"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..." click through for the rest.