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Analyst: Debtor Nations Face Tough Choices

Release Date: 
Friday, March 23, 2012

Gold moved higher today on a weaker dollar with gold trading at $1,658.80 per ounce as of 7:06 a.m. Pacific Time on the New York Spot Market. Silver traded at $31.99 per ounce.

Indian jewelry shop owners closed their shops to protest higher gold import duties. The planned three-day strike is being closely watched by analysts. The fundamental reason to buy gold in India-"culture and weddings"-hasn't changed, said Ajay Mitra, managing director of the World Gold Council for India and the Middle East. He added, "in the longer term, [the tax] increase will not substantially affect demand." In India, parents give gifts of gold for daughters' weddings. Gold is also given as a gift on some religious holidays and is a common investment..

Jeff Nielsen, wrote a detailed article explaining why he favors investing in gold and silver. "Few Western economies (and none of the larger ones) are solvent," he said. "One by one, all of the debt-sinners (the U.K., Ireland, Portugal, Spain, Italy, Japan, France, Canada and the U.S.) have a choice: print and spend (like the U.S. and Canada), or shrink and default (like Greece and the U.K.)."

"Exponential money printing causes all of these currencies to go to zero, igniting hyperinflation. In that scenario, prices for most hard assets soar into the stratosphere, led by precious metals," he said. "It's still not too late for many ordinary people in other Western economies," Nielsen concludes. "Flee the financial destruction and economic slavery guaranteed to the holders of the bankers' paper. Seek the 5,000-year security of gold and silver."

(Source: "Indian Gold: Its Worth and Its Wait," Wall Street Journal, March 23, 2012; "Gold futures trade higher as dollar declines," MarketWatch, March 22, 2012; "Gold Loses Luster in Face of US Recovery," March 23, 2012;"Economic Slowdown Bullish for Precious Metals,"TheStreet, March 23, 2012)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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