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April 9, 2013

Release Date: 
Tuesday, April 9, 2013

Gold and silver prices rallied today on bargain hunting and a weaker dollar index. “Reports overnight said better demand for physical gold coming out of Asia continues as investors scoop up the metal at what they perceive as bargain prices. The U.S. dollar index was solidly lower Tuesday on more profit taking.” (“P.M. Kitco Metals Roundup: Gold Ends Higher on Short Covering, Bargain Hunting, Lower U.S. Dollar,” Forbes, 4/9/13.) You can see the most current spot prices here.

Japan’s plan to double its money supply may spark higher gold prices “if policy makers succeed in their goal of ending 15 years of deflation and sparking a new round of inflation. Gold is usually seen as a hedge against inflation, holding its value while the worth of other assets is eroded by rising prices. ‘The smart money is on buying gold’ rather than selling, said Mark O'Byrne, research director at gold dealer GoldCore in Dublin. ‘Given the BOJ's determination, there's no doubt you're going to get 2% inflation, and there's a risk it might be much, much higher. For those who are prudent, diversifying into gold makes sense.’" (Japanese Rush to Sell Gold as Price in Yen Jumps,” WSJ, 4//13.)

Gold is entering the “buy zone,” according to analysis from two Bank of America Merrill Lynch technicians. “Buy signal or otherwise, the duo expect gold’s support should hold at $1,525 to $1,550. Getting back to $1,625-$1,630 ‘would suggest a successful test of support and set up a stronger rally to the range highs near $1800,’ they write.” (“Gold Was a Buy the Last Time the Fast Money Was This Bearish,” Barron’s, 4/9/13.)

Slovenia appears to be the next euro zone country facing a banking crisis. “The Organization for Economic Cooperation and Development on Tuesday said the country faces a ‘severe banking crisis.’ Alarm bells rang louder after the OECD, whose members include the world’s 34 largest, developed economies, said Slovenia may have significantly underestimated the cost of recapitalizing the country’s banks . Slovenia has pegged the cost at around 1 billion euros ($1.3 billion), but the OECD said that figure is based on what appears to be outdated analysis.” (“6 things you need to know about Slovenia, perhaps the next euro-zone domino,” MarketWatch, 4/9/13.)

North Korea may fire its ballistic missiles at “any time,” according to U.S. officials. The commander of the U.S. Pacific Command told a Senate committee, "A major conflict in Korea could have unpredictable, long term, and far reaching impacts due to the central location of the Korean peninsula in Northeast Asia and the vital importance of Northeast Asian trade to the global economy." (“U.S. official: North Korea could fire at any time,” CNN, 4/9/13.)

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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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