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albatrosss

21,495 Posts.

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17/05/21

17:30

Post #: 53229090
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Originally posted by wrcmad: ↑

"Gold after Basel 3 has extra roles it can be utilised for."No it doesn't.

I don't think you understand the ramifications of moving physical gold to a Tier 1 asset with 100% risk weight - under the current Basel III proposed rules gold is currently not assigned a risk weight for the purposes of assessing bank capital adequacy. Gold only figures into the calculation of the required net stable funding ratio (NSFR), which is part of the Basel III liquidity standards, not the capital standards.

In other words, physical gold will need to be backed 100% instead of the current 50%. This increases the cost of carry to banks, and encourages them to find alternatives. It is definitely not bullish for gold.

There are no changes proposed to the gold capital standards, so it's utility will remain unchanged.

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This is my understanding also. Some banks are already getting out of gold altogether.
Its going to be central banks that i believe are going to carry gold in a big way. Even bigger than now.
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