Why the 2013 Gold Swoon?

Why the 2013 Gold Swoon?
Since late in 2011, gold has been in a “swoon”. First, it went down from the $1900s to about $1750 in early 2012. The possible reasons were: deflation; government manipulation to keep the dollar strong; or, a combination of deflation and manipulation. Since late in 2012, and still continuing, gold has been hammered. The possible reasons could still be the previously stated reasons. I have had a feeling for some time that these explanations in 2013 are inadequate. I had the strong feeling that powerful insiders had access to information that the dollar’s valuation would, for some unknown reason, collapse, and were powerful enough to drive the price of gold down so that they and their powerful backers could purchase the maximum amount of gold at the lowest possible price. But, as I stated, this was just a hunch.
Along came three blogs posted in 2013 by www.zerohedge.com regarding QBAMCO:

  •  “QBAMCY On The Fed’s Exit” 03/13/2013
  •  “QBAMCO On Unreserved Credit Growth And Imperial Constraints” 04-21-2013 (the article has a link for one to read the full article)
  •  “QBAMCO On Precious Metals And The Coming ‘Great Reset’” 04/29/2013

My attempt to summarize the three papers is as follows:
1. The FED is controlled by the big banks, and functions in a way that maximizes big bank profits.
2. Up to 2007, the U.S. was in an inflationary leveraging mode. Hence, the enormous debt build-up by consumers, and federal, state, and local governments. Banks took on a lot of risk, but were very profitable to key people via bonuses.
3. In 2008, the U.S. entered a deflationary deleveraging mode. This is a disastrous mode , and can be the death-knell for an economy. This is what the 1930s was all about.
4. Sometime since 2008 and after all kinds of “stimulus” or reflation, such as, QE 1, QE 2, etc., the U.S. entered an inflationary deleveraging mode. Armageddon was avoided, but the deleveraging did not bring prosperity.
5. Late in 2012, the big banks decided that a new course of action was needed to get the banks profitable. Always, one needs to consider that the FED is a tool for the bank’s goals. The need was to get back to the pre-2007 inflationary leveraging mode, and the prevailing course of action was not successful. What is needed is a shedding of debt by consumers, government, and business. A good way is to default on most of the debt via currency devaluation, and when the debt burden is sufficiently reduced, initiate a new monetary system based on gold in the Bretton Woods principle. This was a G-7 decision, and this is what QAMCO calls the ‘Great Reset’.
6. Thanks to the so called “stimulus”, the U.S. banks balance sheets are in good shape.
Europe through first austerity in the periphery and, now, by seizure of bank deposits
(the Cyprus fiasco) is getting the core country bank balance sheets in good shape. Next,
Japan under Abe is now acting as if it wants to significantly destroy the yen. Then, it
would be Europe’s turn. The last would be the U.S. QBAMCO thesis is that in the
second half of 2013, the U.S. banks will have engineered a dollar collapse. To insure
that the proper person then becomes the FED head and becomes the hero, Bernanke is
out. The likely hero will be Tim Geithner who will engineer the “Great Reset”. The
dollar will be significantly devalued, and the “new” dollar will be based on gold. (There
is a lot of speculation that China, in the same time frame, is planning to do the same
with the yuan.) With the dollar significantly devalued, debt issues in the U.S. will be so
minor, that a new inflationary leveraging period can take place, and, hence, bank
profitability sky-rockets.
If the QAMCO thesis is correct, it goes a long way in explaining the recent, sharp drop in the
price of gold. The entities that would have decided on the “Great Reset” are smart enough
to buy all the gold that they can, and also significantly drive down the gold price in order to
enhance the future profitability of their gold holdings. This would suggest that sometime in
2013, the banks will want the price to rise as high as humanly possible.
QAMCO’s thesis is coherent, and can be the explanation for what has happened and what
will happen in 2013. Several months ago, Marc Faber in an interview predicted major
financial problems in the latter part of 2013. Within the last two weeks, Faber stated that
he buys gold every month, and has purchased gold at the current low price. Financial
observers are starting to comment that something unknown but very important happened
in the latter part of 2012.
While I have absolutely no knowledge of when and how the dollar will collapse, the
continuous “printing” of money by the FED will eventually destroy the dollar, and the value
of gold will sky-rocket. It looks as if the smart money thinks the shit will hit the fan during
the latter part of 2013.
S.J. Kowalski, May 20, 2013

What Went Wrong? : A Tale of Out-Of-Control Global Banking.

We are suffering through a very serious credit crisis which is the result of the super-liquidity wave (the availability of massive amounts of money injected into the financial system in a short period of time, a wave, and which facilitates massive investments, whether sound or unsound) generated by the global banking system, and which, in turn, spawned numerous fragile asset bubbles. The current liquidity boom, which is in its terminal state, was bred by never-ending debt which, in turn, produced a whole series of booms: the LDC lending boom of the 1990s; the 1990s stock market bubble; the commodity and real estate bubbles; the securitization boom of assets ( i.e. real estate mortgages and credit card debt); the U.S. Treasury bond bubble; recycling of Japanese, Chinese, other Asian countries; Middle Eastern oil producing states trade surpluses, and, the 800-ponnd gorilla, the unfathomably massive derivative market. All of these bubbles are related to the monstrous mountain of debt accumulated by the Western world. This debt is so large that it can neither be serviced nor protected from default. It can be inflated away, and this seems to be the stealth course pursued by the global central banks. The 2007 credit crisis is symptomatic of the size and fragility of this massive liquidity injection, and its partner, the massive global debt. What went wrong was the massive accumulation of debt, whether public or private. This is nothing new – history keeps repeating itself. Global capitalism’s parasitic 200 year history shows eight such lending waves each followed by a serious economic crisis. The present crisis is arguably the worst, and, in the worst case scenario, could result in a catastrophic implosion of the world-economies along with their fiat currencies.  To read the entire essay, please CLICK the following link:

What Went Wrong-Final 6-06-23-2012

The Consequences of a Failed Monetary System: The Great Depression and The Great Depression II

 

Franklin Delano Roosevelt’s election to the presidency in 1932 and his subsequent New Deal administration was a revolutionary event for the United States, but was not an isolated event in global affairs. At the turn of the 20th century, the world experienced a collapse of its monetary system, the international gold standard, a collapse which reverberated worldwide, and especially in the 1930s, produced calamitous economic disintegration and revolutionary political changes.  To read the essay, please CLICK the following link:

The Consequences of a Failed Monetary System


Rise and Fall of the American Empire: Quigley’s The Evolution of Civilization Applied by S. Joseph Kowalski

This essay applies Carroll Quigley’s The Evolution of Civilization to Western Civilization and particularly to that of the United States.  This essay argues that: Western Civilization is still mired in the Age of Conflict; the United States became Western Civilization’s Universal Empire at the conclusion of World War II; Western civilization was not fortunate to have a fourth period of Expansion; and, the United States has a high probability of entering its age of Decay.  To read the essay, please CLICK the following link:

The Rise and Fall of the American Empire

 

Halloween in New Orleans

Mardi Gras and Halloween are especially fun times to visit New Orleans.  We timed our 2009 visit to coincide with JJ Grey & Mofro’s scheduled appearances at both the Voodoo Experience Sunday afternoon and Tipitina that evening.  Andrew plays the bass in this group.  Tipitina is the New Orleans musical venue made famous by Professor Longhair and takes its name from his blues number Tipitina. Mofro has a talented leader, JJ Grey, and excellent musicians. To read the essay, please CLICK the following link:

Halloween in New Orleans


The Kowalski Story

An oral history of a Polish immigrant family who, in the latter part of the 19th century, settled in northeastern Pennsylvania. John and Marya Kowalski left their home in the Polish Province of Poznan, which, at the time, was a part of Germany, and settled in Nanticoke, Pennsylvania.  Poland did not regain its sovereignty until the end of World War I.  To read the essay, please CLICK the following link:

The Kowalski Story

 

What Went Wrong? : A Tale of Out-Of-Control Global Banking

We are suffering through a very serious credit crisis which is the result of the super-liquidity wave (the availability of massive amounts of money injected into the financial system in a short period of time, a wave, and which facilitates massive investments, whether sound or unsound) generated by the global banking system, and which, in turn, spawned numerous fragile asset bubbles. The current liquidity boom, which is in its terminal state, was bred by never-ending debt which, in turn, produced a whole series of booms: the LDC lending boom of the 1990s; the 1990s stock market bubble; the commodity and real estate bubbles; the securitization boom of assets ( i.e. real estate mortgages and credit card debt); the U.S. Treasury bond bubble; recycling of Japanese, Chinese, other Asian countries; Middle Eastern oil producing states trade surpluses, and, the 800-ponnd gorilla, the unfathomably massive derivative market. All of these bubbles are related to the monstrous mountain of debt accumulated by the Western world. This debt is so large that it can neither be serviced nor protected from default. It can be inflated away, and this seems to be the stealth course pursued by the global central banks. The 2007 credit crisis is symptomatic of the size and fragility of this massive liquidity injection, and its partner, the massive global debt. What went wrong was the massive accumulation of debt, whether public or private. This is nothing new – history keeps repeating itself. Global capitalism’s parasitic 200 year history shows eight such lending waves each followed by a serious economic crisis. The present crisis is arguably the worst, and, in the worst case scenario, could result in a catastrophic implosion of the world-economies along with their fiat currencies.  To read the entire essay, please CLICK the following link:

What Went Wrong-Final 6-06-23-2012