How safe an asset is gold?

Author: Adam Button | Category: News

There has been some chatter chatter about an upcoming Basel Committee decision that could have large implications for gold.

Banks must hold a certain level of Tier 1 capital — the safest, most liquid assets. Gold is currently classified as Tier 3 capital but the Basel Committee has been asked to re-evaluate that decision and bump it to Tier 1.

This has come up before and there is no timeline for a decision but it’s something that could be a major boost to gold. I’m not an expert on capital rules but I would rather my bank hold gold than equities or Spanish bonds. At the same time, I would guess a change is unlikely because governments would rather force banks into bonds in order to keep yields down.

Gold is chopping around with risk sentiment today, currently down $3 to $1577.

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