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Game Changer for Gold and Stocks

I am not preaching to the converted
however most if not all readers will know that the US banking system is in
trouble as evidenced by QE1, QE2 and now suggestions of QE3. Governments
would not offer or provide the monstrous bailouts and deposit guarantees
unless this was the case. The European bank has also taken steps to prop up
their banking system since 2008, with in excess of US$1.2T in new support in
the past 4 months. This is a global phenomenon made necessary due to the
gradual debt collapse, a deleveraging process that will persist for many
years to come.


This kicking of the can down the road is
all about buying time for the financial institutions to repair their balance
sheets. This expensive ‘time’ purchase is considered the only way
out by governments that don’t want a collapse on their watch and
because there has been a very real danger of a total collapse of the entire
financial system. The counter party risk of this intricately linked system is
highly dangerous thanks to the size of the debt, derivatives, credit default
swaps and now the bond market bubble. This is all key to understanding what I
am about to say about gold and how it fits.
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