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Sunday March 31 Basel III comes into effect making Gold a Tier 1 asset class.

Strawboss

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#1
Under the previous rules, gold was rated as a Tier 3 asset (there are now only two Tiers), and had a 50% Risk Weighting Assessment (RWA).

This meant that an institution that held gold reserves on its balance sheet could only apply half of its market value towards its solvency requirements.

But under Basel III, monetary gold now qualifies as a Tier 1 asset, and is 100% valued for the purposes of banking viability.

Another point to consider is that SIFIs are now required to quadruple their reserves when compared to the previous minimum requirements before the banking crisis.

Essentially, monetary gold is now considered risk free. This significant development remains relatively unknown – for now.

More: https://palisade-research.com/gold-re-monetization-2019/
 

Strawboss

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#3
What effect will this have on the USD price of gold?
Banks will need to store PHYSICAL gold in their vaults.
How many do so currently?
How many will need to buy gold to have so they can store it?
The COMEX is leveraged at what 400:1?
Where is this physical gold going to come from?
If the gold MUST be bought...and supplies at current price are insufficient - what must happen in order for the banks to procure the gold they need?
 

Cigarlover

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#4
What effect will this have on the USD price of gold?
none, it just means the banks that have some gold have increased their balance sheets by a bunch as far as I can tell. Unlike real estate where the appraiser says, oh yes that house is definitely worth 489,00 and 6 months later the banks are foreclosing and at auction it brings 142,000.
Now banks have a real asset with real price discovery. Well sort of on the 2nd point anyway.
 

Cigarlover

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#5
Banks will need to store PHYSICAL gold in their vaults.
How many do so currently?
How many will need to buy gold to have so they can store it?
The COMEX is leveraged at what 400:1?
Where is this physical gold going to come from?
If the gold MUST be bought...and supplies at current price are insufficient - what must happen in order for the banks to procure the gold they need?
I'm pretty sure if they wanted any they would have bought it before today. Why would they go trade fiat for gold when they can use the fiat and leverage it to make new loans and scam the goyim?
 

Strawboss

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#6
none, it just means the banks that have some gold have increased their balance sheets by a bunch as far as I can tell. Unlike real estate where the appraiser says, oh yes that house is definitely worth 489,00 and 6 months later the banks are foreclosing and at auction it brings 142,000.
Now banks have a real asset with real price discovery. Well sort of on the 2nd point anyway.
Not technically correct. SIFI's are now required to have 4x the reserves they had before the 2009 banking crisis.

Another point to consider is that going forward - whenever the banks "reserves" are under stress...the only thing that needs to be done is to increase the price of gold and PRESTO...SIFI banks have additional reserves...without the need for QE.

Gold becomes the new QE...in perpetuity...never forget - physical gold is the only asset on the planet with no counterparty risk...

Incidentally - this is precisely the plan as I see it. They are going to use gold to extinguish debt...by managing its rise in order to keep SIFI banks solvent no matter what crisis may lay in store for us.
 

Fatrat

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#7
I love being my own bank, but where does silver or other than gold metals fit in?
 

oldgaranddad

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#8
I love being my own bank, but where does silver or other than gold metals fit in?
I think silver, platinum, palladium and such are still considered tier II commodities. Silver might be the exception to the rule eventually, since it has traditionally been used as the fractional facility of gold transactions.
 

Strawboss

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#9
Why would they go trade fiat for gold when they can use the fiat and leverage it to make new loans and scam the goyim?
Because they KNOW - better than anyone else - what happens to fiat when the music stops...

They KNOW fiat is a worthless construct - propped up only by confidence. Backed by NOTHING.


"Backed by the full faith of the US government"...

Does anyone think the world hasnt been paying attention to the "US government" over the years?
The smart people know the score. Not just in the US - but across the world.

Does anyone believe that China only has the gold they claim to have?

Gold is money. Everything else is debt.

A rich guy said that once...

A very rich guy...

He's dead now though...

I wonder if he knew Jesus?
I wonder if he regrets his choices while he was alive?
I wonder if he rejected Jesus...
 

the_shootist

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#10
Because they KNOW - better than anyone else - what happens to fiat when the music stops...

They KNOW fiat is a worthless construct - propped up only by confidence. Backed by NOTHING.


"Backed by the full faith of the US government"...

Does anyone think the world hasnt been paying attention to the "US government" over the years?
The smart people know the score. Not just in the US - but across the world.

Does anyone believe that China only has the gold they claim to have?

Gold is money. Everything else is debt.

A rich guy said that once...

A very rich guy...

He's dead now though...

I wonder if he knew Jesus?
I wonder if he regrets his choices while he was alive?
I wonder if he rejected Jesus...
They're positioning themselves for a soft landing, same as most of us!!
 

Bottom Feeder

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#11
I wonder if he knew Jesus?
I wonder if he regrets his choices while he was alive?
I wonder if he rejected Jesus...
You just gotta do that, don't you...
I know, you're being obstinate playful unh, somethin or other there
but I like it anyhow.

Now about gold...

so when they start moving down the value of the fiat FRNs, at what point would it be in your best interest to cash in?
and if you followed it all the way down then you could cash in on the "NEW BUCKS" they came out with afterwards.
but...
and a big butt — where does the taxman come in?

BF
 

TAEZZAR

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#12
They're positioning themselves for a soft landing, same as most of us!!
Ya, BUT, they have the throttle lever in their hands, we have hopium.
 

GOLDZILLA

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#14
I wonder if they are doing this to get physical gold built up inside our borders (without having to buy it for themselves) that they can confiscate if it becomes "necessary".
 

Strawboss

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#15
They don't. Only Gold counts the rest is playful bullshit.


. View attachment 127464
I will buy all silver at 50% of spot value. As Irons has stated - its just playful bullshit so it has no value....

Now that I think about it...considering the gravitas that I know other deplorables here accord Irons' opinions...

40% of spot price for all silver...

Offer expires Sunday at midnight.
 

<SLV>

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#18
So, now banks only need half as much gold to get the same amount of reserve backing?
 

the_shootist

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#19
Ya, BUT, they have the throttle lever in their hands, we have hopium.
We're not completely powerless to acquire some of the shiny metal but you're right, they certainly control the narrative. I don't equate bullion value to FRNs. My feeling is no matter how many FRNs are 'assigned' to gold on a daily basis, its real value stays constant and it serves the purpose of preserving wealth. Stacking bullion doesn't make you rich; it assures that, as long as you hold it, you're not suddenly poor!
 

Bottom Feeder

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#20
Looks to me like as soon as they made that announcement everyone pulled outta gold and put their money on palladium.

BF
 

TAEZZAR

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#21
Looks to me like as soon as they made that announcement everyone pulled outta gold and put their money on palladium.

BF
Not me, I still have my 2 AE's :secret:
 
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#22
@ the OP

that LINK redirects to https://palisaderadio.com

I tried two different computers each of which use different Operating Systems & different Browsers .... Hmmmmm

the following
https://webcache.googleusercontent....-monetization-2019/+&cd=3&hl=en&ct=clnk&gl=ca

seems to contain OP text .... it is from November 2018,
however, it represents mere OPINION and does not reference any bis . org documentation

therefore

I deem the entire " story " associated with Basel III with regard gold to be HYPE .
I spent a short amount of time looking at www. bis. org
I did not find a Basel III document that specifically used the word gold

Comments ??
 

Strawboss

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#23
@ the OP



that LINK redirects to https://palisaderadio.com

I tried two different computers each of which use different Operating Systems & different Browsers .... Hmmmmm

the following
https://webcache.googleusercontent....-monetization-2019/+&cd=3&hl=en&ct=clnk&gl=ca

seems to contain OP text .... it is from November 2018,
however, it represents mere OPINION and does not reference any bis . org documentation

therefore

I deem the entire " story " associated with Basel III with regard gold to be HYPE .
I spent a short amount of time looking at www. bis. org
I did not find a Basel III document that specifically used the word gold

Comments ??
Here is a document from the Bank of International Settlements defining minimum capital requirements for Basel III...

https://www.bis.org/publ/bcbs128b.pdf

At the bottom of page 26 - footnote 32 says:

"However, at national discretion, gold bullion held in own vaults or on an allocated basis to the extent backed by bullion liabilities can be treated as cash and therefore risk-weighted at 0%".

There are a total of 27 references to gold in the document...

Interesting to note is the fact that the BIS views gold as a currency - NOT a commodity - and on page 182 it specifically exempts gold from the commodity reporting requirements even though it includes all other precious metals...

Let there be no doubt that the banking system views gold as an asset of the highest order.

Anything else I can assist you with?
 

AguA

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#24
https://www.bis.org/bcbs/publ/d424.pdf

Document of Dec 2017 on Page 28 -
14. Other assets
95. The standard risk weight for all other assets will be 100%, with the exception of exposures mentioned in paragraphs 96 and 97.
96. A 0% risk weight will apply to (i) cash owned and held at the bank or in transit; and (ii) gold bullion held at the bank or held in another bank on an allocated basis, to the extent the gold bullion assets are backed by gold bullion liabilities.
 

Strawboss

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#26
Thank you for the references
You are welcome.

If you wouldnt mind...in the future - if you deem something I post to be "HYPE" because you spent "a short amount of time" researching and "didnt find anything"...

Please try to contain your cynicism...it was dripping pretty fierce.

:beer:
 

Ragnarok

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#27
Banks will need to store PHYSICAL gold in their vaults.
How many do so currently?
How many will need to buy gold to have so they can store it?
The COMEX is leveraged at what 400:1?
Where is this physical gold going to come from?
If the gold MUST be bought...and supplies at current price are insufficient - what must happen in order for the banks to procure the gold they need?

There is always enough gold - at the right price.

R.
 

bern

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#28
This is a very confusing story. The best article I've found on the subject explains:
...
Gold under Basel II rules was treated as either Tier 1 or Tier 3 capital, since the BCBS stipulated that “at national discretion, gold bullion held in own vaults or on an allocated basis to the extent backed by bullion liabilities can be treated as cash and therefore risk-weighted at 0%.”

Basel III rules abolished the Tier 3 capital class, and all assets fell under either Tier 1 or Tier 2 capital. In Basel III, gold’s liquidity haircut is increasing to 85% from 50%. This percentage is used to help calculate a so-called liquidity buffer known as the net stable funding ratio (NSFR) that all banks must hold from 2018. The higher NSFR, the more funding is needed to meet the overall NSFR requirement.

However, the announcement of the US Federal Deposit Insurance Corporation (FDIC) made on June 18, 2012 and adopted on August 30, 2012 states that “A zero percent risk weight to cash owned and held in all of a banking organization’s offices or in transit; gold bullion held in the banking organization’s own vaults, or held in another depository institution’s vaults on an allocated basis to the extent gold bullion assets are offset by gold bullion liabilities.” So gold was considered riskless in the US under Basel II rules and recommendations, and it will remain this way under Basel III provisions. The announcement also states that “the final rule defines financial collateral as collateral in the form of: (1) Cash on deposit with the banking organization (including cash held for the banking organization by a third-party custodian or trustee); (2) gold bullion; …”.

The European Commission did not automatically consider gold a riskless asset, but charged the European Banking Authority (EBA) with the task of identifying which assets are to be legally deemed riskless. However, the European Parliament expressly pointed to gold as a highly liquid asset that should be taken into consideration by the EBA. The EBA, in its report of December 2013 on appropriate uniform definitions of extremely high quality liquid assets (Extremely HQLA) and high quality liquid assets (HQLA) and on operational requirements for liquid assets, states that “neither equities or gold were found to qualify as assets of high liquidity and credit quality as they failed on the price volatility criteria.”
...
http://bmg-group.com/gold-zero-risk-monetary-asset/

This report from late January seems to confirm that the LBMA is worried about a liquidity crisis in the London gold trading if the NSFR has to apply to European banks that trade on their platform:
European finance ministers have rejected a proposal to ease new liquidity rules for banks trading gold, the London Bullion Market Association (LBMA) said.

The industry says the planned rules could force some players out of the market. Due to take effect in the European Union around 2022, they form part of regulations known as Basel III designed to make banks more stable and prevent a repeat of the financial crisis a decade ago.

The rules treat physically traded gold like any other commodity, requiring banks to hold more cash to match their gold exposure as a buffer against adverse price moves.

The LBMA says they are unnecessary, costly and would disrupt London’s bullion clearing system, which settles gold transactions worth around $23 billion a day.

EU finance ministers rejected a proposal by the European Parliament to lower the percentage used to calculate the liquidity buffer that banks must hold to 50 percent from 85 percent.

Instead, the European Banking Authority (EBA) will examine whether to lower the percentage or exempt precious metals from the buffer, known as the net stable funding ratio (NSFR), the LBMA and the European Council said.

“We are still optimistic,” said the LBMA’s general counsel, Sakhila Mirza. “While we were hoping for that 50 percent, ultimately our aim has always been getting an exemption.”

The LBMA, whose members include major gold refiners and bullion-trading banks, says gold is liquid enough not to need an additional liquidity buffer for clearing and settlement and short-term transactions.

It says the rules could mean a number of banks stop trading or settling gold, curtailing market liquidity. London is one of the world’s biggest bullion markets.

Mirza said the review was likely to last two years. The EBA will then make recommendations which would have to be approved by the European Commission, parliament and council of ministers.

She said the LBMA was preparing to lobby the EBA and that data the LBMA began publishing last year showing for the first time how much gold and silver trades in London each day would help convince the EBA of the need for an exemption.

While Britain plans to leave the European Union this year, the EU’s approach is likely to inform how Britain applies the Basel III requirements.

A European Council official said the EBA had been tasked with reviewing the NSFR requirements for precious metals and did not comment further.
https://www.reuters.com/article/us-gold-regulation-nsfr-idUSKCN1PI12A
 

oldgaranddad

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#29
So far nothing has happened. Probably what has occurred is that all these banks were issued waivers or extensions allowing them to accumulate the gold at a leisurely pace so as not to jack up the price of gold in the market.

As with almost any government or quasi-government agreement when there is a hard and fast rule there is always exceptions and loopholes.