BIS to Reclassify Gold as a Tier #1 Asset on March 31, 2019! What is the Implication?

The Bank for International Settlements (BIS) is the Central Bank for all Central Banks.  http://www.bis.org  Their rules change behavior at the banks and the current Basel III rules will allow gold to be classified as a tier 1 asset (equal with a cash dollar). Gold was previously classified as a tier 3 asset. It will now be tier 1 (zero risk). Does this have some meaning for the price of gold and silver this next year?

 

My sense is that this Basel III rule system will create more demand for physical gold for many commercial banks and also for many central banks. Some 189 banks follow the rules established by the BIS. This should increase demand for gold as an asset of choice for many banking institutions. Tier 1 means that gold will be viewed as having favored ‘value’ status (and zero risk) for bookkeeping purposes.

 

Starting this April 1, 2019, we need to watch what happens in the gold/silver physical markets. If banks can hold gold and value this commodity as a tier 1 asset, this should increase the demand for physical gold (and also silver) and this could then create higher prices for these metals. This would be great for all the gold bugs who have lived with deeply suppressed prices for these past eight years.

 

The BIS website did not clearly show this new status for gold as a tier 1, but other websites do show this change in status. Here are a couple for your consideration:

https://www.crushthestreet.com/articles/breaking-news/central-banks-buying-most-gold-50-years

http://usawatchdog.com/

The interview with Andrew McGuire on usawatchdog.com covers the Basel III issue on gold. Check it out! Maybe we will witness a strong price change in gold and silver in 2019. Personally, this would be great for me. Enjoy!

 

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