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.

The breadth and scope of a bull market depends on the number of people following the market and able to participate. The more people following the market and able to participate, the greater the potential of the market to reach unbelievable heights, as did the great gold-silver bull market of the 1970s, which climaxed January 20, 1980, with gold hitting $850 and silver $50.

Today, with gold already having traded above $1,000 this year, $850 gold may not appear high, but for the 1970s $850 was astronomical. In 1973, when CMIGS was formed specifically to retail silver bullion to Americans, gold was trading below $100. (Silver was the product in 1973 because then it was illegal for Americans to own gold bullion. Americans effectively regained the “right” to own gold bullion January 1, 1975.)

Before gold made its 1970s’ move, a common question was, “How high do you think gold will go?” The standard answer was $300. Frankly, no one had any idea that gold would hit $850. For some unknown reason, $300 became the standard answer. But, as it turned out, $300 was far short of the top.

(Not all prognosticators failed to predict extremely high numbers for gold in the 1970s. The Aden sisters predicted $3,000 gold, but considering how far that prediction was off the mark, let’s say that few forecasters foresaw how high gold would eventually go.)

As for silver, there were not a lot of rash predictions. At the time, an abundance of silver lay in precious metals warehouses around the world. The U.S. Strategic Stockpile, for example, still held 139,000,000 ounces. The fear of sales from the Strategic Stockpile hampered predictions of high silver prices. In May 1973, Merrill Lynch published a “Situation Report” that predicted $2.75 - $3.00 silver “within the next 12months.” In that report, ML hedged its prediction by warning of “pending sales from the U.S. Stockpile assuming that they take place.”

In the 1970s’ gold-silver bull market, the sources of information about gold and silver were limited. If you wanted information about gold or silver, you’d head for the local library where you could spend hours trying to find relevant data. Further, you usually had to depend on Establishment publications.

Rarely does the Establishment present accurate, reliable facts, especially when it comes to investments. During my life, I’ve seen Establishment reports on subjects about which I knew something that were so far off that mark they were laughable. Often, Establishment reports are suspected “plants.” In my April 30 blog post, I questioned a Reuters’ article about silver.

With the advent of the Internet, however, things changed – and in a big way.

Today, the first resource for information on just about anything is the Internet. Plug gold into Google, and you get 886,000,000 pages to view, which are too many and too general. Change the search to gold coins, and your choices are reduced to 3,700,000, and you get more specific information. Still too many? Search for gold investments and get 400,000 hits. But, say you’ve heard that the Krugerrand is the best-known gold coin in the world and also carries the lowest premium of the modern gold bullion coins, then google Krugerrand and get 298,000 choices of pages to review. (By the way, if you search the Internet, there’s a 69% change you’re using Google, 17% chance it’s Yahoo!, with MSN, Ask and AOL fighting over the scraps.

According to Internet World Stats, some 1.4 billion persons are connected to the Internet and, therefore, have instant information about investing in silver or gold. Further, because of the Internet, potential investors wanting gold investment information are not limited to the publications that libraries choose to house, which are almost exclusively Establishment publications.

For example, the World Gold Council’s website, www.gold.org, contains a plethora of data about gold, everything from its history, to production and usage, to who owns it. Want to know how much gold the world’s central banks claim to hold? That data is found there.

Like to know more about silver? Visit www.silverinstitute.org, the website of The Silver Institute, a nonprofit association that “serves as the industry’s voice in increasing public understanding of the many uses and values of silver.”

Want to learn what a 34-year veteran of the gold-silver bullion industry has to say about buying gold and silver? Visit www.cmi-gold-silver.com. Our website has been declared by some visitors to be best on the Internet for basic information about what form of gold or silver to buy.

Although I’ve chosen only three resource sites, there are literally thousands of sources of information on the Internet about gold and silver, which means that 1.4 billion potential investors have easy access to information about gold and silver. Because of the Internet, this gold-silver bull market has the potential to dwarf the bull market of the 1970s.

Yesterday, gold fell $26.70 in the cash market for a 3% decline. Silver suffered a 3.35% fall. The declines added to gold’s and silver’s losses since the middle of March, when they hit decades-high prices. (Actually, gold hit a record high, but silver is still far short of its 1980 high of $50.) Gold’s mid-March through June 10 decline: $134.50 for a 13.4% drop. Silver slipped $4 for a slightly larger decline of 19.3%.

Silver suffers bigger declines in falling markets but enjoys bigger gains in rising markets, which is to say that silver is more volatile than gold.

Big declines are enough to send new gold/silver investors back to the stock market. However, veterans of the precious metals markets know that large, sharp movements, up and down, often come on meaningless news. Since the first of the month, there has been talk of Treasury Secretary Henry Paulson’s frequent comments about a “strong dollar.”

Such talk is utterly ridiculous in the face of the U.S. fiscal policy of massive deficit spending and interest rates that are artificially depressed by the Fed. Still, what flies in the mainstream media affects gold and silver prices.

Veteran precious metals investors also know that gold and silver prices are seasonally low during the summer months. So, with gold and silver having suffered significant losses since their March highs, the worst may be behind us.

Still, with 2-1/2 months to go before summer ends, gold and silver could see additional sharp moves to the downside. And, they may see sharp upside moves, such as today. As this is written, gold is up $10 and silver $.20.

Investors thinking of adding to their gold and silver positions should take advantage of the traditional summer price weaknesses. Remember also: unless you are the luckiest person in the world, no matter when you buy gold or silver prices will go lower before they go higher.

I tell clients that investing in gold and silver is akin to playing football. If you’re not prepared to get knocked down, don’t play. Prices will fluctuate lower before they go higher. You just have to pick an entry level and buy. A year from now you’ll be happy you did; two years from now you’ll be delighted. This is a big gold/silver bull market, and it has a long way to go.

“A soaring gold price is a vote of ‘no confidence’ in the central bank and the dollar. This certainly was the case in 1979 and 1980. Today, gold prices reflect a growing restlessness with the increasing money supply, our budgetary and trade deficits, our unfunded liabilities, and the inability of Congress and the administration to rein in runaway spending,” wrote Congressman and Republican presidential candidate Ron Paul in a commentary published on lewrockwell.com titled What the Price of Gold Is Telling Us.

Ron Paul’s piece is enlightening and provides evidence that he is the only presidential candidate who understands the relationship of money, banking, deficit spending and the dire circumstances in which America finds itself. The time spent reading Paul’s piece is time well spent.

Ron Paul’s piece is a general and accurate condemnation of central banking and paper money. However, I suspect that gold topping $1,000 last week was not the result of the people’s sudden recognition of the evils of central banking and paper money but more specifically concerns about the stability of the nation’s financial structure. The Fed’s bailout of Bear Stearns, Wall Street fifth largest investment banking firm, became front page news last week.

The Arizona Republic, Arizona’s largest newspaper, made the Fed’s bailout of Bear Stearns its lead front page article Saturday with this headline: “Fed aids bank to quell panic.” Can you believe that, a major newspaper reporting a bank panic? Perhaps that’s why gold topped $1,000 and silver $20.

In a related article in The Republic’s Business Section titled “JPMorgan, Fed move to salvage key bank,” a professor from the Graduate School of Business at the University of Chicago was quoted as saying “My guess is by next week, there will be rumors of other large, familiar institutions” that might be in financial trouble. If so, gold’s run is not over at $1,000.

It’s one thing for the Fed to bail out a bank that most Americans never heard of, but something entirely different if rumors of insolvency spread about more widely known banks. If that happens, this move in gold and silver is not over. However, if people come to accept that the Fed can and will solve all financial problems, then we may see a break in the precious metals prices run up.

Still, there this to consider, which is discussed in The Arizona Republic article: Tuesday the Fed may lower its discount rate a half-point, which would signal to the rest of the world that the Fed is less concerned with the strength of the dollar than it is with the efficacy of the country’s financial system. According to the article, lowering interest rates would put downward pressure on the dollar. A falling dollar, would, of course, mean further increases in precious metals prices.

However, there is always the possibility that gold’s recent run-up and dollar’s decline were caused more by concerns about the U.S. banking system than by concerns about the dollar itself. If so, then $1,000 gold may have already discounted the Fed lowering its discount rate one half-point. And, if there is the perception that a banking crisis has been averted, precious metals prices’ climb—and the dollar’s decline—could take breaks. Only time will tell. Regardless, this should be an interesting week for the precious metals.

Years from now, when we look back at the dollar’s demise, will the Fed’s bailout of Bear Stearns may turn out to be one of the smaller problems faced by the Fed, or will it be pivotal? These are truly times to be invested in gold and silver.

Kitco.com, which is renown among gold and silver investors for feeding to the Internet precious metals spot prices, recently posted this notice on its site:

Metal price changes are now based on closing prices at 5:15 PM NY time Mon-Fri.

The notice has caused some confusion on the part of many precious metals investors and deserves clarification of just what it means.

The header at the top of Kitco’s All Metals Quote page reads New York Spot Price, which suggests that the prices come from New York. They do not. The prices are fed from the Chicago-based Globex Exchange, which is an Internet trading platform. The Globex is owned by the Chicago Mercantile Exchange (CME), the world’s largest commodities futures exchange.

However, The New York-based COMEX is the best-known exchange among gold and silver investors because that is where gold and silver have traded for decades. When investors think New York Spot Prices for gold and silver, they automatically think that prices are coming from the COMEX. But, from Kitco’s site, gold and silver prices are coming from the Chicago-based Globex Exchange.

The 5:15 PM NY time adds to the confusion because gold and silver investors have long known that the New York market closes at 1:30 p.m. EST. (Actually, gold closes at 1:30 p.m., EST, and silver at 1:25 p.m.) So, what’s with the 5:15 PM NY time to which the Kitco site refers?

The Globex trades Sundays through Thursdays from 6:00 p.m. EST to 5:15 p.m. EST the next day. So, 5:15 p.m. EST is a closing time for the Globex, but the COMEX still closes at 1:30 p.m. EST (silver at 1:25 p.m. EST), and the COMEX remains an important futures exchange for the trading of gold and silver despite growing importance of the Globex. The COMEX is an “open outcry” exchange where live traders execute orders for customers and for themselves. The Globex is an Internet exchange where trades are effected by traders using computers, such as the one on which this blog post is being written. The Globex is very impersonal while the COMEX requires dealing with persons. In time, the COMEX, I suspect, will go the way of the dinosaurs. However, the COMEX will not go away without a fight for it is a cash cow for the COMEX traders.

Of no significance, one page on the Globex website calls the 5:15 p.m., a “closing,” while another page says that there is “a 45-minute break each day between 5:15 PM and 6:00 PM.” Regardless of whether 5:15 p.m. represents a “close” or a “break,” the Globex does not trade between 5:15 p.m. EST and 6:00 p.m. EST, Mondays through Thursdays. In effect, gold and silver trade on the Globex nearly 24 hours a day, except weekends.

Do not confuse the Globex, a futures exchange, with the spot market, and think that you cannot buy and sell gold or silver while the Globex is not trading. The products that CMI Gold & Silver buys and sells are based on the spot market, which is greatly influenced by prices on the futures exchanges, but are not “controlled” by the futures prices. The spot market, also called the cash market, calls for delivery and settlement with 48 hours. The Globex is a futures exchange with delivery and settlement “in the future,” depending on the contract month. The spot market operates anytime a dealer will quote a price. The spot market is definitely open while the Globex is closed. In fact, the spot market is open Saturdays but CMIGS is not open Saturdays.

Further, to the recipients of our Daily Prices, we will continue to email Daily Prices based on the close of the New York markets. Often, significant price changes and trading occur on the COMEX, and it remains, at this time, an important market for gold and silver.

Be reminded that our Daily Prices are “spot prices,” and not futures markets. Often we have callers wanting to know why our prices are different from price seen other places or heard on the news. I can’t say here, for I don’t know all the other sources. Sometimes, though, I know that news outlets will report “trading in New York” but not disclose whether those prices are from futures exchanges or are spot prices.

Finally, it is important to know that there is no final authority on “spot prices.” Major dealers often differ on what they call spot, but the differences are usually small. Often, though, those differences are enough that callers demand to know why our spot prices are different from Kitco’s. Our spot prices may differ from Kitco’s for two reasons.

One, we have to use the spot prices of the wholesalers who supply our coins and bars, and, frankly, those dealers could not care less what Kitco calls spot. Two, the spot prices that Kitco feeds to the Internet sites, including the “spot prices” on our 24-hour graphs, are the bid side of Kitco’s prices. See Kitco’s All Metals Quote page to see that Kitco has bids and asks for the metals it quotes.

Regardless of the small discrepancies, Kitco provides a great service to the precious metals investors by feeding its spot prices to website throughout the Internet.