Gold Becoming Widely Recognized as a Collateral Asset

Gold may not “do anything but just sit there on the shelf” but it is becoming more recognized as a safe haven for investors and now, it seems, for bankers too!   There is so much outstanding debt in the global banking system that finding ‘good’ collateral to back it is becoming more difficult. Furthermore, as the debt increases, and maturing debt is rolled over into new debt, traditional asset-backing collateral becomes more scarce.  The Basel Committee for Bank Supervision (BCBS) is considering making gold a Tier-1 asset, which would escalate the desire for banks to hold more of it in their vaults to provide backing for all their debt activities.  Read more at SafeHaven.

John Exter's Inverted Pyramid