Quote from: molecular on August 21, 2012, 08:16:12 PM

Quote from: sadpandatech on August 21, 2012, 10:54:07 AM

Quote from: Melbustus on August 21, 2012, 10:38:18 AM

Quote from: miscreanity on August 21, 2012, 03:38:20 AM

I believe this would be the most significant section:

Quote

A. Zero Percent Risk-Weighted Items

The following exposures would receive a zero percent risk weight under the proposal:

Cash;
Gold bullion;
Direct and unconditional claims on the U.S. government, its central bank, or a U.S. government agency;
Exposures unconditionally guaranteed by the U.S. government, its central bank, or a U.S. government agency;
Claims on certain supranational entities (such as the International Monetary Fund) and certain multilateral development banking organizations
Claims on and exposures unconditionally guaranteed by sovereign entities that meet certain criteria (as discussed below).

Is that a change from current policy? Is gold bullion currently an "item" that's considered 0% risk by the FDIC or not? ... If this *is* a change from existing policy, I consider it a significant one.

aye, fairly certain that gold was NOT listed as qualifying as a Zero Percent Risk-Weighted Item before this update.

It will likely do more for the large holder risk assessment sheets than it will for would be buyers though.

I'm pretty sure that's new, too. Shouldn't we see huge impact on the gold price?

Gold was changed back in June by the FDIC for US banks, and the EU has very recently adopted the same policy.

But there's a cause and effect here. It's because there is no good collateral left - every dollar has already been leveraged to the hilt, every promise to pay has been levered up multiple times to create new promises to pay backed by existing ones. Meanwhile all the "good" collateral keeps getting downgrade so that it is no longer "good" anymore.

Plus you have the new collateralization agreements (Basel III) starting to kick in for international banks, which require higher reserves (far too little, too late, and this within the context that non-market banking always eventually fails). And the banking systems in countries whose sovereign debts are downgraded to dirt cannot access good capital in the first place, because nobody wants to do business with someone that holds a worthless underlying asset as the foundation for their entire operating model (see greek, spanish, italian banks, who are literally bleeding money and have been for many months).

Long run it's great for gold, great for silver, great for anything liquid and not instantly and infinitely replicate-able (owned free and clear). Short run, since gold collateralization is so new on that level, it will be great for actual cash notes, since all debts are currently denominated in cash, and there are roughly 50x as many promises-to-pay cash notes floating around out there as there are actual cash notes. The world is overleveraged on a scale that will probably not be seen again for centuries. Cash is king, and gold will be emperor (and hopefully bitcoin, the "perfect money", along with it, as it solves the problem of a corruptible central depository by overcoming that historically insurmountable element of human nature, which will never, ever change).