OMG New Gold Rule!
- Thread starter Monad Portal
- Start date
Monad Portal
Was it me?
The new Tier 1 asset rules under Basel III classify allocated physical gold as a High-Quality Liquid Asset (HQLA), allowing banks to count it at 100% of its market value toward their liquidity reserves. This change enhances banks' capital efficiency and reinforces gold's role as a core reserve asset.
americanstandardgold.com
usfunds.com
These regulatory updates mark a significant shift in how precious metals are viewed in the banking sector, emphasizing their role as monetary assets rather than mere commodities.
usfunds.com americanstandardgold.com
Overview of New Tier 1 Asset Rules
As of July 1, 2025, significant changes have been made to the classification of certain assets under the Basel III banking regulations. These changes primarily affect how banks treat physical gold and silver.Gold as a Tier 1 High-Quality Liquid Asset (HQLA)
- New Classification: Allocated physical gold is now recognized as a Tier 1 HQLA. This means banks can count it at 100% of its market value toward their liquidity reserves.
- Regulatory Impact: This change enhances capital efficiency for banks, allowing them to hold less capital against gold holdings. It also reinforces gold's status as a core reserve asset.
- Demand Surge: The new rules are expected to increase institutional demand for physical gold, with many central banks planning to boost their gold reserves.
Silver's Position Under Basel III
- Unique Impact: Silver is also affected by the Basel III regulations, but its paper-to-physical leverage ratio is significantly higher than gold's, creating potential for greater price appreciation.
- Market Dynamics: As banks unwind paper silver positions, the market may experience supply shocks, further driving up prices.
Implications for Banks and Investors
| Tier 1 Status | Yes | Yes |
| Market Value Treatment | 100% of market value | 100% of market value |
| Risk Weighting | 0% risk weighting | 0% risk weighting |
| Institutional Demand | Expected to rise | Expected to rise |
| Market Dynamics | Strengthens balance sheets | Potential for supply shocks |
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Aspect
[/th][th]Gold
[/th][th]Silver
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Monad Portal
Was it me?
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The new Tier 1 asset rules under Basel III classify allocated physical gold as a High-Quality Liquid Asset (HQLA), allowing banks to count it at 100% of its market value toward their liquidity reserves. This change enhances banks' capital efficiency and reinforces gold's role as a core reserve asset.
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will these changes have any downside for the economy as a whole?
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GPT-4o mini
Potential Downsides of New Tier 1 Asset Rules
The new Tier 1 asset rules can have both positive and negative implications for the economy. While they are designed to enhance capital efficiency and stabilize financial institutions, there are potential downsides to consider as well.Increased Reliance on Commodities
- Market Volatility: Gold and other commodities can be subject to significant price volatility. Increased reliance on these assets could introduce instability, especially during economic downturns.
- Supply Constraints: A greater emphasis on gold as a reserve asset may create artificial demand, leading to price surges that can affect various sectors, from jewelry to electronics.
Impact on Lending
- Reduced Credit Availability: If banks focus on holding more gold and other liquid assets as opposed to lending, this may reduce the overall availability of credit in the economy, particularly for small businesses and consumers.
- Loan Rates: A tighter credit environment can lead to higher interest rates, making borrowing more expensive and potentially stifling economic growth.
Inflationary Pressures
- Asset Inflation: Increased demand for gold may lead to asset inflation, where the prices of gold and related materials rise disproportionately, affecting overall inflation rates and potentially leading to higher costs of living.
Risk of Systemic Issues
- Concentration Risk: By banking more on Tier 1 assets like gold, institutions may expose themselves to systemic risks associated with commodity price swings, potentially harming financial stability.
- Tight Monetary Policy: If central banks respond to potential inflation by tightening monetary policy, it could further hinder economic growth and increase borrowing costs across the board.
Conclusion
While the new Tier 1 asset rules are aimed at increasing financial stability and capital efficiency in banks, they could introduce several economic risks, particularly related to market volatility, credit availability, and inflationary pressures. Careful monitoring and regulation will be essential to mitigate these downsides.
Monad Portal
Was it me?
bump for the tardy.
tardy for the party.
tardy for the party.
Matt Dillon
Retardium User
When was the last time gold lost value, fucktard?
I can't fix your brand of stupid.
It goes up and down almost every day. It had a huge crash back in 2013 where it lost a third of its value.
Matt Dillon
Retardium User
Yet has it not always been increasing?
Gold Prices - 100 Year Historical Chart
Interactive chart of historical data for real (inflation-adjusted) gold prices per ounce back to 1915. The series is deflated using the headline Consumer Price Index (CPI) with the most recent month as the base. The current month is updated on an hourly basis with today's latest value.
www.macrotrends.net
Holy crappo, it's almost at $5k.Gold Prices - 100 Year Historical Chart
Interactive chart of historical data for real (inflation-adjusted) gold prices per ounce back to 1915. The series is deflated using the headline Consumer Price Index (CPI) with the most recent month as the base. The current month is updated on an hourly basis with today's latest value.
www.macrotrends.net
Uhm yeah, fiat currency is ass without gold to back it up.
The Federal Reserve and Central Banks are nothing but a grift.
Even your own chart says it has not always increased.
Tier 1 assets are not supposed to go up a lot, they are supposed to be extremely stable. Is gold extremely stable?
serendipity
Verified User
More shitty music, it's never fucking ending.
Monad Portal
Was it me?
it is nonetheless the top tier asset now. the rule change is real, even if you don't agree, dumb idiot.
our bankers are trying to slow walk walk the impact.
if you think its meaningless that's just your stupidity.
"Top tier" in what sense? A tier 1 asset should be incredibly stable, without making major moves up or down. It should have no reasonable way to crash. The very fact that gold is flying high makes it not a tier 1 asset.
Or put another way, if there is a 20% correction(very probable), and if it is a major amount of the tier 1 assets, the taxpayers will have to pay TRILLIONS to bail everyone out.
Tier 1 assets are sometimes called "heads I win, tails you lose" assets. If they go up in value, the banks keep the money. If they go down in value, the taxpayers have to make up the difference.
And we will see what it brings us. You say gold cannot possible go down in value, and yet almost every day it does go down in value for at least part of the day.
They are? Remember it is heads the bankers win, tails the taxpayers lose. This is nothing but good news for them.
Do I think trillions in taxpayer backstops is meaningless? No, I think it has a huge meaning.
Here is another issue: It takes money from Treasurys, the ultimate Tear 1 Asset at the exact moment trump is taking the deficit to non-emergency record highs, and discouraging foreigners from buying Treasurys. That starts sounding like a perfect storm of people not wanting to buy Treasurys.
Interest rates skyrocket as we desperately try to find someone who is willing to buy Treasurys. It starts looking like a death spiral, so no one buys. And thus it becomes a death spiral(higher interest rates raise the cost of borrowing, which in turn means more borrowing to service the debt, and more interest rates).