Montreal, Canada

This is truly an historical moment for gold and silver bulls.

For the first time since 2008, silver prices this morning show an opening bid of $20.81 an ounce, finally surpassing the closing 30-year high of $20.78 in March 2008. This price action vindicates any doubts about a false gold rally as “birds of a feather flock together. “ In this case, gold and silver have now confirmed this bull market is real and legitimate.

As if I had any doubts?

I’ve been a gold-bull since discovering how the monetary system was debased by central banks and the Fed after Nixon broke gold in 1971.

I’m not romantic about gold; but I’m stunned how central banks have compromised our purchasing power over the past forty years vis-à-vis inflation. It’s really a joke how they get away with this sort of thing. And still, the poor, unsuspecting investor out there doesn’t understand what gold offers or how it’s rapidly becoming an alternative currency since 2005; they just sit in paper currency and keep most of their assets under the auspices of one currency. Talk about financial suicide!

Paper money is now in a long-term bear market as hard assets like gold and silver come to fore as a store of wealth amid a bulging expansion of credit, desperate central banks attempting to grow the money supply, and the likelihood of broad based sovereign government defaults over the next few years.

I still believe we’ll end up in an inflation nightmare before this credit crisis is resolved.

However, central banks and their conduits – including the International Monetary Fund (IMF) and the Bank of International Settlements (BIS) – will probably try to cut gold down as we fly towards $1,300 an ounce and beyond. The IMF is sitting on a few hundred tons and can do some serious short-term damage to gold prices. I suspect this action won’t derail the primary trend anyway since emerging market central banks will absorb whatever the IMF sells.

Nevertheless, you can bet the IMF will come into play soon to cool off this rally. When they do, I’ll be a buyer once again.