Gold & Silver Digest: 3/27/13

Adam Taggart
By Adam Taggart on Wed, Mar 27, 2013 - 5:23pm

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.

3/27/13 6:24 PM EST US close metals price quotes from Finviz

Reuters: Gold edges up on euro zone fears, Fed stimulus hopes

Gold rose 0.5 percent on Wednesday, snapping a three-day losing streak, as renewed euro zone worries and hopes the Federal Reserve will continue its loose monetary policy triggered bullion buying.

The metal reversed earlier losses, as U.S. equities slipped after soft demand at an Italian debt auction stirred fears about the financial stability of the euro zone.

Also underpinning gold was a plan by Cyprus to restrict capital flow as it tries to avert a run on its banks after agreeing a tough rescue package with international lenders.

Recommended Book:
Currency Wars: The Making of the Next Global Crisis
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Forbes: Central Banks Bought More Than $3B In Gold In 2013: UBS

Gold has been on a definite downtrend since last October, with bullion falling a dramatic 5.1% in February alone.  As prices have dropped and investors lost faith, central banks have been on the opposite side of the trade, gobbling up bullion at a rate of 27-metric tons a month, according to UBS’ gold expert Edel Tully.  Russia and South Korea are among the biggest buyers, while several smaller, first-time acquirers have emerged, suggesting global central banks aren’t snubbing the yellow metal in the same way the general market seems to have done, which, in the face of it, is definitely bullish for gold.

Central banks became net buyers of gold in 2011 after 20 years of consistent selling, according to the World Gold Council.  And while the yellow metal has fallen consistently every month since October (with the exception of March, where gold is up 1.6%), the trend seems set to continue.

CNBC: The Two Biggest Misconceptions About Gold

Gold is one of the most widely held financial assets – but that doesn't mean everyone understands the catalysts that drive gold higher or lower. On Tuesday's "Futures Now," RBC Precious Metals Strategist George Gero set out to clear two of the biggest misconceptions people have about gold.

Misconception One: If Gold Falls for a While, That Gives You a Good Chance to Buy It

The Telegraph: Could the Government confiscate your gold?

The thought of a government confiscating your gold may seem far-fetched but, given the shenanigans of the past few years and recent events in Cyprus, it is easy to see why some commentators are stirring the pot.

Roosevelt's 1933 gold raid is well documented but it's often forgotten that in 1966 Britons were banned from holding more than four gold coins or from buying any new ones, unless they held a licence.

Business Insider: MARC FABER: Not Even Gold Will Be Able To Save You From What Is Coming

Marc Faber, who authors the Gloom Boom & Doom newsletter, is usually pretty bearish on stocks and bullish on gold.

Lately, though, gold doesn't seem like it can catch a bid.

"Despite the continued reverberations regarding the Cyprus bailout and its involvement of bank deposits, gold struggled to maintain the positive momentum created in the first two weeks of March and instead now looks very likely to move lower, towards $1580/oz," wrote Deutsche Bank commodities analyst Xiao Fu in a note this morning.

Business Insider: Folks Who Used To Be Fanatical About Silver And Gold Have Now Got A New Obsession...

It's durable.

It's portable.

It's fungible.

And it carries intrinsic value.

Surely we're referring to gold and silver, ya?

Nope.

Gold and silver bugs have now transferred these arguments — the ones they used to insist  that their metals were the only safe investment — to something seemingly gold and silver's antithesis: Bitcoin.

Silver Bear Cafe: Top Gold Analyst – "We Can't Imagine What It Would Be Like
If There Was True Chaos"

In the 1930′s, when President Roosevelt seized physical gold from Americans, gold mining companies remained untouched by the draconian move. And, while stocks in the United States dropped precipitously and remained depressed for a decade, companies whose primary business was the exploration and mining of gold and silver rose to new highs. Homestake mining, a gold mining firm operating during FDR’s Presidency, was one such company that saw its shares skyrocket over 500%.

A similar effect occurred in the 1970′s, after the US dollar was taken off the gold standard. By the early 1980′s gold had once again reached new highs – highs that were not surpassed until the debt crisis of 2008 took hold, nearly thirty years later.

CountingPips: Silver ‘$100 Within Two Years’

You could say that buying gold is like drinking vintage Grange wine.

In which case buying silver is like doing double shots of Bundaberg rum.

They both have the desired effect – the latter does it more effectively, but at the risk of a bigger hangover. Silver’s volatility means it swings wildly between the buy and the sell zone.

Silver Investing News: Can Silver Outperform Gold in 2013?

“I think silver will be the investment of this decade, whereas gold was the investment of last decade,” Eric Sprott of Sprott Asset Management said in a recent Russia Today interview.

Looking at US Mint sales in 2011 and 2012, Sprott said that silver and gold coins have received the same amount of investment dollars. That means investors are purchasing 53 percent more silver than gold.

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