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March 28, 2013

Release Date: 
Thursday, March 28, 2013

Gold fell below $1600 on the New York Spot Market on technical selling. Silver was also lower falling nearly 1%. Nonetheless, a majority of analysts polled by Kitco see higher prices fueled by safe haven buying: "Several participants cited the continued economic mess in the eurozone as supportive for gold prices and for gold's safe-haven properties." ("Gold Survey: Majority Of Survey Participants See Higher Gold Prices Next Week," Kitco, 3/28/13.)

Cyprus banks reopened today but withdrawals were limited to the equivalent of $383. The European Central Bank reported Cypriot banks lost 1 billion euros from depositors who withdrew funds in February due to uncertainty over the bailout. ("Cyprus Averts Panic Withdrawals as Banks Open With Cash Controls," Bloomberg, 3/28/13.)

Mark O'Byrne, director of research at  GoldCore Ltd., told Bloomberg TV that gold prices may reach an all-time record high of $2,400 per ounce. "The death or demise of the gold bull market is greatly exaggerated…Gold's value is its proven safe haven diversification throughout history… Gold's nominal high in January 1980 was $850 per ounce; in inflation adjusted terms that's $2,400 per ounce… we believe it is most likely would surpass this level… I think it will mostly likely happen within the next 12-18 months although there are absolutely no guarantees." ("Gold Prices May Reach Record High in 12-18 Months,", 3/28/13.)

Metals Analyst, Kira McCaffrey Brecht explained the need for diversifying into assets such as physical gold increases with the growing worldwide fiscal crises. "The case for physical ownership is heightened when investors look at the situations unfolding in countries around the world. Cyprus is not the only pointed example right now… Restrictions on what one can do with their bank deposits, restrictions on currency exchange and the risk of devaluation are being seen right now in Cyprus and Argentina. Fiat currencies are vulnerable and it only clarifies the focus on diversification into physical gold and the benefits that can offer individuals." ("Capital Controls, Devaluations and the Case for Owning Gold." Kitco, 3/28/13.)

The United States flew two nuclear-capable B-2 bombers to South Korea to participate in military drills following North Korea's threats to turn the U.S. ally into a "sea of fire." Bruce Klingner, a senior research fellow for Northeast Asia at The Heritage Foundation and a former Korea Branch chief for the CIA, told USA Today, "Given North Korea's increasing threats against South Korea and the United States, including threats of nuclear annihilation, this is meant to deter and send a message that the United States is prepared to respond if things get hot." (U.S. sends bombers to South Korea," USA Today, 3/28/13.)

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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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