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March 22, 2013

Release Date: 
Friday, March 22, 2013

Gold and silver prices fell in morning trading, largely driven by profit taking. Investors are expected to largely on the sidelines today given the uncertainty surrounding the Cyprus bank crisis.

Cyprus struggles to avert a banking collapse and expulsion from the euro zone. Euro finance ministers have proposed closing two of Cyprus’s largest banks, splitting deposits between “good” and “bad” banks. Those depositors with uninsured accounts would move to the “bad” bank where they could potentially lose 40% of their deposits. (“Euro Finance Heads Said to Weigh Closing Two Cyprus Banks,” Bloomberg, 3/22/13.)

“There’s a dawning realization that the crisis is unfortunately far from over in Europe,” the executive director of GoldCore Ltd. told Bloomberg. “Ultra-loose monetary policies are set to continue for the foreseeable future and that would suggest that gold prices could go higher as long as that’s the case.” (“Gold Seen Extending Rebound as Cyprus Revives Bulls, Bloomberg, 3/22/13.)

Bloomberg reports that, in its weekly survey, sixteen analysts expect prices to gain next week. This is the highest proportion of bullish forecasts since March 8. (“Gold Seen Extending Rebound as Cyprus Revives Bulls, Bloomberg, 3/22/13.)

Kira McCaffrey Brecht, the managing editor for Trader Planet offered a powerful commentary on why to own physical gold: “Gold is a multi-faceted hedge. It's a hedge against inflation. It's a hedge against devalued fiat currencies. It's a hedge when central banks around the world continue policies of massive monetary accommodation and quantitative easing. It's a hedge against slower economic growth. It's a hedge against declining paper assets. It's a hedge against global uncertainty and political and military stress. It's a safe-haven…More significantly as of late, it's a hedge against bank holidays when you can't get your cash. Can you imagine being turned away at your bank unable to get your money?” (“Gold Is A Hedge Against Many Things,” Kitco, 3/22/13.)

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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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