Gold & Silver Digest: 3/22/13

Adam Taggart
By Adam Taggart on Fri, Mar 22, 2013 - 5:48pm

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.

3/22/13 6:23 PM EST US close metals price quotes from Finviz

Reuters: Gold down as Cyprus fears ease, notches weekly gain

Gold fell on Friday as investors took profits a day after the precious metal hit a one-month high, and safe-haven buying dried up as a deal between Greece and Cyprus eased fears of an escalating euro zone debt crisis.

For the week, bullion gained 1 percent, its biggest weekly gain in 2 months, with investors seeking refuge in the precious metal for most of the week amid worries about whether Cyprus could secure a bailout from the European Union.

"The appeal of gold could return after a delay, as occurred in the immediate aftermath of the financial crisis in 2008. But should gold fail to respond, it is running out of catalysts to drive prices higher," said Suki Cooper, precious metals strategist at Barclays Capital.

Forbes: Gold Survey: Solid Majority Of Survey Participants See Higher Gold Prices Next Week

Gold prices are expected to climb next week, with expectations that the yellow metal may catch a bid as the situation regarding a possible bailout for Cyprus could attract safe-haven buying.

In the Kitco News Gold Survey, out of 33 participants, 28 responded this week. Of those 28 participants, 22 see prices up, while four see prices down, and two are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

Yahoo! Finance: Gold Not ‘Antifragile’ Enough for ‘Black Swan’ Author

Gold does not rust, spoil or otherwise decay. But to Nassim Taleb, it is not antifragile.

Gold may be physically durable and culturally indispensable as a store of value over the centuries. Yet the metal doesn’t itself thrive by becoming stronger as a result of the inherent and unpredictable variations in conditions that the world constantly presents.

Forbes: Is It Time To Buy Gold Again?

In the era of fiscal discipline, the price of gold – for the most part – tracked inflation.  Sometimes it moved above the inflation trend line and sometimes it moved below the inflation trend line.  The U.S. government strayed from fiscal discipline in the 1960s.  When this occurred, the money supply grew faster than gross domestic product and the price of gold began to rise well above its “official price.”  In 1971, President Nixon issued an executive order “temporarily” suspending the gold standard.

One documentary, “End of the Road: How Money Became Worthless”, suggests the suspension of the gold standard in 1971 has enabled Congress to forego fiscal discipline but the consequences nonetheless remained.  Research cited in the documentary finds that the price of gold now is not tied to inflation so much as it is tied to the extent to which money supply grows faster than gross domestic product.

ETF Daily News: Trend Change In Platinum-Gold Relationship? (PPLT, GLD, SLV, AGQ, IAU, GDXJ, PALL)

Jeb Handwerger: For many months, I have witnessed a trend towards resource nationalism which is taking a major toll on the potential supply of platinum (NYSEicon1.png:PTM) where over 90% comes from South Africa, Zimbabwe and Russia. These are far from safe mining jurisdictions. Simultaneously, auto sales are rebounding to levels not seen since before the credit crisis in early 2008.

Despite global supply concerns, increase of resource nationalism and rising industrial and automobileicon1.png demand, platinum is still undervalued compared to gold (NYSEARCA:GLD). The platinum price is still far below pre-credit crisis highs, while gold and silver (NYSEARCA:SLV) are almost double 2007 highs. This may be a short-term phenomenon and over the long term PGM’s may provide a great buying opportunity and catch up to gold (NYSEARCA:IAU) and silver (NYSEARCA:AGQ).

The Daily Gold: Next US$ Peak is Catalyst for Precious Metals & Hard Assets

Our title seems obvious. We all know that the US$ tends to be negatively correlated with commodity prices. This is true in the short-term but not always so over the long-term. The US$ index is currently nearing 83. It’s at the same level it was in 2007 when Gold was trading in the $600s and the CCI (currently 554) was trading near 400. The US$ index is near the same level it was at the end of 2005 when Gold was trading below $400 and the CCI was trading below 300. This tells us that the bull market in precious and hard assets goes way beyond simple US$ weakness. It is driven by long-term supply and demand dynamics as well as rampant monetary inflation from global parties and not just the USA. Throughout this bull market, key advances and turning points have originated from strength against foreign currencies and then sustained strength amid textbook US$ weakness.

321Gold: Gold-Stock Spring Rally

The loathed and left-for-dead gold miners look to have begun their usual spring rally. This sector has actually exhibited strong seasonality for its entire secular bull. For well over a decade, most years have enjoyed a major gold-stock rally between mid-March and early June. These favorable seasonals are a welcome tailwind for a sector that is radically undervalued fundamentally and overdue to explode higher.

Pronounced seasonality is certainly not something you'd expect from gold miners. Outside of mine expansions and new projects, their production rates are remarkably consistent over a calendar year. This is very different from agriculture, where harvests only happen once or twice a year. But despite steady gold sales over time, the stocks of this metal's miners are inarguably slaved to definite seasonal trends.

MineWeb: CFTC, communism and fixing the gold fix

So, is the London gold fix a fix? US derivatives-market regulators think it might be.

The CFTC is no doubt absolutely within its rights to question the use of certain prices as reference points (aka "marks") in US transactions. Joining the International Roundtable on Financial Benchmarks three weeks ago, its commissioner Bart Chilton said he also thought many other markets might deserve attention, too. But quite what a Washington commission overseeing the US futures markets might achieve – or hope to – as regards the London Fixings as a process, however, we can't imagine.

SilverSeek: Silver's Investment Demand Conundrum

The silver market is increasingly becoming an exercise in contradiction. On one hand, the silver spot price has disappointed thus far in 2013, falling from the low-thirties in early January down to its current level around US$29.00/oz. Given that price direction, one would be forgiven for assuming that the silver ETF's had experienced outflows over that time - but they have not. While we have seen the SPDR Gold Trust (GLD) shed 141 tonnes of gold year-to-date with the price of gold reacting accordingly, silver ETF's have in fact ADDED to their stockpiles since January 2013, representing more than 20 million ounces of additional silver.

Chart 1 below, courtesy of Bloomberg, compares the total ETF Holdings of gold versus that for silver since the beginning of the year. As can be seen, silver ETF's have enjoyed considerable inflows over the past three months, while gold ETFs have seen redemptions. Given the positive correlation between the prices of gold and silver, it is indeed strange to see the metals' most popular exchange-traded vehicles experience completely divergent investment flows.

SilverSeek: Silver Prices Before the Monetary Collapse

Has the silver market been pricing in the coming collapse? In a word, no!

Markets dominated by the impulses of real people largely no longer exist. The machines have taken over, as bots read the news and respond rapidly with large transactions.

No matter how volatile world markets will get, remember that there will be more Cyprus-type events, more Quantitative Easing programs, more denials of the importance of inflation, more threats from Central Banks to remove liquidity, more mining sector failures and more bubble callers designed to influence mainstream investor opinion.

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