I was intrigued to come across the following quote on from Alan Greenspan on 9 September 2009:  'The rise in gold and silver is strictly a monetary phenomenon and is an indication of the very early stage of an endeavour to move away from paper currencies.'

That the previous figurehead of the world’s primary paper-money spigot, the Federal Reserve, would say such a thing in public is a surprising shot in the arm for gold and silver ‘Bugs’, who make much of the 5000 year historic use of gold and silver as money - the medium of exchange or ‘specie’.

The quote reflects that we are entering an systemic irredeemable currency crisis. The USDollar is weakening against most other paper currencies (see enclosed USDX chart) and gold and silver have broken out of their consolidation phases.

The unbacked paper merry-go-round is running out of gas and the implications are enormous for gold, silver and all tangibles (all denominated in the unbacked and depreciating global reserve currency).

Few challenge the nature of money when macroeconomic conditions provide support to speculation and leverage. Now, however, we find ourselves in a situation where fiscal policy, a car which has relied on a gentle downhill gradient to maintain forward movement, is hitting a considerable upslope with no petrol in the tank.

There are many reasons for the recent change in sentiment in gold and silver, but the most important one centres on a fundamental change in Asian thinking about gold.

It used to be difficult for Chinese citizens to buy gold or silver bullion; now there are myriad bullion dealers in China with the government recommending bullion-ownership on State TV.

This shift in cultural behaviour in China has profound implications for investors in our sector. The Chinese authorities appear to be trying to stimulate a shift in thinking domestically, and with precious metals production globally struggling to match demand, this is starting to look like a potent brew for a substantial move higher.