First, in order to compensate for the diminishment of purchasing power that usually accompanies rising inflation, investors normally have demanded higher interest rates on their investment assets. This was particularly true in the 1977-81 era when inflation soared to almost 20% and interest rates rose to roughly the same level.

Fundamental information on gold and silver turned more to the bullish side this past month, and we can point to three particular items as the basis for that conclusion.