RE: NSFR 28th June 211 Jan 2021 18:16
You can google Basel 3 and gold. There is going to be a transferral between March 21 and end 22. Including US.
https://www.fxstreet.com/analysis/what-will-basel-iii-rules-mean-for-the-gold-price-202012181719
Page 15...85% coverage for...
“•Cash, securities or other assets posted as initial margin for derivative contracts and cash or other assets provided to contribute to the default fund of a CCP
• Other unencumbered performing loans with risk weights greater than 35% under the standardised approach and residual maturities of one year or more, excluding loans to financial institutions
• Unencumbered securities that are not in default and do not qualify as HQLA with a remaining maturity of one year or more and exchange-traded equities
• Physical traded commodities, including gold”
https://www.bis.org/bcbs/publ/d295.pdf
“Andy Schectman: Readers should note, Basil III is the most significant event of my career. And really if people were to take a broad look at this and understand what it means, quite frankly, I don't think you need to know anything else. Everything else that we see is just noise. Since 1944, there's only been one tier 1 asset, and that has been United States Treasuries or fully funded dollar deposits. Gold was considered a tier 3 asset where only 50% of its value was allowed to be calculated on a balance sheet. Therefore, there would be four reasons that central banks would be de-incentivized to own gold. It wouldn't pay interest, costs money to store, it was unpredictable in its movements, but the tier 3 status meant that a 50% denigration on the balance sheet would limit a central bank's ability to sell bonds or transact international business. So really, the only purest form of collateral, and by the way, if your readers were to Google tier 1 asset, it's listed as a riskless asset.
So the Bank of International Settlements, which is the central bankers' central bank in Basel, Switzerland, reclassified gold in April of 2019, as the only other tier 1 asset in the world next to U.S. dollars in Treasuries. So since 1944, there's only been the dollar and the treasury bill that would give a tier 1 status for a central bank and or commercial bank collateral. Now, with gold brought up to that table, it's important to note that the central banks of the world front-ran this decision. In 2018, they bought more gold cumulatively as a group than they did in the 60 years previously. And in 2019, those numbers were up 90% and continue unabated higher now. And so you're seeing the most sophisticated, well-funded, well-informed traders on the globe accumulate what they call a riskless asset and have been front-running that decision, of course, now for over three years.
I think it's only a matter of time before gold goes higher than anyone thinks possible.....”
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