another gold video, page-6

Tarmac

Even if Basel III made gold a zero risk weighted asset for banks (which they haven't), that wouldn't mean that the banks would rush off and buy gold.

When you (tazmac) buy gold, you spend your own money and presumably you are happy to accept the risk that prices might go down occasionally. I have no problem with that.

But banks are different.

When they spend money buying gold, the money isn't theirs. It belongs to depositors and shareholders. Naturally enough depositors and shareholders might have different ideas about the risk on gold. Depositors like to get their deposits back, and shareholders may not like their managers "going to the casino" with their capital.

As you are aware, banks are perfectly capable of taking stupid risks, and the purpose of the Basel capital accords is to discourage reckless risk taking by forcing banks to hold appropriate levels of reserves to cover potential losses.

Buying gold is not necessarily reckless risk taking, but it is risk taking. You can lose money. Banks may sometimes have a bullish view on gold and put gold on their balance sheet, but because the price of gold goes down as well as up, under the Basel accords they are required to put some money aside to ensure they can repay their depositors if the worst should happen.

Basel III won't change that.

Cheers