Gold & Silver Digest: 3/20/13

Adam Taggart
By Adam Taggart on Wed, Mar 20, 2013 - 7:28pm

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.

3/20/13 8:06 PM EST US close metals price quotes from Finviz

Reuters: Gold slips after Fed maintains policy, euro rise supports

Gold slipped slightly in brisk trade on Wednesday after the U.S. Federal Reserve issued its latest policy statement, repeating its accommodative stance while extending it another two years, but gains in the euro provided support for the precious metal.

The latest communique said the Federal Reserve would keep to its plan to stimulate the U.S. economy with large-scale bond purchases despite data indicating improved growth. But, policy makers would monitor risks posed by their policies, as well as their progress in lowering unemployment. 

Forbes: FOCUS: European Gold Demand Firm, But Hasn't Seen A Sharp Rise On Cyprus Worries

Demand for gold in Europe is firm, but so far there hasn’t been a specific rise in physical demand on fears of the economic situation in Cyprus, gold market watchers said

However, these analysts said the situation must be watched closely as events may change, and if there is fear that tax levies on bank depositors can be applied in other economically weak European countries – which is at the heart of the concerns over a bailout of the near-bankrupt Mediterranean nation – then gold buying could emerge as investors seek a safe haven.

Bloomberg: Gold Demand in India Climbing May Weaken Attempt to Curb Deficit

Gold use in India, the world’s biggest buyer, may climb for the first time in three years as rising incomes and inflation boost investment demand, undermining efforts to narrow a record current-account deficit.

Consumption may total 865 metric tons to 960 tons this year, compared with 864.2 tons in 2012, Somasundaram P.R., managing director of the World Gold Council for India, said in an interview in Mumbai. The gain in imports will match the increase in demand, he said. The country imported 860 tons last year, according to data from the council.

Reuters: Swiss right-wing forces referendum on banning SNB gold sales

The right-wing Swiss People's Party (SVP) has gathered enough signatures to force a referendum on a proposal to ban the country's central bank from selling any of its gold reserves.

The proposal, dubbed "Save our Swiss Gold", would prohibit the Swiss National Bank (SNB) from offloading its gold reserves as well as force it to hold at least 20 percent of its assets in gold, the committee behind the plan said on Wednesday.

Bull Market Thinking: 200 Years Of The Dow/Gold Ratio Suggest Staggering Moves Dead Ahead

One of the more fascinating reminders of what may be to come for the remainder of this gold bull market, is the charted history of the dow/gold ratio. Below are two charts illustrating the upward potential in gold which remains for the duration of this market.

The first chart is a normal 200-year look at the dow/gold ratio. What’s particularly shocking here, is the staggering levels of volatility injected into the economy and financial system following the US Federal Reserve’s formation in 1913. Now commonly called a “business cycle”, this volatility has wreaked havoc on many, while creating excellent one-way bets for long term speculators. These charts essentially represent, a speculator’s dream.

TF Metals Report: Cyprus Gold...and Silver, too

As if this week wasn't going to be crazy enough, the knuckleheads of the EU have really thrown everyone a curveball with their latest.

Here's the latest from ZH and it's a good place to start: http://www.zerohedge.com/news/2013-03-18/all-conditions-total-disaster-are-place

The gist of it is this:

This is a big deal, regardless of how Cramer and CNBS attempt to downplay it. Why? Fractional reserve banking. As depositors across Europe realize that they are potentially next in line for a similar (or worse) "haircut" if their bank fails, the realization will dawn upon them that keeping money in said bank, at 0% interest no less, is not a very good idea. As depositors begin to withdraw their cash, the entire fractional reserve system begins to seize up. So let's start first with this, a reminder as to how the fractional reserve system works:

Numismaster.com: Eagle Sales Soar Even as Metal Prices Fall

Sales of 1-ounce silver and gold American Eagle coins are soaring as market prices for the precious metals drop.

In fact, February sales of gold Eagles from the U.S. Mint were up 240 percent year over year, with sales of silver Eagles up 126 percent from February 2012 to 2013. The total number of troy ounces of gold sold during the two months in the form of Eagles was 230,500. For silver, the total was 10,866,500.

“More buyers are turning to physical gold and silver because of concerns over the U.S. debt and the crisis this huge debt level may bring to the U.S. economy over the next several years,” said Michael Haynes, CEO of American Precious Metals Exchange (APMEX).

GoldSilver.com: Argentina Turns To Gold As Inflation Tops 26%

Despite an increase in risk appetite in recent months, systemic risk remains. As Reuters' Pedro da Costa noted the "global impact of events in Cyprus casts doubt on the notion that the financial system has gotten a lot stronger since the crisis." The Cypriot deposit levy is creating jitters among some investors who are increasing their gold positions. 

Argentines are buying more gold than ever to protect their savings from the Western Hemisphere’s fastest inflation reported Bloomberg.

Silver Bear Cafe: Why Silver is a Steal At These Prices

Lately there has been quite a divergence in the behavior of those investing in silver compared to those holding gold.

One group is running scared, while the other is calmly stocking up.

It looks as if many of the weak hands holding gold in the form of exchange-traded funds (ETFs) are giving up and liquidating their positions. A record $4.1 billion was yanked out of gold ETFs in the month of February, a record high, according to the BlackRock ETP Landscape report. This figure was almost double the previous record set in January 2011 of $2.6 billion.

WealthDaily: Silver Shortage Coming

As of March 11, 2012-W Uncirculated American Silver Eagle coins were not available for purchase anymore from the U.S. Mint.

Since August 2 of last year, when they had gone on sale, SilverCoinsToday reports that 202,504 were purchased. However, that figure is for individual purchases; the coins also form part of the 2012 Annual Uncirculated Dollar Coin Set, which is still available from the Mint.

That means there will likely be more sales for the Silver Eagle coins. Altogether, we’re looking at 220,559 and growing. Nevertheless, back in 2006, sales amounted to 466,573. As recently as 2011, 409,927 coins were sold. Clearly, there is a significant shortfall in sales of the one troy ounce silver coin.

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