Gold and silver bulls will be walking round with smiles on their faces after three months of frowns.  Bears will be nursing sore bank balances

In a move which left the bears reeling, the yellow metal was recording a supercharged day as the dollar weakened, the financial crisis put more major institutions under downgrading scrutiny.  In a matter of a couple of hours the gold price shot up almost $50 to over $830, having languished in the $740-$780 range for the previous week.  From this point it steadied a little and refreshed moved on up touching $870. Oerall the increase has been around 11 percnt as we write.At the time of writing it looked poised to rise even further.

What is more the metal appears to have shaken off the oil price correlation stranglehold for, although oil also gained, in comparison with the gold surge it remained comparatively static in the $93-95 a barrel range befor emoving up to $96 on gold's coat tails.

As for the more volatile silver; in percentage terms it managed a 14 percent rise of nearly $1.50 - said to be the highest intra-day increase in around 30 years.

 

Losses among investment banking stocks and doubts about the US Fed's rescue of AIG have sparked a flight to safety.  This has no doubt been added to by fears over the financial stability of Goldman Sachs and Morgan Stanley and the news in the UK that Lloyds TSB is in talks to take over the country's biggest mortgage lender, HBOS, along with equally depressing financial sector news elewhere in the world.  This truly is a global problem and the financial chickens are coming home to roost big time.

Perhaps, not before time some may say, financial institutions are recognising gold's defensive properties in times of market turmoil - a position already taken by numerous individual investors who have almost stripped the dealers bare of gold coins and small bars around the world.

Technical factors (chart breakots and computerised tades) and short covering are also said to be contributors to the inordinately rapid rise in price.

The gold market will now be being watched very closely over the next hours and days to see whether the upsurge is shortlived, or whether gold can return rapidly to its earlier heights, all reflecting an extremely fast change in sentiment.

The scenario which is unfolding is a scary one for the man, or woman, in the street.  A financial meltdown on the scale the gold and ilver price rises suggest does the majority of people no good at all as life savings crumble.  One hopes that this panic stage is relatively shortlived.