Gold & Silver Digest: 3/19/13

Adam Taggart
By Adam Taggart on Tue, Mar 19, 2013 - 7:00pm

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.

3/19/13 6:51 PM EST US close metals price quotes from Finviz

Reuters: Gold holds firm after Cyprus parliament rejects tax

Gold stayed strong on Tuesday, but eased off earlier 3-week highs above $1,615 an ounce after Cyprus' parliament rejected a tax on bank deposits which cast doubt on the country's bailout package, affirming a need for flight-to-safety buying.

Cypriot lawmakers overwhelmingly rejected a deeply unpopular plan to tax bank deposits on Tuesday, throwing into doubt an international bailout for the troubled euro zone member needed to avert default and a banking collapse.

Gold edged off its highs just after vote, but the lingering uncertainty surrounding Europe's financial stability should keep prices supported.

Barron's: Gold Price Withstands ETF Outflows: Commerzbank

You’ve read Barclays Capital strategists arguing that gold’s loss of “stickier” exchange-traded fund investors is the single biggest risk to the metal’s price. Well, Commerzbank’s commodity strategists are taking a different view.

The firm writes this morning that ETF outflows continue, but the mess in Cyprus is drawing other buyers back into the market:

Jesse's Café Américain: Gold Daily and Silver Weekly Charts - The Great Bail-In - New Zealand Goes Cyprus-Style

"Here in New Zealand the Reserve Bank is moving to add an Open Bank Resolution Policy (OBR) to tools it could potentially use in the event of a bank failure.

The implementation of OBR would see all unsecured liabilities that rank equally among themselves, including deposits, having a portion frozen. The Reserve Bank says the OBR policy could save taxpayers' more than NZ$1 billion regardless of whether there is a bank failure or not.

However, Norman points out that if a bank fails under OBR, all depositors will have their savings reduced overnight to help fund the bank’s bail out."

321Gold: Gold & The Retail Investor

  1. Hedge funds have been exiting the gold market, and shorting it. Most of the bearish analysis is based on forecasts of crashing investor demand.
     
  2. Many analysts are claiming the gold bull market is over, and you should sell all your holdings.
     
  3. I disagree. So does Merrill Lynch. “Our data shows that to sustain gold prices at $2,000/oz by 2016, investors need to purchase an amount of gold similar to that purchased in 2008, when prices hovered around $872/oz.” -Merrill Lynch, quoted by Investing.Com, March 17, 2013.

Sprott: Do Western Central Banks Have Any Gold Left??? Part II

The past few months have been difficult for the gold investor as selling pressure in the gold futures market has set a decidedly negative direction for the price of the yellow metal. As fundamental investors, we always pay special attention to the supply and demand dynamics of gold and, recently, we have found it very difficult to reconcile lower prices with continued strong demand for physical gold.

While the supply of gold has remained largely static, we have seen a steady increase in demand for the yellow metal. India and China have emerged as strong buyers, consuming over half of the mine supply in recent years. Central banks have switched from being sellers of gold to being net buyers, with their gold purchases in 2012 increasing by 17% to almost 535 tonnes. Exchange traded products (ETPs) around the world have continued to add to their gold hoards, as have institutions and private investors. Furthermore, central banks, such as South Korea and Russia, have added to their bullion reserves early in 2013, which points to sustained strength in demand. These facts are important because, over the past decade, the annual supply of gold has stayed flat at approximately 4,000 tonnes.

South China Morning Post: New arguments for gold sound like the old story warmed up

One tangential result of the sharp rise in risk aversion following the Cypriot debt crisis is that the price of gold has popped higher.

Yesterday, bullion was trading in Asia at US$1,601.86 an ounce, up 3 per cent over the past month.

You might think the latest price gain on the back of safe-haven buying can have done little to console gold's true believers.

321Gold: Investors Seeking Gold And Silver On Banking Instability

For weeks, I alerted you to a yen devaluation and warned that it may next turn into a Euro decline, which could then be followed by a U.S. greenback collapse. All of these global bailout attempts and now this levy on depositors in Cyprus could destabilize the European banking system and boost the discounted gold (GLD) and silver (SLV) prices. 

In ancient Greece, farmers would plant crops based on prophecies from an oracle. Today investors look to spreadsheets and minute by minute charts to try to predict the future. Trying to be a prophet is an unprofitable occupation. The secret to wealth is buying wholesale, waiting and hopefully selling it retail. Gold (UGL) and silver (AGQ) should bounce off key support levels.

Silver Bear Cafe: The Silver Shortage Of 2013

Did you hear the U.S. Mint just ran out of silver? In mid-January, the Mint suspended sale of the 2013 run of its popular U.S. “Eagles.”

The new silver Eagles sold out fast. They went on sale, and buyers bought everything they could lay hands on. Within days, the shelves at the Mint were stripped bare. It’s not the first time that this has happened.

The Mint quickly announced that it’s obtaining new supplies of silver. It will stamp out more Eagle coins. There will be more to buy, or so they say. And yet… people in the silver markets are squirming — and I’ll tell you more about that, below.

CBS This Morning: "Gold rush" in space? A look at asteroids' potential for wealth, destruction

(CBS News) We are "sitting ducks" when it comes to asteroids, according to CBS News contributor Michio Kaku, a physics professor at the City University of New York.

Congress is holding a hearing Tuesday on asteroids, as scientists say more can be done to stop them from smashing into the Earth.

The next asteroids, experts say, are expected to pass by Earth in 2029 and 2036. Kaku said on "CBS This Morning," "The asteroid Apophis (to arrive in 2026) -- it'll miss, but it's 1,000 feet across, it is a nation-buster. It'll take out England. It'll take out Germany. That's how big it is."

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