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March 19, 2013

Release Date: 
Tuesday, March 19, 2013

Gold and silver continued to rally on safe haven buying as the Eurozone zone continued to struggle with the Cyprus bailout. Following the significant backlash both domestically and abroad following the proposed tax on bank deposits, Eurozone finance members floated the idea of eliminating the tax on smaller deposits while increasing the tax on larger bank accounts. However, the EU and IMF persist in demanding that Cyprus raise 5.8 billion euros ($7.4B) from depositors as a condition to the bailout. (“Cyprus aims to let small savers off bank tax; veto still likely,” Reuters, 3/19/13.)

Forbes contributor Charles Biderman explains why investors should acquire gold: “[I]n a world where the major economies are debasing their currencies to pay bills and with no hope for real growth anytime soon, gold is the best play for the longer term.” (“Buy Gold And Float Shrink,” Forbes, 3/19/13.)

Commerzbank analysts have noted that demand for physical gold have outweighed recent outflows from gold ETFs: Gold is holding its own at above the $1,600 per troy ounce mark on the back of continuing uncertainties over Cyprus... For as long as there is a lack of clarity in this context, and especially if the situation should escalate, gold should continue to remain in high demand as a safe haven. What is more, the yellow precious metal appears to be immune to the latest outflows from the ETFs…Evidently the ETF outflows are being offset by strong physical demand elsewhere. In our opinion, the gold price should continue to gain ground.” (“Gold Price Withstands ETF Outflows: Commerzbank,” Barron’s, 3/19/12.)

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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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