The Gold And Silver Dam Breaketh

Ask precious metals' holders and chart technicians what in the last 6-8 weeks stands out in their mind and they will point to the breakout of gold and silver above areas which had contained them for almost a decade.

Gold rocketed without pause to $2,070. Silver, though still well below record nominal dollar highs, sliced through $26, which was supposed to be a lid on prices until next year.

A litany of "price pullers" we've long discussed in our essays – government deficit spending, lagging metals' production vs. exploding demand, and an almost complete absence of big discoveries have all played a part.

But these are relative symptoms. I believe that several new and hard to quantify root causes are set to become critical drivers in their own right.

The interplay of these new factors means that all bets are off in terms of how high, how violently up and down, and how vigorously the rest of this secular gold and silver bull run – over at least the next several years, will play out.

As Dorothy tells her dog Toto in The Wizard of Oz, after riding the tornado and landing with a bump... "We're not in Kansas anymore."

What follows are two "finishing touches" to this uber-bull narrative. The third element – a "capstone event" – took place in early August.

Combined with the "volcanic tremors" discussed above, these volatile elements should soon lead to "a pyroclastic explosion" in the price of gold, silver and the miners which produce them.

National Geographic defines my metaphor as,

"... a dense, fast-moving flow of solidified lava pieces, volcanic ash, and hot gases... extremely hot, burning anything in its path...Pyroclastic flows often occur in two parts. Along the ground, lava and pieces of rock flow downhill. Above this, a thick cloud of ash forms over the fast-moving flow. (It) can transform the landscape drastically in a short period of time.”

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