The Latest From Sprott

Thu, Nov 29, 2012 - 8:30pm

Here's the latest from Sprott Asset Management, "Gold: Solution To The Banking Crisis".

Of course, if you'd like to receive these newsletters directly to your inbox, you can subscribe by following this link:

Gold: Solution to the Banking Crisis
By: Eric Sprott & David Baker

The Basel Committee on Banking Supervision is an exclusive and somewhat mysterious entity that issues banking guidelines for the world’s largest financial institutions. It is part of the Bank of International Settlements (BIS) and is often referred to as the Central Banks’ central bank. Ever since the financial meltdown four years ago, the Basel Committee has been hard at work devising new international regulatory rules designed to minimize the potential for another large-scale financial meltdown. The Committee’s latest ‘framework’, as they call it, is referred to as “Basel III”, and involves tougher capital rules that will force all banks to more than triple the amount of core capital they hold from 2% to 7% in order to avoid future taxpayer bailouts. It doesn’t sound like much of an increase, and according to the Basel group’s own survey, the 100 largest global banks will only require approximately €370 billion in additional reserves to comply with the new regulations by 2019. Given that the Spanish banks alone are believed to need well over €100 billion today simply to keep their capital ratios in check, it is hard to believe €370 billion will be enough protect the world’s “too-big-to-fail” banks from future crises, but it is indeed a step in the right direction.

Initial implementation of Basel III’s capital rules was expected to come into effect on January 1, 2013, but US banking regulators issued a press release on November 9th stating that they wouldn’t meet the deadline, citing a large volume of letters (ie. complaints) received from bank participants and a “wide range of views expressed during the comment period”. It has also been revealed that smaller US regional banks are loath to adopt the new rules, which they view as overly complicated and potentially devastating to their bottom lines. The Independent Community Bankers of America has even requested a Basel III exemption for all banks with less than $50 billion in assets,“in order to avoid large-scale industry concentration that would curtail credit for consumers and business borrowers, especially in small communities.” The long-term implementation period for all Basel III measures actually extends to 2019, so the delays are not necessarily meaningful news, but they do illustrate the growing rift between the US banking cartel and its European counterpart regarding the Basel III framework. JP Morgan’s CEO Jamie Dimon is on record having referred to Basel III regulations as “un-American” for their favourable treatment of European covered bonds over US mortgage-backed securities. Readers may also remember when Dimon was caught yelling at Mark Carney, Canada’s (soon to be former) Central Bank Governor and head of the Financial Stability Board, during a meeting in Washington to discuss the same topic. More recently, Deutsche Bank’s co-chief executive Juergen Fitschen suggested that the US regulators’ delay was “hurting trans-Atlantic relations” and creating distrust... stating, “when the whole thing is called un-American, I can only say in disbelief, who can still believe in this day and age that there can be purely European or American rules.” Suffice it to say that Basel III implementation has not gone as smoothly as planned.

One of the more relevant aspects of Basel III for our portfolios is its treatment of gold as an asset class. Documents posted by the Bank of International Settlements (which houses the Basel Committee) and the United States FDIC have both referenced gold as a “zero percent risk-weighted item” in their proposed frameworks, which has launched spirited rumours within the gold community that Basel III may define gold as a “Tier 1” asset, along with cash and AAA-government securities. We have discovered in delving further that gold’s treatment in Basel III is far more complicated than the rumours suggest, and is still, for all intents and purposes, very much undecided. Without burdening our readers with the turgid details, it turns out that the reference to gold as a “zero-percent risk-weighted item” only relates to its treatment in specific Basel III regulation related to the liquidity of bank assets vs. its liabilities. (For a more comprehensive explanation of Basel III’s treatment of gold, please see the Appendix). But what the Basel III proposals do confirm is the regulators’ desire for banks to improve their liquidity position by holding a larger amount of “high-quality”, liquid assets in order to improve their overall solvency in the event of another crisis.

Herein lies the problem, however: the Basel III regulators have stubbornly held to the view that AAA-government securities constitute the bulk of those high quality assets, even as the rest of the financial world increasingly realizes they are anything but that. As banks move forward in their Basel III compliance efforts, they will be forced to buy ever-increasing amounts of AAA-rated government bonds to meet post Basel III-compliant liquidity and capital ratios. As we discussed in our August newsletter entitled, “NIRP: The Financial System’s Death Knell”, the problem with all this regulation-induced buying is that it ultimately pushes government bond yields into negative territory - as banks buy more and more of them not because they want to but because they have to in order to meet the new regulations. Although we have no doubt in the ability of governments’ issue more and more debt to satiate that demand, the captive purchases by the world’s largest banks may turn out to be surprisingly high. Add to this the additional demand for bonds from governments themselves through various Quantitative Easing programs… AND the new Dodd Frank rules, which will require more government bonds to be held on top of what’s required under Basel III, and we may soon have a situation where government bond yields are so low that they simply make no sense to hold at all. This is where gold comes into play.

If the Basel Committee decides to grant gold a favourable liquidity profile under its proposed Basel III framework, it will open the door for gold to compete with cash and government bonds on bank balance sheets – and provide banks with an asset that actually has the chance to appreciate. Given that US Treasury bonds pay little to no yield today, if offered the choice between the “liquidity trifecta” of cash, government bonds or gold to meet Basel III liquidity requirements, why wouldn’t a bank choose gold? From a purely ‘opportunity cost’ perspective, it makes much more sense for a bank to improve its balance sheet liquidity profile through the addition of gold than it does by holding more cash or government bonds – if the banks are given the freedom to choose.

The world’s non-Western central banks have already embraced this concept with their foreign exchange reserves, which are vulnerable to erosion from ‘Central Planning’ printing programs. This is why non-Western central banks are on track to buy at least 500 tonnes of net new physical gold this year, adding to the 440 tonnes they collectively purchased in 2011. In the un-regulated world of central banking, gold has already been accepted as the de-facto forex diversifier of choice, so why shouldn’t the regulated commercial banks be taking note and following suit with their balance sheets? Gold is, after all, one of the only assets they can all own simultaneously that will actually benefit from their respective participation through pure price appreciation. If banks all bought gold as the non-Western central banks have, it is likely that they would all profit while simultaneously improving their liquidity ratios. If they all acted in concert, gold could become the salvation of the banking system. (Highly unlikely… but just a thought).

So far there have only been two banking jurisdictions that have openly incorporated gold into their capital structures. The first, which may surprise you, is Turkey. In an unconventional effort to increase the country’s savings rate and propel loan growth, Turkish Central Bank Governor Erdem Basci has enacted new policies to promote gold within the Turkish banking system. He recently raised the proportion of reserves Turkish banks can keep in gold from 25 percent to 30 percent in an effort to attract more bullion into Turkish bank accounts. Turkiye Garanti Bankasi AS, Turkey’s largest lender, now offers gold-backed loans, where “customers can bring jewelry or coins to the bank and take out loans against their value.” The same bank will also soon “enable customers to withdraw their savings in gold, instead of Turkish lira or foreign exchange.” Basci’s policies have produced dramatic results for the Turkish banks, which have attracted US$8.3 billion in new deposits through gold programs over the past 12 months - which they can now extend for credit. Governor Basci has even stated he may make adjusting the banks’ gold ratio his main monetary policy tool.

The other banking jurisdiction is of course that of China, which has long encouraged its citizens to own physical gold. Recent reports indicate that the Shanghai Gold Exchange is planning to launch an interbank gold market in early December that will “pilot with Chinese banks and eventually be open to all.” Xie Duo, general director of the financial market department of the People’s Bank of China has stated that, “[China] should actively create conditions for the gold market to become integrated with the international gold market,” which suggests that the Chinese authorities have plans to capitalize on their growing gold stockpile. It is also interesting to note that China, of all countries, has been adamant that its 16 largest banks will meet the Basel III deadline on January 1, 2013. We can’t help but wonder if there is any connection between that effort and China’s recent increase in physical gold imports. Could China be positioning itself for the day Western banks finally realize they’d prefer gold over Treasuries? Possibly – and by the time banks figure it out, China may have already cornered most of the world’s physical gold supply.

If global banks’ are realistically going to improve their balance sheet diversification and liquidity profiles, gold will have to be part of that process. It is ludicrous to expect the global banking system to regain a sure footing through the increased ownership of government securities. If anything, we are now at a time when banks should do their utmost to diversify away from them, before the biggest “crowded trade” of all time begins to unravel itself. Basel III liquidity rules may be the start of gold’s re-emergence into mainstream commercial banking, although it is still not guaranteed that the US banking cartel will adopt all of the Basel III measures, and they still have years to hammer out the details. If regulators hold firm in applying stricter liquidity rules, however, gold is the only financial asset that can satisfy those liquidity requirements while freeing banks from the constraints of negative-yielding government bonds. And while it strikes us as somewhat ironic that the banking system may be forced to turn to gold out of sheer regulatory necessity, that’s where we see the potential in Basel III. After all – if the banks are ultimately interested in restoring stability and confidence, they could do worse than holding an asset that has gone up by an average of 17% per year for the last 12 years and represented ‘sound money’ throughout history.

Appendix: Gold’s treatment in Basel III

Basel III is a much more complex “framework” than Basel I or II, although we do not claim to be experts on either. It should also be mentioned that Basel II only came into effect in early 2008, and wasn’t even adopted by the US banks on its launch. Post-meltdown, Basel III is the Basel Committee’s attempt to get it right once and for all, and is designed to provide an all-encompassing, international set of banking regulations designed to avoid future bailouts of the “too-big to fail” banks in the event of another financial crisis.

Without going into cumbersome details, under the older Basel framework (Basel I), the lower the “risk weighting” regulators applied to an asset class, the less capital the banks had to set aside in order to hold it. CNBC’s John Carney writes, “The earlier round of capital regulations… government-rated bonds rated BBB were given 50 percent riskweightings. A-rated bonds were given 20 percent risk weightings. Double A and Triple A were given zero risk weightings — meaning banks did not have to set aside any capital at all for the government bonds they held.” Critics of Basel I argued that the risk-weighting system compelled banks to overweight their exposure to assets that had the lowest riskweightings, which created a herd-like move into same assets. This was most evident in their gradual overexposure to European sovereign debt and mortgage-backed securities, which the regulators had erroneously defined as “low-risk” before the meltdown proved them to be otherwise. The banks and governments learned that lesson the hard way.

Basel III (and Basel II) takes the same idea and complicates it further by dividing bank assets into two risk categories (credit and market risk) and risk-weighting them depending on their attributes. Just like Basel I, the higher the “riskweight” applied to an asset class, the more capital the bank is required to hold to offset them.

It is our understanding that gold’s reference as a “zero percent risk-weighted asset” in the FDIC and BIS literature only applies to gold’s “credit risk” - which makes perfect sense given that gold isn’t anyone’s counterparty and cannot default in any way. Gold still has “market-risk” however, which stems from its price fluctuations, and this results in the bank having to set aside capital in order to hold it. So for banks who hold physical gold on their balance sheet (and we don’t know of any who do, other than the bullion dealers), the gold would not be treated the same as cash or AAA-bonds for the purposes of calculating their Tier 1 ratio. This is where the gold community’s conjecture on gold as a “Tier 1” asset has been misleading. There really isn’t such a thing as a “Tier 1” asset under Basel III. Instead, “Tier 1” is merely the ratio that reflects the capital supporting a bank’s risk-weighted assets.

HOWEVER, Basel III will also be adding an entirely new layer of regulation concerning the relative liquidity of the bank’s assets and liabilities. This will be reflected in two new ratios banks must calculate starting in 2015: the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR).

Just as Basel III requires risk-weights for the asset side of a bank’s balance sheet (based on credit risk and market risk), Basel III will also soon require the application of risk-weights to be applied to the LIQUIDITY profile of both the assets and liabilities held by the bank. The idea here is to address the liquidity constraints that arose during the 2008 meltdown, when banks suffered widespread deposit withdrawals just as their access to wholesale funding dried up.

This is where gold’s Basel III treatment becomes more interesting. Under the proposed LIQUIDITY component of Basel III, gold is currently labeled with a 50% liquidity “haircut”, which is the same haircut that is applied to equities and bonds. This implicitly assumes that gold cannot be easily converted into cash in a stressed period, which is exactly the opposite of what we observed during the crisis. It also requires the bank to maintain a much more stable source of funding in order to hold gold as an asset on its balance sheet. Fortunately, there is a strong chance that this liquidity definition for gold may be changed. The World Gold Council has in fact been lobbying the Basel Committee, the Federal Reserve and the FDIC on this issue as far back as 2009, and published a paper arguing that gold should enjoy the same liquidity profile as cash or AAA-government securities when calculating Basel III’s LCR and NSFR ratios. And as it turns out, the liquidity definitions that will guide banks’ LCR and NSFR calculations have not yet been finalized by the Basel Committee. The Basel III comment period that ended on October 22nd resulted in the deadline being pushed back to January 1, 2013, and given the recent delays with the US bank regulators, will likely be postponed even further next year. Of specific interest to us is how the Basel Committee will treat gold from a liquidity-risk perspective, and whether they decide to lower gold’s liquidity “haircut” from 50% to something more reasonable, given gold’s obvious liquidity superiority over that of equities and bonds.

The only hint we’ve heard thus far has come from the World Gold Council itself, which suggested in an April 2012 research paper, and re-iterated on a recent conference call, that gold will be given a 15% liquidity “haircut”, but we have not been able to confirm this with either the Basel Committee or the FDIC. In fact, all inquiries regarding gold’s treatment made to those groups by ourselves, and by other parties that we have spoken with, have been met with silence. We get the sense that the regulators have no interest in stirring the pot by mentioning anything related to gold out of turn. Given our discussion above, we can understand why they may be hesitant to address the issue, and only time will tell if gold gets the proper liquidity treatment it deserves.

About the Author

turd [at] tfmetalsreport [dot] com ()


Daredevil73 · Nov 29, 2012 - 8:34pm

Frist Post?

Really? Almost better than winning Powerball smiley

joehappen · Nov 29, 2012 - 8:35pm


Top ten YAY!!!

Darth Smoker · Nov 29, 2012 - 8:46pm

Throwing me a Turd ball

almost as hard to understand as the manipulation thread last week

rocoach · Nov 29, 2012 - 8:55pm

Go Forth

and Multiply!

cpnscarlet · Nov 29, 2012 - 9:00pm

Fun is Fun, but...

With all the hopeful talk about silver, don't the OI numbers from Harvey Organ tonight seem more than a little disappointing? Sure...if all 7K+ stand for delivery, there's big trouble in December, but with 22K+ bailing yesterday, it feels like a big "Well maybe next year." leftdown.

Who the hell knows what's going on anyway????

vonburpenstein · Nov 29, 2012 - 9:02pm

Fifth of XR...

...and I'll be totally confused about this basel stuff...

silver66 · Nov 29, 2012 - 9:06pm

info from Sprott

I have posted the link before to Sprott's web site. If you like Eric Sprotts or Rick Rules writings. There is a plethora of info on the public access site. If non-Canadian they have link to international sites



kingboo · Nov 29, 2012 - 9:14pm

Top 10........

and no i didnt read it yet......

Stratajema · Nov 29, 2012 - 9:18pm

Paper metals

Something to think about for the newcomers who think the Crimex will default on silver or gold some day:

"In 2000 palladium appreciated from the level of $443 to the level of $956 boasting a stunning rate of return of 115.8%. During that time, however, the New York Mercantile Exchange raised margin requirements for palladium futures contracts in a series of steps which brought the margins as high as to $168,750 for a $72,000 contract. That meant that just to maintain your position open and reap the profits, you had to make a deposit exceeding the size of your position by 133.1%(!)"

Here is the link to the full article:

¤ · Nov 29, 2012 - 9:27pm

16 to 1...

...or less seems likely. There's too much history for it not to happen.

Timber Tim · Nov 29, 2012 - 9:33pm


China's thirst for copper continues.

Myanmar security forces assault protesters

Myanmar on Thursday began its largest crackdown on protesters since the civilian government of President Thein Sein came to power 20 months ago, mounting a raid on hundreds of Buddhist monks and villagers opposed to the expansion of a Chinese-led copper mine project in central Myanmar.

Witnesses said dozens of monks and other protesters were injured when security forces used incendiary devices that set fire to protesters’ encampments outside the offices of the Chinese company, which has a partnership with the powerful military in Myanmar, formerly known as Burma.

The mine, which is often referred to as Letpadaung for the mountains from which the copper is extracted, was initially operated by a joint venture between the Myanmar government and a Canadian company, Ivanhoe Mines. The Chinese company that took over two years ago is trying to expand the project, which would displace inhabitants of two dozen villages.

foggyroad · Nov 29, 2012 - 9:36pm

Risk weighting an asset

My understanding is a bank has to increase its asset ratio from 2% to 7% core capital it holds vs loans given out.

AAA bonds are risk weighted at one to one, meaning 10 grand worth of AAA bonds is worth 10 grand as an asset, 10 grand cash is also risk weighted at one to one, so it is valued at ten grand. Gold has historically been risk weighted at 50% meaning 10 grand of gold in the vault only counts for 5 grand worth of liquidity on the ledger.

This means in order to keep core capital/ liquidity at 7% they would have to have twice as much dollar value to hold gold in the vault as they would cash or AAA bonds.

Another way of looking at it is, if they were told to increase liquidity they would sell gold first as they would double their liquidity simply converting gold to Bonds or cash.

The hoped for changes ie. tier one asset rating on gold would make selling gold to increase liquidity a thing of the past, as it is rated at one to one, as is holding cash or AAA bonds.

Hope this helps.

This is My understanding of it.

El Gordo · Nov 29, 2012 - 9:50pm

Another "Minimum" Measure of Safety

The Basel balancing act is to try to reach a method of computing capital, presumably a measure of overall safety, for banks which will comfort depositors and others who may wish to park their money with them. By design, this measure, whatever it turns out to be, will by necessity be an absolute minimum safety cushion that they think the public will accept. It does not measure safety of depositor funds in any true sense since there are many exceptions allowed and "off-balance sheet" operations being conducted by these institutions. The real problem is that banks have wound up being the funding source for many sovereigns, particularly the weak sisters in the EU. Typically, a weak bank could be supported by merely offering up a sovereign guaranty, ie. TBTF, by the local country where the institution is domiciled. However, due to the weakened state of the sovereign, the bank has in effect become the lifeline of the country to money markets and funding sources. In other words, the sovereign is dependent upon the bank rather than the other way around. Remember when you went to the bank to open an account and they would give you a free toaster? No days, if you go buy a toaster they will give you a bank.

kingboo · Nov 29, 2012 - 10:09pm


i agree with your description.....completely. Ivars and I were discussing this a few dozen threads back, we could not find an accurate definition as to where gold would be rated in Basel3..... i feel a little better knowing that even Sprott cannot accurately predict Basel's future impact on gold. However.......if they did give gold a "zero-risk weight".the banks would not only need 1/2 as much gold as now to meet liquidity ratios, (theire gold holdings would essentially double in value as far as their ledger is concerned) but why in God's name wouldn't they? Considering it would be the only asset on their books with zero counter-party risk? Wouldn't this create a huge demand for gold by the big banks? And assuming they met liquidity ratios currently, the move to lower gold's risk weighting would allow them to "lever up" tremendously, no? So.....just for fun, "wink wink"....lets say big banks have been quietly stockpiling gold......and then, all of a sudden......whaddya know? gold's risk weighting is lowered! Their ratios would far surpass basel3 requirements and they would have a boat load of capital on hand... Hey's lever time! Let's hit the global casinos like drunken sailors! I'm praying it goes that direction for a few reasons

first of all it would put gold in it's rightful place at the top of the heap

second of all it would create demand which will support gold prices

third, it would create awareness again as to the true value of gold

fourth, it would at least temporarily stem a financial crisis

ofcourse i could be completely wrong......and just riding the sugar high i just got from a whole bag of chocolate covered peanuts 

recaptureamerica · Nov 29, 2012 - 10:13pm

Hong Kong Exchange & Clearing

Hong Kong Exchange & Clearing (388 HK) approved for USD 2.2bln LME takeover

recaptureamerica · Nov 29, 2012 - 10:17pm

When did the various

When did the various countries ship their gold to the USA? Does the US include others' gold in their total? 

Ferd Torgerson · Nov 29, 2012 - 10:37pm

Not Sure if This Might Help for Refreshes

Saw the inquiry and responses regarding page refreshes.

Not sure if this will help but I’ve developed a macro that some might be interested in which will be available January 1.

Holding down the CTRL and F5 keys simultaneously will invoke a macro that:

  1. Refreshes the page. 
  2. Captures the text in the browser window for the title of the current thread (example: “Silver in Four Charts”).
  3. Scans the text in the “Latest Blog Posts” segment of the page and compares it to the text in the browser window.
  4. If the two sets of character strings are non-equal (signifying a new thread; example: “The Latest from Sprott”), clicks on the title of the new thread, opens a new comment and posts “FIRST!!”
  5. This FUFT routine (First Up Ferd Torgerson) has not yet been priced but should be available for a nominal charge.
  6. For an extra $10.00 per month, the macro will also predict the daily closing price for AU within $.75 and for AG within $.125.

This may be more than anyone needs but thought I’d throw this out. (Sometimes, I have a tendency to over-think things).

Void where prohibited.


TexasStacker · Nov 29, 2012 - 10:45pm

Ferd cracks me up!

Ferd cracks me up!

foggyroad · Nov 29, 2012 - 10:50pm

@ king boo Agree ,It would be bullish.

If a bank gets into a bind on a trade or they get down graded, now Gold is the first thing they sell to bolster liquidity.

This puts downward pressure on Gold price.

If the BIS allows gold to compete on an even playing field with cash or AAA's, banks will hold their gold, as will pension funds, hedge funds etc.

Very bullish.

I think its only a matter of time before this occurs, as the E.U. wants/needs this as the ECB holds a sizeable chunk of gold, backing the Euro.

I think this would put the historic safe haven status back into the gold vs. fiat relationship.

Maybe thats why, Dimon says He's against it.

The Fed is the power behind the BIS, so who knows, magicians and illusionists.

Black is white and up is down.


Mr. Fix Ferd Torgerson · Nov 29, 2012 - 10:59pm

@ Ferd Torgerson

Can your strategy be adapted to work on a MacBook Pro? Particularly steps two, three and four.
This would be particularly handy for me in the mornings,
as I often waste a lot of time refreshing manually.
It would be mighty handy to get the computer to do it all by itself.

Or do I have to find out how I-stack does it?

I can't find a CTRL key.angry


I must be getting tired,

 I didn't get the joke.

Ha ha.

· Nov 29, 2012 - 11:03pm

Off topic question

In light of the fact that the US is about to phase them out ( shouldn't we start loading up on nickels the way some people did (and more people should have) with silver dimes, quarters, halves and dollars after 1964? I'm thinking about turning a chunk of my dry powder into rolls of nickels while I can still get them at face value.

Added thought: That the ten cent piece is about to become the new penny is more or less an admission that a "dollar" is now worth about 10 real cents.

Ferd Torgerson · Nov 29, 2012 - 11:04pm

Sorry About That, Mr. Fix

Yes, there is a version available for a MacBook Pro.

However, within five minutes after I posted about my new macro, a sexy-voiced lady called me at home and wanted to buy the rights to my development. I sold her the whole kit and kaboodle for $1,000. She said that was all she had and that I drove a hard bargain.

I think she said her name was Blythe something or other - might have been Mathers. In any event, you'll have to contact Blythe Mathers to get the macro now.

Sorry to disappoint everyone but a guy has to make a living.


SteveW · Nov 29, 2012 - 11:15pm

When did the various countries ship their gold to the USA?

In the good old days pre-WWII and during the Bretton Woods agreement countries had to settle their current account (export - import) deficit in gold. This was largely achieved by having Joe and Moe, working in the basement of the New York Fed, move gold from say bin A (belonging to France) to bin B (belonging to Germany). I'm not sure how the gold originally got there, but once there it was really only moved around to change ownership. If a country ran short on gold then they would have to devalue their currency.

Since Germany eventually became an export powerhouse by 1971 they accumulated a large trove of gold at the New York Fed. Now when Nixon closed the gold window (which allowed good as gold US $ to be redeemed for gold) it seems that Germany left their gold at the NY Fed, where it constitutes most of their gold and the largest US holding of foreign gold.

So Germany didn't ship their gold but acquired it from their exports.

Hope this helps.

Mr. Fix · Nov 29, 2012 - 11:18pm

@ Ferd Torgerson

I had a little chat with Blythe Masters this morning,
I requested that she hold the price of silver down that so I would be able to buy more of it,
apparently that did not go well.

I don't think I hold much sway with Blythe Masters.

Next time
You invent one of your snazzy new inventions,
send me a PM before you accept any other offers,
outbidding somebody like Blythe Masters,

would make posting “first” seem like chump change.:)

Mr. Fix · Nov 29, 2012 - 11:20pm

My take away from the post.

The making gold a tier 1 asset will only happen when there are no other options,
and it most certainly will not be initiated by any Western entity,
since they have basically sold all their gold to China.

As for the rest of the capital requirements on banks,
maybe I'm just being cynical,
but this looks like a scam to leave the too big to fail banks the only ones left.

Smaller local banks will be demolished.
Everything that is happening right now appears to be the consolidation of power as it's only goal.

Or did I miss something?
I'm not seeing any of this as good news,
and I don't think gold will be made a tier 1 asset until well after the shit hits the fan.
If then.
Besides, if all the banks were to collapse, what good is a tier 1 asset to them?

fast mover · Nov 29, 2012 - 11:21pm

Gold from Germany to USA

Wasn't there a biography on this with Clint EASTWOOD as the main character???


foggyroad · Nov 29, 2012 - 11:32pm

Dr. copper @ Puck

Old Dr. copper might be worth some attention now that pennies are no longer going to have an influence in real copper price discovery, would have been real messy if copper doubled or tripled, when countries were still using the metal for coins.

Same could be said for nickels hmmm... you may well be on to something My friend!

Didn't JPM corner 80% of the copper at the LME a couple of years ago?

Thats it, I am going to have a guess the amount of pennies in the five gallon pig contest, 25 pennies to enter 50 dollar bill prize. payable when the pig is full, or in 2015 whichever comes first. :) 

Icarus Puck Smith · Nov 30, 2012 - 12:06am

Getting rid of pennies and nickels

Puck writes:

In light of the fact that the US is about to phase them out ( shouldn't we start loading up on nickels the way some people did (and more people should have) with silver dimes, quarters, halves and dollars after 1964? I'm thinking about turning a chunk of my dry powder into rolls of nickels while I can still get them at face value.

The ONLY source for this information was skewnews. NO other mainstream outlet carried this. The skewnews article was then picked up by the blogosphere as truth and fact and spread like wildfire. Skewnews must be a cousin of the onion. I also suspect that this whole story is made up because IF Geitner actually said they were going to get rid of pennies and nickels it would have been front page news for every newspaper in the country.

Until I see it in the New York Times under Paul Krugman's byline I don't believe it.smiley


old tradesman · Nov 30, 2012 - 12:12am

furd you are a turd

I think there are still people holding down those keys lgmao

TomMack · Nov 30, 2012 - 12:18am

blythe mathers?

is she the beaver's mother?

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11/27 9:00 ET Case-Schiller home prices
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11/20 8:30 ET Housing Starts
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11/14 8:30 ET Consumer Price Index
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