Silver Dollar Values Prices Up, Sprott: The Way Gold Will Resolve Global Banking Debacle, Gold Price

Printing currency for liquidity, can't resolve these basic issues.” My suggestion would be to purchase gold and silver to prepare for the coming monetary storms ahead. Better be safe, than sorry! Read on...
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Dec. 10, 2012 - PRLog -- The man who accurately claimed that “this will be the decade for silver” has now asserted that there is some hope for the banking crisis: gold. But it all depends on this one entity. If you have not heard of the Basel Committee on Banking Supervision, chances are it's because they attempt to function in secret to the best of their skills. Basel is a rather mysterious entity and very exclusive, however it serves a crucial function in Western society. It issues banking recommendations for the world's biggest and most esteemed monetary institutions. They've been working around the clock devising new international regulatory guidelines that will minimize the danger for another disastrous monetary meltdown in the aftermath of the 2008 financial crisis. How high will silver go? Learn more >>

Eric Sprott and David Baker expand: The Committee’s newest ‘framework’, which is what they call it, is referred to as “Basel III”, and entails tougher capital guidelines that will force all banks to more than triple the amount of core capital they hold from 2% to 7% in order to prevent future taxpayer bailouts. It does not sound like much of an increase, and according to the Basel group’s personal survey, the 100 biggest global banks will only require roughly €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 these days simply to keep their capital ratios in check, it's hard to believe €370 billion will probably be enough shield the world’s “too-big-to-fail” banks from future crises, however it is indeed a move in the right direction.

One of the most important facets of Basel III is that it will treat gold as an asset class. Many specialists think Basel III may officially label gold as a “Tier 1” asset in addition to money and AAA-government securities. Banks will have elevated incentive to select gold vs. money or bonds if gold is granted “a favorable liquidity profile below its proposed Basel III framework.” Why would they select otherwise when gold continues to outperform the U.S. dollar and bonds? Rare Coins, Silver Coins, Gold Coins, Learn more >>

Other banks across the globe - non-Western banks - have already adopted this philosophy in regards to their foreign exchange reserves, vulnerable to erosion from 'Central Planning' currency printing programs, according to Sprott and Baker.

Turkey and China are two nations that have been encouraging their citizens to own physical gold. Turkey is doing it to increase the country's financial savings rate “and propel loan development.” Throughout the year, analysts have speculated that China is preparing to get a gold standard. When one studies the ever-increasing levels of gold imports into their nation, it is hard to think otherwise.

In the midst of all this, Basel III would add a new layer of regulation concerning relative liquidity of the bank's assets and liabilities.

Nevertheless, the Basel Committee and also the FDIC stay elusive. Apart from a study paper from April and one conference call on behalf of Eric Sprott, the groups have kept silent regarding gold's liquidity. Still, that paper and phone call recommended that gold will be give a 15% liquidity cut, even though which has not been officially confirmed from Basel or the FDIC. We'll simply have to wait and see if the fragile fate of our financial wywtem can be saved using the valuable yellow metal. Printing currency for liquidity, can't resolve these basic issues.” My suggestion would be to purchase gold and silver to prepare for the coming monetary storms ahead. Better be safe, than sorry!  How high will silver go? Learn more >>
Source:James Bakerman
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