"But inflation invites increased interest rates and that is bad for metals."

Respectfully, my friend, I have to disagree quite strongly and based on historical evidence, though yours is a common misperception.

The most recent of best examples is that period of the late 1970's into the early 1980's. You may not be old enough to recall that back then, interest rates rose to unusually high levels of around 18 percent. At the same time, the price of gold rose from around 100 dollars per ounce to a record high of around 850 in a period of little over 4 years.

You see, it's not interest rates alone that effects inflaltion, it's the inability - for whatever reason - of the Fed to manage rates in regards to demands on liquidity. For this reason, it is believed that increasing rates can actually drive up demand for loans even as interest rates go up, because banks can earn more from lending than they can from sitting on their money, as they are now doing.

In other words, where there is little bank lending, there is likely to be little inflation. At present, banks are less motivated to lend to the public than they are to buy government bonds (which return next to nothing). They only way that will change is for interest rates to rise.

As we do not have a free market in this regard, we can only watch and wait.

...all in my opinion.

VP