Gold & Silver Digest: 3/13/13

Adam Taggart
By Adam Taggart on Wed, Mar 13, 2013 - 8:01pm

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.

3/13/13 8:56 PM EST US close metals price quotes from Finviz

Reuters: Gold falls on optimism over US economic improvement

NEW YORK, March 13 (Reuters) - Gold fell on Wednesday as a strong U.S. retail sales report boosted optimism about the U.S. economy and after prices failed for a second time to surpass $1,600 an ounce, prompting  investors to reduce bullion positions.

The metal rose to within $1 of $1,600 on hopes that the European Central Bank will extend its loose monetary policy  following euro zone industrial output data showing a surprisingly big fall in January. If This Isn’t The Gold Bottom, It’s Close

In this week’s talk with National Numismatics’ Tom Cloud, he covers the tightness in the silver market and why the coming debt ceiling increase is good for gold.

DollarCollapse: Hi Tom, the tone of the precious metals markets seems to have shifted from utter despair to cautious optimism. Is this the bottom?

Tom Cloud: I’m not sure that the bottom is in, but it certainly will be between now and the 27th when the government raises the debt ceiling. In the meantime there’s the possibility of gold going lower, maybe breaking down to $1,540, which from a technical standpoint certainly looks possible.

Reuters: U.S. CFTC looking at London gold, silver fix - WSJ

The top U.S. derivatives regulator has started internal discussions on whether the daily setting of gold and silver prices in London is open to manipulation, the Wall Street Journal reported, citing people familiar with the situation.

The Commodity Futures Trading Commission (CFTC) has not launched a formal investigation into the matter, but it is examining various aspects of price fixings, including whether they are sufficiently transparent, the paper said in its online edition.

Reuters: What will become of Chávez’s gold hoard?

In August 2011, while undergoing cancer treatments that ultimately failed him, Venezuela’s President Hugo Chávez began withdrawing 160 tons of gold from U.S., European and Canadian banks. “It’s coming to the place it never should have left. … The vaults of the central bank of Venezuela, not the bank of London or the bank of the United States. It’s our gold,” he said on national television as crowds cheered armored trucks carrying an initial bullion shipment to the central bank.

While Chávez suggested the gold repatriation might forestall a Libya-style seizure of Venezuela’s assets by Western powers he had antagonized, IHS Global Insight analyst Diego Moya-Ocampos told Reuters it might stymie potential claims by foreign corporations seeking compensation for nationalizations they had endured. Central Bank of Venezuela President Nelson Merentes said it was “an act of financial prudence and sovereignty” intended to guard against problems in the international markets.

Bloomberg: Gold Losing Luster as Price Drop May Curb Demand From China

Gold, which fell the past five months in the worst run since 1997, is losing its luster and lower prices may curb demand from China, according to Danske Bank A/S and Credit Suisse Group AG.

Gold is unlikely to return to its September 2011 record of $1,921.15 an ounce, Credit Suisse said Feb. 1. Goldman Sachs Group Inc. said Feb. 25 bullion’s cycle has probably turned as the U.S. economy recovers. It cut its three-month forecast by 12 percent to $1,615 that day and expects $1,550 in a year. Gold fell 5.3 percent to $1,587.20 in London this year.

CNBC: Think Gold Slump Is Bad? Bullion Stocks Fared Way Worse

While the "great rotation" into riskier assets has triggered a 4.3 percent fall in the price of gold since the start of the year, this is just a fraction of the losses seen in the shares of gold miners, which have fallen 15 percent on average over the same period.

Worries over the outlook for the precious metal and declining profitability of the miners have led to a continued selloff in their shares, which have struggled to find favor with investors over the past year. As a result, gold miners are now trading at their cheapest level in 25 years relative to the physical metal, according to Point View Wealth Management.

Gold seek: Quaintance and Brodsky: Fed's exit can be only debt and currency devaluation via gold

Dear Friend of GATA and Gold:

In their new commentary, Lee Quaintance and Paul Brodsky of QB Asset Management in New York argue that the Federal Reserve's only plausible exit from "quantitative easing" is not selling bonds and junky assets but currency and debt devaluation based on a great upward repricing of gold and a general tendering for gold by the central bank at that new price, even if this would only start a new era of debt creation in advance of still another currency and debt devaluation in a few decades. Oh, well, as Quaintance and Brodsky note, this would be only what has been done before. With their kind permission their commentary, "The Fed's Exit," has been posted in PDF format at GATA's Internet site here:

GATA: China is part of gold market rigging as well and tries to talk market down

BEIJING -- China is likely to limit its gold holdings to 2 percent of its total foreign exchange reserves, said Yi Gang, a deputy Chinese central bank governor.

The People's Bank of China last made known changes to its gold reserves in 2009, announcing that it held 1,054 metric tons. The bank hasn't made any revisions since then. That's about 1.8 percent of its total reserves, according to data from the World Gold Council.

"If the Chinese government were to buy too much gold, gold prices would surge, a scenario that will hurt Chinese consumers," Yi said today in a press briefing in Beijing. "We can invest only about 1-2 percent of the foreign exchange reserves into gold because the market is too small."

Invezz: Silver Price Seen Outperforming Gold in 2013

With gold prices under pressure in recent months analysts see silver outperforming gold this year. On 12 March 2013, Resource Investing News reported Eric Sprott of Toronto-based asset manager Sprott Asset Management as expecting the current level of silver demand to have an impact on the market.

“The Investment of This Decade”

Referring to the 2011 and 2012 sales of the US Mint, Sprott noted that silver and gold coins had received the same amount of investment, meaning that investors have been purchasing 53 percent more silver than gold. “I think silver will be the investment of this decade, whereas gold was the investment of last decade,” Sprott commented, as quoted by Resource Investing News. He added that his own company had raised $320 million (£214 million) in the final tranche when it issued its silver trust, compared to $349 million raised for gold a few months earlier.

Resource Investor: Will we see a silver breakout in 2013?

Silver has been trading sideways so far in 2013, but what will the rest of the year bring? Will 2013 be the year silver prices break out or crash and burn? What is a sustainable silver price for mining companies and where will the metal come from to supply the next generation of industrial and investment demand? Most important, how can investors make money off this volatile sector? These were the burning questions The Gold Report took to analysts, money managers and heads of silver mining companies. The answers may surprise you.

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