As I have made many comments on gold in my previous hubs, it may be appropriate to add some comments in light of yesterday's very large up-move in the prices of precious metals. The up-move of gold prices was near $90 per ounce and silver increased well over a dollar an ounce; both these increases were in the 11% to 12% range in one day.

Such rises are indicative of up-trends. Yesterday's increases mark the start of powerful moves in most precious metals because precious metals have proven to be safe harbors in times of monetary troubles. As more and more people realize that simple fact, the prices of precious metals will continue up. Look for prices to exceed earlier highs by big margins.

It is not usually a great idea to jump into a purchasing frenzy (which we may be seeing) because there are usually downward corrections when buyers calm down. On the other hand, when some real substance is behind a buying frenzy (or for that matter, a selling frenzy), it is appropriate to pay attention. In this case, a lot of people are realizing that more and more dollars are being (shall I say?) printed. The prices for gold, for other precious metals, and ultimately for most everything else is based upon perceived values. A few weeks ago, the perceived value for gold was based on the strength of the dollar, making gold and other such assets less valuable. Now, with recent "guarantees" by the USA government, dollars are being essentially created. Hence, that (continuing) creation of dollars is changing the perception regarding the strength of the dollar and a lot of people are reckoning that setting aside some "monetary" metal (gold) as a balance to paper money is a good idea.

My opinion is that setting aside some gold is not only a good idea but is probably vital to one's financial well being. Therefore, although I am not suggesting to people in general that buying gold is a good idea at this time, I am buying and I am telling my friends and family to do the same. If I were paid to give advice, I'd be telling everyone to get enough gold (or silver, etc.) to see them through a month or so of currency troubles. In fact, one of my first suggestions would be to buy silver bullion coins. But because I am not authorized to provide financial advice, I'll be keeping quiet.

When I say that having some gold, silver, etc., is vital to one's financial well being, I am essentially saying that sooner or later we may be "enjoying" a very serious inflation. Hope it doesn't come to that, but having some negotiable precious metals could be very satisfying. Having precious metals during a monetary crisis is somewhat like having fire insurance when your neighbors' homes are on fire. You hope you don't need it, but it's sure comforting to have! And to make the analog timely, it does seem that there are inflationary fires being set.

It doesn't take a lot of awareness to understand why this is happening. Simply, the US Treasury actively sells bonds without any payback plan except to roll them over. In concert, financial experts on Wall Street have created a monster which is further distorting the USA financial system and, correspondingly, distorting financial systems the world over. This is a matter, in the latter case, of greed taking over commonsense. If one truly evaluated the direction which the excesses were taking the system, cooler heads might have prevailed. However, when a person in charge of a financial entity can be rewarded to the tune of several million dollars for running that financial entity into bankruptcy, well, why not take the chance?! Only a few souls will suggest capital punishment rather than rewards for people who bring down pieces of the system (which is exactly what I suggested in recent E-mails to government representatives). So millions of dollars are rewarded to those whose greedy incompetence is ruining the financial system. Any damages to other peoples' finances are considered as collateral damage.

So, there we were. The USA economy has been happily spinning in orbit, relying mostly on the momentum supplied by previous decades of hard work and capital accumulation plus the magic of Treasury Bond debt (including sales to foreign entities). Now, however, excesses in the financial arena are putting major drags on the economy and we, collectively, are facing the dreadful moment of reentry into sustainable reality. Certainly, there will be many efforts to boost the orbit. Massive injections of fiat money has been and will continue to be made. However, my guess is that continuing failure will be the order of the season. Trying to boost the financial system is somewhat like trying to put humpty dumpty back together again.

Unlike disclaimers from several US Congress people and from a former Federal Reserve chief, I suppose that I do bear some (small) responsibility. I continued to support the financial system which was providing me with happy returns on my very modest investments. No, I did not buy a new house nor did I up my personal debt, but still I enjoyed some fruits of the excesses. To be frank, I thought that we had a couple of years before there would be questions about the viability of the system. The problem is that it's tough to time what are referred to as "black swan" events.

Regardless of the cause, dollars, bonds and other monetary symbols will eventually lose purchasing power. I say "eventually" because it takes a couple of years for monetary dilutions to be worked through the system. Maybe with events moving as fast as they do, the system will be "on the ropes" sooner rather than later.