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April 24, 2013

Release Date: 
Wednesday, April 24, 2013

Gold prices rose today on the New York Spot Market, erasing yesterday’s losses, as physical demand continued to support prices. “Strong demand for physical gold world-wide, and especially from Asia, continues to underpin the gold market,” a Kitco analyst told MarketWatch. (“Gold futures jump with physical demand on the rise,” MarketWatch 4/24/13.)

Silver prices remained flat during morning trading despite increased demand. You can see the most current spot prices here.

The head of precious metals research and forecasts at Thomson Reuters GFMS, Neil Meader, sees silver potentially rising by as much as 30% based upon an “external trigger.” “One such catalyst… would be if the U.S. economy wobbles further, meaning the Federal Reserve’s quantitative-easing program will last longer than many might currently expect. Another potential trigger could occur when U.S. budget and debt-ceiling negotiations intensify, perhaps around July. ‘If we get any word of a U.S. credit rating downgrade, that could be quite significant for the price,’ Meader said. ‘You only have to look back to the summer of 2011 when the U.S. had a credit downgrade. That added $200 to the gold price…You could easily get a scenario where we get back over $30 and maybe even get to $32,’ Meader said.” (“Thomson Reuters GFMS: Silver Could Reclaim $30/Oz In 2013,” Kitco News, 4/24/13.)

Financial journalist Matthew Lynn explained why gold remains in a bull market in a commentary for MarketWatch. “What gold really represents is a bet on economic chaos — and unfortunately there is plenty of that to come. The global economy faces three huge challenges — and each of them, when you look at them closely, are bullish for gold… First, the euro is the most dysfunctional currency system ever created, locking what remains the world’s largest economic block into permanent depression… Next there is a debt crisis. Whether the levels of debt all developed economies have built up will stop them from growing is still a controversial issue. It remains to be decided. What is certainly true is that governments and consumers everywhere have taken on far more than they can afford… Finally, the dollar is in long-term decline as the world’s reserve currency… At some point, those problems will be fixed… Until then, and despite market panics, gold remains a bull market. It is bet on a chaotic global economy. And that isn’t about to disappear any time soon.” (“Be bullish on gold as long as chaos reigns,” MarketWatch, 4/24/13.)

Demand for durable goods fell in March by the largest amount in seven months.  “The weakness that we see developing in China, the recession in Europe and the unknown about the weight of the fiscal restraint in the U.S. from the sequester, all those increase uncertainty for business,” said the chief economist at Credit Agricole CIB. (“Manufacturing in U.S. Cools as Durables Orders Slump,” Bloomberg, 4/24/13.)

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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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