Gold & Silver Digest: 1/22/13

Adam Taggart
By Adam Taggart on Tue, Jan 22, 2013 - 6:03pm

The Gold & Silver Digest contains headlines of stories that members of this group deem relevant and/or interesting to precious metals enthusiasts.

If you have articles to submit for the next digest, please email them to me by clicking here.

1/22/13 6:00 PM EST US close metals price quotes from Finviz

Reuters: Gold up on Japan stimulus, U.S. stocks at 5-year high

NEW YORK, Jan 22 (Reuters) - Gold rose on Tuesday as the Bank of Japan's pledge to launch an economic stimulus effort and a five-year high in U.S. equities prompted nervous investors to
buy gold.

The metal rose for a second day after the Bank of Japan said it would switch to an open-ended commitment to buying assets next year and double its inflation target to 2 percent in its most determined effort to boost its stagnant economy. Germany Prepares: The Bundesbank Repatriates Gold Reserves

It is official:  Germany is set to repatriate a large share of its gold reserves.  This is one of the most definitive measures the country has taken in light of the ongoing global crisis.  

Earlier this month, the Bundesbank (Germany's central bank) announced its intention to take delivery of over half of its gold reserves by 2020, gradually transferring it to gold vaults in Germany.

The remaining half of Germany's gold holdings will remain vaulted in New York and London.  The following table illustrates current and future locational allocations of Germany's gold holdings.

Yahoo Finance: Central Banks Repatriate Gold: How Will This Affect Investors?

Gold is rebounding. News that the Bank of Japan set a 2% inflation target and is buying 13 trillion yen worth of assets ($146 billion) rallied gold prices Tuesday, to near a one-month high of $1,697.80 set last week.

That’s not surprising since gold, more than any other commodity, rises and falls along with changing government policies globally.

Bloomberg BusinessWeek: Gold Trades Near One-Month High as BOJ Announces Stimulus

Gold futures rose in New York after the Bank of Japan (8301) announced stimulus measures, increasing demand for the precious metal as a store of value.

The central bank said today it will buy about 13 trillion yen ($146 billion) in assets per month from January 2014 and set a 2 percent inflation target. Bullion gained 7 percent last year as stimulus programs in the U.S., Europe and Japan enhanced the appeal of the precious metal as an alternative to currencies.

“This is definitely bullish for gold,” James Cordier, the founder of in Tampa, Florida, said in a telephone interview.

MoneyWatch: Answering Peter Schiff on gold

Recently, Peter Schiff, CEO of EuroPacific Precious Metals, wrote a response to a post I made warning investors about the potential problems with jumping in on gold based on economic forecasters. Specifically, he took issue with what I said about economic forecasters and about gold in general.

In short, I stand by what I wrote earlier regarding both. My opinion, based on the academic evidence, have been made clear in previous posts, and nothing in Schiff's response has caused me to doubt the evidence. Today, I'd like to address a few of Schiff's arguments.

MarketWatch: Gold will be ‘up and running’ soon says Felix Zulauf

Contributors to Barron’s recent Roundtable 2013 had high expectations for gold despite its somewhat lackluster performance last year, with Felix Zulauf, president of Zulauf Asset Management AG in Switzerland recommending gold again and talking about its prospects for record prices above $2,000 an ounce.

“Gold is at the very end of a cyclical correction and the gold price will be up and running again soon,” said Zulauf. “Once gold surpasses $1,800 an ounce, it will run to the low- to mid-$2,000s.”

SilverSeek: How Far Up Could Silver Go?

Last three months were sort of a roller coaster for precious metals investors – gold and silver hit a local bottom at the beginning of November and it looked like nothing could stop a strong rally to follow. Yet the fears concerning the “fiscal cliff” issue seem to have won and stopped the prices at the end of November. Moreover, gold & silver correlations structure that used to propel the rally got distorted and even though the dollar weakened and the general stock market got stronger, precious metals were unable to react.

As it turned out that the end of 2012 was not the end of the U.S. economy and the “fiscal cliff” was a mere scarecrow and not the doom of the financial markets, a rally begun. Will it be the long-awaited rally that could bring precious metals to their new all-time high? There are no certainties on any market, but as the correlations seem to be returning to normal, it gets more and more likely. This is because precious metals are not the only assets that have gone up in price recently – the general stock market, in fact, seems to be doing even better and the dollar is in a downtrend.

Silver Bear Cafe: An Inside Look at the Rapidly Escalating Physical Silver Shortage

On Thursday, we alerted readers to the fact that the US Mint had sold out of Silver Eagles, selling over 6 million ounces over the first 9 days of sales in 2013, and was shutting down sales and production of Silver Eagles through at least 1/28, and would ration sales of eagles upon resumption of sales. 

With a rapidly growing presence in the retail gold and silver market via SDBullion, we have had a unique perspective of the escalating physical silver shortage, and would like to give our readers an inside glimpse of the time-line of events evidencing a growing shortage of physical silver.

ZeroHedge: The One Chart That Explains the Massive Risk of Investing in Gold & Gold Stocks

Viewing the chart above, a six-year old child could tell you that investing in physical gold and gold mining stocks (as indicated by the AMEX HUI gold bugs index) yielded returns from 2001 to 2012 far superior to the returns of the US S&P 500 Index over the same time period. In fact, the truth of this statement is so self-evident, that if this same child was asked what asset classes he should have been invested in over the past decade by viewing the above chart, the simplicity of that question might lead him to think that one is asking a trick question. So why is it that all the leading Wall Street investment firms stated during the visible onset of the global financial crisis in 2008 (versus the real onset of the global financial crisis quite a few years earlier) that gold was one of the riskiest assets in which one could possibly invest? The simple answer, of course, is that if they were the ones involved in the scam to take gold and silver prices down, then certainly they would not tell you that the steep, rapid (but short-lived) drop in gold/silver prices was a massive buying opportunity.

The Gold Report: Keys to Rare Earth Companies’ Success: Innovation, Cost Efficiency

Geologist Alex Knox followed rare earths before they were Wall Street's darlings, and continues to do so, having seen stormy weather in this industry before. Demand for rare earths remains; it's just a question of who can supply them first—and at what cost? In this interview with The Metals Report, Knox tells investors what questions they need to ask management and highlights companies that are progressing toward production.

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