From Dr. Alex Cowie (Diggers & Drillers) in Melbourne...

The saying goes that debt is the currency of slaves.

This makes slaves of most of us, but few more so than those in the US. We all know that the US is up to its ears in debt. The official figure for the national debt is $14 trillion, which is a ridiculous number however you cut it.

Call me sceptical, but I reckon the US government's statistical department is full of it.

So, I prefer to listen to a former professional blackjack gambler from Vegas: Bill Gross. These days he is the famous MD of PIMCO, which successfully manages hundreds of billions of dollars worth of bonds.

Gross estimates the actual figure for US debt is more like $75 trillion.

This is a guy you want to listen to. He has made many fortunes for himself and his clients by carefully investing in bonds. Government bonds, municipal bonds, and corporate bonds - from the US and all over the world as well.

Recently he sold his entire holding of US treasuries. The simple reason is that the tide of inflation is rising - and that is the nemesis of the bond investor. What good is a 3% return if money is losing 4% of its purchasing power each year? To be honest, I'm surprised he stuck around as long as he did.

Again - you can chuck the government stat's on inflation in the bin. You reckon Obama would get re-elected if the people knew the government was destroying 7% of their wealth each year? Real inflation is way, way higher than what the official statistics would have you believe.

I prefer to listen to John Williams at >

'...rising inflation is about to become serious, and that Wal-Mart was seeing cost increases starting to come through at a pretty alarming rate.'

When they sound the inflation alarm, you have to listen. We have been warning about this in the Daily Reckoning for ages, but it seems folks - we have arrived.

So what does Obama do?

There is talk of him raising the debt ceiling by 50% to $21 trillion.
Just stop reading for a second and take that in.

A 50 per cent raising of the debt ceiling?

If you aren't yelling at your computer, then you're not paying attention.

If this happens then we are witnessing the dollar's end game. Time to buckle up.

It would enable shenanigans that make QE2 look like some light stretching before a marathon.

So what to do?

As with most of the economic problems in this world, the solution is precious metals.

Gold, silver, and platinum group metals.

That same saying that says 'debt is the currency of slaves' actually begins with 'gold is the currency of kings, and silver is the currency of the free man'.

Never is that truer than now. As inflation gets a grip of the world's largest economy, precious metals' prices will soar.

The US-centric media doesn't seem to have noticed however that China and India are in fact the biggest markets for precious metals. And inflation is already well underway there - thanks to years of importing inflation-infected US dollars. Chinese inflation is already up to 5.3%, and Indian inflation has just hit 8.7%.

As editor of

And I'm not the only one.

Bill Gross has recently launched an equities fund that has most of its

It's a bit like finding out that your family GP is the biggest boozer of anyone you know. You know it makes sense - but it still comes as a bit of a shock.

Gold has been in a bull market for 10 years, and is basically a no-brainer. Buy gold bullion, buy good gold stocks, buy gold jewellery - just buy gold!

I think the faster returns are going to be made in silver though, if you don't mind taking on some more risk. Silver's performance was a bit slow for most of the last 10 years, but seems to be making up for lost time now.

The price is highly volatile as we have seen recently. The price may have fallen 33% in a month, but let's not forget it is still up 100% in a year.

Why the steep rise? It is all down to the tight fundamentals of the market. Most estimates point to there being just 1.2 billion ounces of silver bullion available in the world. This makes it twice as rare as gold bullion.

So my question is then - why is silver not twice the price of gold?
I took a look at the fundamental of the silver market in a recent width="448" />
Source: Zerohedge

Having an idea of what it might do in the short term is extremely important. And that's when having a seasoned technical trader sitting next to me comes in very handy indeed. Murray Dawes writes

Murray's current view is that silver will spend a few months settling at this current level, and could even fall to $30 first.