Precious metals: the fundamentals.

A few of the Bloggers on Seeking Alpha doubted that there was such a thing. Fundamentals of gold? Or silver?

By fundamentals we mean the reasons why PMs will be more expensive in the coming months.

To consult the opinions of people knowledgeable in the field, one of the best places to consult is King World News. The people interviewed flesh out the reasons why PMs are going higher:

1. Western governments are carrying on a Ponzi scheme: governments have gotten the voters to accept govt handouts that are financed by borrowing and increasingly - by money printing;
2. Inflation is hitting people hard and that is the underlying motivation for the Arab Spring. "Benefits" are being phased out, the cost of living is increasing while jobs are harder to come by.Wages are not keeping up with inflation.
3. The Ruling Class is handing itself bonuses and high pay.
4. There is a resource scarcity as it costs more and more to produce needed materials. This is aggravated by the Chinese buying up all they can.
5. Decoupling the Dollar from gold has made it possible for the political class to spend without discipline.

Will there be more QE's? The consensus is YES. It might be called different, but the govt can't stop. The causes of hyperinflation are such that once a nations enters the path, there is no way out. Consider the US: the Dems want to increase the debt ceiling by 2T. They threaten US default if they don't get their way. A default could be the event to set off a PM rally not seen since 1980. But, if the debt ceiling is raised, it will fuel inflation and more printing as well. European countries are really behind the eight ball. Who will default first? Greece? Ireland? Portugal? Even the ratings of Italy and Spain are getting its trimmed, which will increase the cost of financing their debt.

Attempts to rein in the deficits will bring demonstrators into the street such as the "Arab Spring." In fact, Gerald Celente (in the Summer Trend Journal) predicts revolts by the Summer or at the latest by the Fall.

As the extent of the disintegration of the Western financial system becomes known, PMs will rally. When? This Summer. It is not known what will be the catalyst that sets things off.

As for the gold and silver miners, these are grossly undersold. An ounce of gold identified by THM, for example, is valued at $40. Such companies may become takeover candidates. The large producers are getting flush with cash, but their production is dropping. A wave of consolidation looms for some of the smaller miners.