Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold gained another 0.4% as deepening worries about the eurozone debt crisis spurred more safe-haven demand. The parliament of Cyprus today rejected the EU�s bailout proposal requiring the expropriation of up to 10% of citizen bank deposits in exchange for $13 billion in financial aid. With no viable alternative to prevent default, the debt-strapped nation may now face what Cypriot President Nicos Anastasiades called the �indescribably misery� of a collapse in its banking sector.

Although Cyprus accounts for a mere half-percent of the eurozone economy, fears are growing that its default could trigger the spread of debt-contagion, plunge the region more deeply into recession, and even undermine the viability of the euro itself. The euro fell to a three-month low against the dollar as investors sought protection. Gold brushed $1,615, its highest level in three weeks, before slipping back to close above $1,611. It was gold�s fourth consecutive winning session and eighth in the last nine. Silver finished 0.1% lower. Platinum lost 1.5% while palladium tumbled 3.9%, its largest drop in four months, after reports that Europe�s car market contracted by more than 10% in February. The sister metals are widely used in automobile catalytic converters.

April gold gained $6.70 to $1,611.30; silver slipped less than 3 cents to $28.84; April platinum delivery fell $19.60 to $1,555.40; June palladium tumbled $29.75 to $735.20 an ounce.

Bloomberg reported today that accelerating demand for physical gold in India is causing banks to have difficulty funding credit growth. With inflation running at 9% over the past three years, Indians are looking for ways to prevent the erosion of their savings. Instead of depositing into banks, they are increasingly buying physical gold, which means banks have less money on hand for loans. Indians have accumulated some 18,000 tons of gold in coins, jewelry, and other forms, worth around $1.1 trillion, whereas the entire banking system of India holds only slightly more, at $1.35 trillion. According to recent World Gold Council statistics, Indian gold purchases jumped 41% in the fourth quarter of last year, after three straight quarters of decline, and are expected to rise by 11% overall in 2013.