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January 1st 2013 - Game Changer for Gold

Posted by on 22 November 2012

On January 1st 2013 the latest edict from the Basel Committee on Banking, an elite group of financial rule makers who’s task it is to define capital requirements and banking standards, comes into play. The new rule will be that Gold is attributed with First Class Asset status in the banking world ie any gold that a bank holds will be counted 100% towards the collateral of that bank whereas currently they can only count 50% of their Gold holdings in their equity totals.

So what does this mean for Banks, well for the first time in over 40 years they will be able to rate the Gold they hold in their vaults as a First Class asset and will therefore be able to lend 100% against it, of course this also means at the same time they will now no longer have to hold as much government bonds or mortgage backed securities and let’s face it both of these have had their reputations tarnished over recent years. Thus it will be no surprise to see Bank’s significantly increase their Gold holdings relative to the other First Class assets that they hold especially as part of the new rules has stipulated that Banks must increase their First Class Assets from 4% to 6% of their overall assets.

This move attributes to Gold an equal status as cash, in other words it once again becomes essentially a currency. This is a massive development and yet the mainstream media seems hardly to be noticing such a huge and potentially game changing story for the importance of Gold.

It is not surprising that authorities are keeping fairly quiet about this as Central Banks are quietly going about the business of accumulating more gold into their coffers in anticipation of the new rules at year end and they certainly don’t want to be competing with all and sundry (for example you and me) during this process as they want to keep competition, and therefore price, down to a minimum.

For all we know this could well be the first move to return to some sort of Gold standard, something that we are constantly told would be impractical and will not happen. You can rest assured that if such a development was ever enacted the general public would receive no prior warning of it.

Is this new rule likely to lend itself to  a significantly higher Gold Price- well it is not very likely to cause the opposite effect now is it.Jan

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