Gold and silver have crept quietly higher over the course of the last week, with growing signs of a shift in investor sentiment away from perceived safe havens towards growth or “risk” assets. The yield on the 10-Year US Treasury Note has been a notable indicator of this, moving from around 1.4% in late July all the way to 1.8% today. This is still below the yields seen in March, but the rapidity of the rise (coupled with the US dollar’s continuing struggle to gain momentum) suggests that markets could be in for a bullish spell.

Inflation expectations are also rising, which should tempt speculators back into the commodities sector. This should have a notably bullish impact on silver; it won’t take much in the way of speculative interest in the white metal to send it soaring higher again, as discussed by James Turk in his latest King World News interview. $50/oz by Christmas? Perhaps.

Rising prices will be partly a consequence of manmade phenomenon – the racing certainty that major central banks will be forced into more dramatic money printing escapades. It is also because of natural events: the fierce draught in the American Midwest that has forced crop prices to record highs. Either way, the result is the same – a jump in commodity prices, followed by a spurt higher in producer prices, and eventually a rise in consumer prices.

Gold was also helped yesterday by news that the Chinese government is interested in buying a controlling stake in the FTSE gold-mining company African Barrick Resources (LSE: ABG). This is just the kind of merger and acquisitions activity that gold mining bulls have long been talking about as a precursor to a bull market in the mining stocks (which have as a group underperformed gold bullion over the last decade).

All in all, things are starting to get exciting again in the precious metals markets.