PRECIOUS METALS BUZZ

February 16, 2013

"The silver market has finally confirmed a major breakout by closing above $21 per oz." said Bill Murphy, SR. Vice President of the IRA Advisor Group. "The market is beginning to recognize silver is way undervalued to other class assets and specially in the precious metals sector." For the year so far, silver has climbed about 10% while gold has gained 9.7%.

In a recent interview, Dr. Paul Craig Roberts, former Assistant Secretary of the US Treasury and a Wall Street Journal columnist. Roberts said one explanation for the current turmoil in emerging markets is related to the Fed's creation of increased liquidity. "All of the liquidity the Fed created," he said, "some of it flowed into the emerging markets and now that the Fed is indicating an end to Qualitative Easing, the money is flowing out and as it does, of course, it causes the sale of the currencies of those countries, so it plummets, which causes all sorts of financial chaos."

Silver is gaining support from investors seeking safety in precious metals amid the current market turmoil, reports Ira Iosebashvili for the Wall Street Journal.

"As long as you have concerns about the U.S. economy, there will be capital moving around, and some of it will inevitably find its way into precious metals," Peter Hug, director of precious metals at Kitco Metals, said in the WSJ article.

Well-known manager George Soros bought shares in Barrick Gold Corp, one of the world's top gold mining producers. Soros Fund Management, run by billionaire financier George Soros, added 6.3 million shares of Barrick Gold worth $111 million to its holdings. The firm also boosted its stake in the Canadian miner's call options.

New York-based Paulson & Co, led by longtime gold bull John Paulson, owned 10.2 million shares in the ETF worth $1.19 billion on December 31, unchanged from its holdings on September 30, a filing with the U.S. Securities and Exchange Commission showed on Friday. Paulson, which shot to fame in 2007 with a prescient bet against subprime mortgages, sharply cut its stake to 10.2 million shares in Q2 from 21.8 million in Q1, marking the first time the firm cut its gold ETF stake since the fourth quarter of 2011.

Estimated all-in production costs by Thomson Reuters GFMS above US$1,200oz. With estimated average all-in costs of production by Thomson Reuters GFMS surpassing US$1,200/oz,11 we expect that any sustained price reduction in gold may impede the ability of gold miners to maintain profitable levels of production. Further, the significant level of capital write-downs reported in 2013 could impair future production for some miners.

About $3 trillion has been erased from the value of equities worldwide this year amid a slump in emerging-market currencies and slowing expansion in China. The global turmoil reignited demand for precious metals after some investors lost faith in them as stores of value in 2013. Sales of gold coins by the U.S. Mint rose 63 percent in January to the highest since April, while silver purchases almost tripled.

"The correction in equities and disappointing economic data are pushing people to safe-haven assets," Tommy Capalbo, a broker at Newedge Group in New York, said in a telephone interview. The "ADP data did not meet market expectations, and people have started wondering whether the Fed will continue to taper."

"Precious metals are bouncing as the equity markets take a hit, and there is turmoil in emerging markets," Scott Gardner, who helps manage $400 million at Verdmont Capital SA in Panama City, said in an e-mail. "Gold and silver are attracting safe- haven buying"

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