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April 17, 2013

Release Date: 
Wednesday, April 17, 2013

Gold prices rose for a second day as physical buyers rushed into the market while silver remained flat. Premiums for both silver and gold coins have increased and the world’s largest mints are reporting increased demand. “There has been huge retail demand,” said The Perth Mint spokeswoman to the Wall Street Journal. “The phones have been ringing off the hook.” (“Coin Sales Surge Despite Drop in Metal Prices,” WSJ, 4/17/13.) You can see the most current spot prices here.

Investors also returned to gold as concerns grew about the stock markets. “People are buying gold after the earnings disappointed and stocks declined,” a senior market strategist at Archer Financial Services Inc. said. “A price drop of this kind has also brought in some physical demand.” (“Gold Gains for Second Day as Equities Decline, Demand Rebounds,” Bloomberg, 4/17/13.)

Equities dropped by more than 1% on a variety of negative economic news. “Talk of Germany possibly facing a credit rating downgrade, on top of worse-than-expected British employment figures, dragged down stocks in Europe and contributed to the pessimism in the U.S. Disappointing earnings reports from U.S. companies and falling energy prices also helped push stock prices lower.” (“Stocks fall hard; Apple drops 5%,” USA Today, 4/17/13.)

Gold sales have increased significantly in India, the world’s largest consumer of physical gold, following the recent selloff. India celebrates a major gold-buying festival next month and the wedding season continues until early June. “Definitely, definitely, [there is] significant increase in footfalls [customers] and enquiries and purchases. It has the benefit of the festival coming next month and also the fact that wedding season is on, so it adds to the quantum of purchases being done,” reported the expert head for one of India’s largest jewelry chains. (“India Rushes to Buy Gold as Prices Fall,” Voice of America, 4/17/13.)

Cyprus’s finance minister stated he expects his country will sell a portion of its gold reserves to raise $400 million necessary for the EU bailout. The ultimate decision, however, rests with Cyprus’s central bank. (“Cypriot finance minister sees gold sale within months,” Reuters, 4/17/13.)

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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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