Gold Is & Will Always Be Secure - Now 0% Risk with New Basel III Rules

godcoin (58)in #money • 5 years ago

Recently, banks have been buying gold while the prices are lower, yet are attempting to "vilify" gold. Shotgun Economics reported that Western Banks, including those in Europe, are "about to experience some new and difficult requirements come March 31. And this is because Basel III will come into effect." According to the article, the Central Bank is at an all high time since Nixon's Presidency of buying gold because "their purchasing of gold may just be tied to the upcoming Basel 3 since holding the precious metal will not count against their capital requirements."

Source

Unsure of what these Basel rules are? The article summarized:

What is the relationship between Basel rules and gold? Basel rules are a set of recommendations on capital requirements for private banks. Bank assets are divided into several groups based on their perceived riskiness, with bonds and gold in the least risky category. Banks were required, according to Basel I rules, to cover 8% of their assets based on a special formula. The objective was that at least a part of the total banks' assets would be backed by assets, including gold, that were perceived as safe.

In Basel II rules, bank assets were divided into three categories: Tier 1 included assets perceived as least risky, and Tier 3 included assets perceived as risky. 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%." Seeking Alpha

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.

That's just what the Banks are doing, but what about what others think of gold? Last Thursday, Kitco reported that "managing director and head of Alternative Investments at Direxion", Edward Egilinsky, stated:

'If you're looking for a flight to safety, treasuries might be utilized in lieu of gold but with rates this low, that might represent more of a shift to gold now when you do feel some nervousness with what's going on in the global equities markets,' Egilinsky told Kitco News.

Egilinsky said that the Fed 'putting the brakes on raising rates' would put a ceiling on the U.S. dollar, which is positive for gold and silver.

'If you do have a stable or weakening dollar, that should represent some positive opportunity and positive price action for particularly gold and silver,' he said.

Since gold is at a 0% risk now, and gold and silver are looking good in the future, the value of this precious metal is worth more than any other fiat currency can and will ever offer. So, what does this have to do with cryptocurrency you might ask? Well, it has everything good to do with GODcoin! Since GODcoin will be backed by gold and silver you know your investment is now guaranteed to be secure and bound to make you prosper. Invest now while you still can!

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This article was authored by Judith Monte, @belovebelight

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