LBMA campaigns for gold to be Tier 1 asset for banks under Basel III
Posted on 20 September 2011 with 8 comments from readers
European central banks have become net buyers of gold for the first time in more than two decades, a significant sign that the role of precious metals in currency markets is not only being reassessed but actually changing, reported The Financial Times, while there also is a campaign afoot to include gold as a Tier 1 bank asset with the Basel Committee on Banking Supervision.
This week the London Bullion Market Association is meeting in Montreal, the biggest gold industry conference of the year. China, Mexico, Russia, South Korea and Thailand central banks are also net buyers of the yellow metal.
Tier 1 gold
However, the Basel III initiative is highly significant too because it would trigger a far wider use of gold within the banking system, not quite a return to the gold standard but the next best thing as far as demand for the yellow metal is concerned.
Presently Tier 1 assets include government bonds such as Greek bonds and a widening of Tier 1 to include precious metals is seen as a way of shoring up confidence in the banking sector with assets that do not require official rating because there is zero counter-party risk.
The Chinese central bank has openly called for gold to be a part of a basket of assets used to support a new super-currency from the IMF, another indication of mounting support at the highest levels for giving a greater role to gold in the global economy, and complained about the ongoing gold price suppression in cables revealed by Wikileaks (click here).
Silver too?
There is presently no pressure for silver to return to its old monetary role. Nonetheless if gold becomes more important then it would be logical to include silver, if only because the additional demand for gold would put considerable upward pressure on the gold price and silver is an alternative precious metal.
That is where the interest comes for gold and silver speculators of course. There is not sufficient gold in all of the world, for example, to back the US dollar fully with gold, and to do so estimates of the gold price range from $10-12,000 an ounce.
Silver is even rarer than gold with far smaller physical stocks and very little capacity to expand production that is often a by-product of huge copper mines.
Whatever the short-term vagaries of financial markets this autumn the long-term demand for gold seems assured as a money that central bankers cannot print, ironically something central banks are now acknowledging as a virtue by buying gold themselves. This video with ArabianMoney publisher and editor Peter Cooper from the Dubai Mall Gold Souk explains the gold price dilemma this autumn (click here).
8 Comments posted by readers:
Excellent commentary, Peter!
While the Basel III initiative is good for gold investors, there’s no doubt in my mind that the fraudulent and corrupt LBMA and COMEX have got something up their sleeve.
It’ll be interesting to see how this evolves!
The sudden conversion of LBMA paper-gold peddlers to physical gold advocates might seem a stunning reversal. As such, it would be laudable event, if it was credible in its intent. However, consider if this suddenly-found religion of gold might come from forked tongues, speaking with intent of deception. The LBMA, along with COMEX, has perhaps one or two ounces of unencumbered physical gold for every hundred-ounces of paper-promises it issues with a reckless abandon, matched only by Central Banks issuing fiat currencies and Treasuries issuing government bonds, the check-kiting scheme long in the teeth. It seems to me, just more worthless promises backing more worthless promises, and now a third layer of worthless promises, designed to deceive the gullible that all is well. It seems the LBMA would be happy to supply almost entirely hollow promises, and somehow, against all odds, salvage the “extraordinary privilege” of the dollar reserve currency system. As for me, for long term savings, I trust only pure physical gold I can hold in my hands. I use fiat currencies for short term transactions only, not as long term stores of value. Gold should be floating freely and be exchangeable tax-free, and actual gold reserves Marked-To-Market, like the ECB publishes every quarter. That is real transparency, so you can know what your paper money is worth in gold. I predict the Euro will not only survive, but thrive, just because of this feature of the Euro architecture.
Confetti – Spaghetti…!!!
Gold is theTier One – Basel III or not!
Basel III -
seeks to improve the banking sector’s ability to deal with financial and economic stress, improve risk management and strengthen the banks’ transparency.
GATA BE IN TO WIN.
Bravo David !!!
You really do understand what exactly is happening. A pleasant surprise to read your perfect comment.
Thank you.
@ David:
Well said!
Worth Repeating:
“The LBMA, along with COMEX, has perhaps one or two ounces of unencumbered physical gold for every hundred-ounces of paper-promises it issues . . .”
Thank you, VK. My confidence is the result of diligent searching for the truth in monetary matters for decades, and learning from the brightest and most benevolent insiders. fofoa.blogspot.com contains a Treasury of Truth in archived and current articles and reader comments. The daily readings of multiple sources, and hard mental lifting to acquire the correct paradigm, have proven invaluable in protecting my wealth accumulation and the peace of mind. Free-floating Gold, Reference Point Gold, must be allowed to flow freely and fulfill its free-market balancing function. Once you apply the correct paradigm and consider the sources and their motivations, the conclusions become self-evident. Self-serving deceivers like Soros, LBMA, COMEX, GS dominate the Anglo-American media. These deceivers must be exposed and confronted with the truth. We must prevent, at all costs, a European Treasury issuing common euro bonds, with oppressive taxing powers to enslave the peoples of Euroland. A European Treasury of what? Since when is paper money a Treasure? On the contrary, treasury bonds and their twin paper money or electronic entries are mere evidences of indebtedness; the polar opposite of asset, or treasure. The only true treasure is physical gold in your own vault, with universal acceptance and zero counter-party risk. This applies to individuals and countries equally. Countries like Germany, storing their gold reserves on foreign soil, should be very concerned. A European Treasury bond would irreversibly corrupt the Euro, and would extinguish the hope of having ended 500 years of division and suicidal wars in Europe.
“There is not sufficient gold in all of the world, for example, to back the US dollar fully with gold, and to do so estimates of the gold price range from $10-12,000 an ounce.”
Forget the dollar ever again being backed by gold, even fractionally, at any price. By the way, that range is far, far too low by realistic calculus. But, no matter. Reputation for honest dealings, once lost, like virginity, is gone forever. Remember the day of infamy, August 15, 1971 Nixon conveniently “closing the gold window”. De jure, that was fraudulent declaration of bankruptcy, as they had plenty of gold, but refused to honor their contractual obligations. They cannot even Mark-To-Market today, as that would be unlawful, since the fraudulent declaration of bankruptcy in 1971. So much for “backing”. Not enough gold? Says who, on what bases, may I inquire? Well, we shall see soon enough, but I am firmly convinced there is more than enough gold in the world (at the correct price), real, above-ground physical gold you can hold. Just make sure you have your fair share of it. You individually, and your country collectively. Soon enough, the artificial LBMA, COMEX paper-gold markets implode and fail to deliver any metal, the free market will reset the price so astronomically high, that our present Western, Keynesian minds cannot comprehend. $50,000/ounce in today’s purchasing power? $500,000/ounce in today’s purchasing power? Nobody will care any more than for the hundred trillion Zimbabwe dollars you can buy on eBay for about two bucks. Or the Weimar Germany marks in the quadrillions, or millio milpengos of Hungary I used to play with, as a child. Return to intrinsic value (Voltaire). Paper to essentially zero (okay, “intrinsic” is toilet paper, or heating fuel, or wallpaper, all historic precedents of once-proud and prosperous nations). Gold: returning to a free-market, Mark-To-Market price to facilitate commerce, at an exchange rate that honestly measures the collective wealth of the world, and yours in it, in proportion to the grams of physical gold in your vault. Gold will become The Reference Point, as the only monetary asset that is not the liability of any counter-party. Based on many years of study, I am confident that soon enough, there will be no offers to exchange any gold for hollow, dishonored promises of entities with a history of bankruptcy (like that of August 15, 1971). Oil will flow only against gold, but only for those who own it, or have something of value to trade for it. No more reserve currency status for dishonored paper promises of any kind. No more $100 bills, even if printed, at a cost of under two cents, exchanging for a barrel of precious, irreplaceable Arabian oil. How is that for fairness? Do you want to learn the truth? Do you want to become free of deceptions? Your life, freedom and prosperity hang in the balance, as the world teeters on the brink of abyss and total breakdown of trust, even amongst thieves – well, especially amongst thieves. Where does the Euro fit? Notwithstanding the incessant attempted rapes by the likes of Soros, LBMA, COMEX, GS: thankfully, the Euro is still a cherished virgin, with honest Mark-To-Market, simply to lubricate the wheels of commerce, and unfailingly, honestly publishing its balance sheet every quarter. Not aspiring to Empire, just to a sustained reputation for honest dealings, thankfully. The Euro and dollar, day and night. But, time will show all things. Meanwhile, as thing rapidly unfold, consider fofoa.blogspot.net to get a first class monetary education, at a price of your choosing, that beats any other. I would not trade FOFOA’s wisdom for all the advanced academic degrees I hold. The Truth is Priceless – for all else, there is MasterCard (for now, so enjoy)!
@ David:
Again, well said!
It’s fortunate for Europeans that the ECB’s Common Eurobond scam is dead; if it ever re-surfaces, it will break the backs of most Europeans!
Worth Repeating:
I enjoyed reading your second remark, moreso than the first. And within your remarks, here’s another comment worth repeating:
Self-serving deceivers like Soros, LBMA, COMEX, GS dominate the Anglo-American media. These deceivers must be exposed and confronted with the truth.
On this ArabianMoney blog, I have repeatedly commented on these “self serving deceivers” as you called them; but in addition to Soros, LBMA, COMEX, and GS, I include JPM, which is the King and Chief Coordinator of the Gold Cartel . . . a Cartel which excels at price suppression of gold and silver, in order to perpetuate the “paper gold, paper silver, paper money Ponzi schemes.
P.S. The FOFOA web site should be “required reading” for everyone who wishes to know the truth.