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Banks buy Gold
Pinnacle Digest writes: Something big is happening in the banking sector which may result in a global surge in gold demand and banks buying gold.
The Basel Committee for Bank Supervision is arguably the highest authority in banking supervision. It is their job to define capital requirements and revise standards rigorously.
Bob Eisenbeis discusses circulating rumours that the Basel Committee on Supervision may modify its proposals for Basel III standards by moving gold asset holdings from Tier 3, to Tier 1. Tier 3 has a 50% risk weight, whereas Tier 1 has a 100% risk weight. Banks carrying risk would have to back it with increased levels of gold.
Some speculators have gone on to suggest this will be extremely bullish for gold as banks will have to increase their holdings dramatically if this change occurs. The hype surrounding this move is defunct by Bob as he explains the underlying costs associated with such a move by the banking sector. Different asset categories and liquidity characteristics each must hold are explained to give the reader clarity on this potential shift.
Could this be the catalyst gold has been searching for or at the very least the next short term leg up for the metal?
Read this article...