Ordinarily, the summer is a slow period for the gold and silver markets.

Additionally, the summer is normally a period of low prices for gold and silver, and that is the case this summer. Both metals’ prices are significantly below what they were in March when gold topped $1,000 and silver $21. But, this is not a slow summer for gold and silver. Presently, there is more than normal interest in both metals.

One reason, undoubtedly, is the widespread fear that Bush administration has plans for military action against Iran. If so, that military action would most probably be bombings of Iran’s suspected nuclear facilities, which Iran asserts are for peaceful purposes but the Bush administration says hold the capabilities for advancing Iran’s uranium enrichment program, which is necessary for the building nuclear bombs.

However, there is speculation that covert operations inside Iran have already begun. Seymour Hersh, a regular contributor to The New Yorker on military and security matters, wrote for the weekly magazine a piece titled Preparing the Battlefield.

Additionally, Hersh was interviewed on CNN where he reasserted his position that covert operations inside Iran have begun. Hersh further asserts that the Bush administration is determined to see to it that before it leaves office, Iran has no nuclear capabilities.

What would be Iran’s most likely response if Bush bombs Iran? According to many military strategists, that would be the closing of the Strait of Hormuz, through which 17 million barrels of oil flow daily. If you think that the price of gasoline is high now, try calculating the price if approximately 20% of the world’s daily consumption of oil no longer can make it to the market.

If the Bush administration takes military action against Iran, gold and silver prices will remain active this summer, very active. Actually, just the talk of the Bush administration attacking Iran will keep people interested in gold and silver this summer. Seasonally, the summer has been a favorable time to do some silver and gold investing. This summer looks better than past summers.

Ron Paul has long opposed the concept of central banking and whenever the chairmen of the Federal Reserve System, the central bank of the United States, have had to testify before House congressional committees, Ron Paul has been a thorn in the sides of the Fed Heads. Ron Paul’s tête-à-têtes with former Fed Head Alan Greenspan became legendary.

Now, Ron Paul is going head to head (pun intended) with Ben Bernanke, Greenspan’s successor. With Ron Paul being the ranking member of the Domestic and International Monetary Policy, Trade and Technology subcommittee, before which Fed Heads are required to testify twice annually, Greenspan’s appearances become scheduled debates between the world’s biggest advocate of paper money and the Congress’ most knowledgeable critic of paper money.

With Greenspan, however, the confrontations were mostly reported by the print media and the public benefited little by sparse—and usually condescending—coverage of Ron Paul’s calling the Fed Head on the carpet. The media’s ridiculing of Ron Paul’s questions was based on this: why should the world’s most brilliant economist have to answer policy questions from a doctor from rural Texas? With Bernanke, however, things have changed.

Not fair and more balanced coverage, we don’t get that. Things are different because of technological advances. Ron Paul’s challenges to Bernanke are videoed and put on Youtube for the entire world to see. Take a look at the February 27 hearings. About five minutes.

If you have not set up your computer to view Youtube types of videos, install the necessary software, which is free. Youtube, and other sites, provide the means to break the Establishment’s control of what we see, hear and learn. Ron Paul’s taking Ben Bernanke to task is an excellent example.

The most often given reason for buying gold and silver by new investors is concern about the dollar. And, rightfully so. The dollar is in a precipitous decline in the foreign exchange markets, brought on by decades of deficit spending by our federal government.

The fedgov’s deficit spending really got started after President Nixon “closed the gold window” August 15, 1971, which meant that foreign governments could no longer turn in paper dollars and receive gold. Nixon effectively put the world on a monetary system based on paper.

Actually, Nixon “dropped the second shoe.” President Franklin Roosevelt put us on the road to a paper currency when he made it illegal for Americans to own gold coins and gold bullion. Regardless of how we got to this point, we are there, and we must deal with it: a worldwide monetary system based on paper, a useful but an inexpensive commodity.

The sad history of paper money is that when it is unlinked from gold or silver politicians print it until it is worthless. As the late Franz Pick, noted currency expert, said when Nixon closed the gold window, “The dollar is a dead currency. It is only a matter of time.” Now, it appears that the news is spreading about the dollar’s ill health.

Earlier today, CNN.com posted an Associated Press article about debt in America. It is a scary read. A ticking time bomb, the author says. The article reinforces why gold and silver are “the investments” for the times. Actually, they are hedges against a declining dollar, brought on by decades of deficit spending.

For those readers who want a really good piece on money and the dollar, read The End of Dollar Hegemony, a statement by GOP presidential candidate Ron Paul before the House of Representatives. Paul’s piece is one of the best I’ve read, showing that we have at least one presidential hopeful who understands money and the predicament our country is in.

Tourists to the Taj Mahal and other famous landmarks in India will no longer accept dollars for entrance fees. Indian officials blame the dollar’s decline in foreign exchange markets as the reason.

In India, the rupee, a currency rarely accepted outside India, is now preferred to the world’s primary reserve currency. This is further evidence of the damage done to our once proud dollar by massive federal deficit spending.

For years, analysts said that if the dollar dropped below 79 on the US$ Index it could spiral downward in a precipitous drop. Well, the dollar is trading below 79 and fears of a big dollar decline are starting to spread. And, rightfully so.

The dollar is in serious trouble because of decades of deficit spending and the running up of the national debt. Since Bush took office, the national debt has more than doubled. A declining dollar, of course, would be bullish for the precious metals.

James Turk, longtime monetary analyst, has posted telling graphs for gold, silver, the dollar, and the euro. Gold has broken to the upside out of a consolidation pennant that started in May and is now trading at its highest level since January 21, 1980. Yet gold receives little attention by the media, further evidence that we’re still in the early stages of this precious metals bull market.

Silver has not matched gold’s performance since March. Under performed is the term now widely used to describe silver’s price action. However, Turk notes that silver has broken above the downtrend line going back to the May 2006 top, supporting the position that gold’s uptrend is a significant event.

Turk sees the decline in the dollar as “relentless,” that downside momentum is starting to build, and that a rout could be ahead. He also notes that gold has broken out against the euro, which I consider strong evidence that gold is in a strong bull market.

Meanwhile, silverseek.com has posted a Ted Butler article on gold and silver. Butler is legendary in silver circles for his bullish articles on silver, which are always interesting. This article is especially interesting because he is short-term bearish on gold due to the large commercial traders’ short position in gold.

As he often does, Butler lambasts the bullion banks for their actions in the gold and silver markets. Manipulation is a word Butler often uses. He fears that the COT (commitment of large commercial traders) position in gold portends downside action. When it comes to silver, however, he has another view.

The COT in silver is not nearly as large as it has been in the past, evidence to Butler that the large traders are not as willing to take big short positions in silver as they once were. Still, he sees gold as vulnerable in the short run.

I don’t know what gold and silver will do in the short run, but in the long run I see them going higher, much higher. Before you jump of off gold because of Butler’s analysis, remember that when gold tacked on $300 from the fall of 2005 to May 2006, the large commercial traders held huge short positions in gold and suffered horrendous losses. During the same time, silver doubled in price from $7 to $14, and the bullion houses were short millions of ounces of silver, taking big losses there.

I suspect that the big bullion houses will suffer similar losses before this bull market is over because they continue to play the short side of the market, but this time? We’ll just have to wait and see.

Eight reasons for being bullish on gold

At the recent Denver Gold Forum, Dr. Martin Murenbeeld, chief economist of the Dundee Group of Companies, gave eight reasons for being bullish on gold. The first three had to do with the dollar.

The first is because monetary reflation is happening due to the liquidity crisis.

The second is the U.S. dollar’s continued devaluation.

The third reason is the excessive of U.S. dollar reserves in Asia. “Asia holds more than $3 trillion in exchange reserves but ‘next to nothing’ in gold reserves. If the nations would want out of those exchange reserves, ‘hopefully they turn to gold.’”

I have no idea why Murenbeeld said “hopefully.” Gold has been standard monetary reserve since paper currencies were developed. If the Asians want to turn their dollars into hard assets, gold is the logical choice. For those who think that the euro is the dollar’s replacement, remember the euro is only another paper currency, which can be created at will just like the dollar.