Jay Taylor: Under Basel III Rules, Gold Becomes Money!

The comments below are an edited and abridged synopsis of an article by John Rubino

In 2018, central banks added nearly 23 million ounces of gold, up 74% from 2017. This is the highest annual purchase rate increase since 1971, and the 2nd highest in history. Russia was the biggest buyer. Not surprisingly, the lion’s share of gold is flowing into the central banks of countries that are targeted by America.

Jay Taylor: Under Basel III Rules, Gold Becomes Money! | BullionBuzz

In his latest newsletter, commodities analyst Jay Taylor notes that an important date is approaching:

“The Bank for International Settlements (BIS), located in Basel, Switzerland, is often referred to as the central bankers’ bank. Related to this issue of central bank hoarding of gold is the fact that on March 29, the BIS will permit central banks to count the physical gold it holds (marked to market) as a reserve asset just the same as it allows cash and sovereign debt instruments to be counted.”

Jay concluded that recently (especially in 2018), a higher gold price would have been the norm. However, gold closed last year down 7% and with a negative financial return. That’s because central banks raided real gold bars and offered hundreds of tons of synthetic gold on the London and New York exchanges, where 90% of metals trading takes place. The supply of gold derivatives kept the gold price down, forcing investors to liquidate in order to limit losses accumulated on futures. The more gold futures prices fell, the more investors sold synthetic gold, triggering bearish spirals exploited by central banks to buy physical gold at lower prices.

The only way governments can manage debt levels that threaten the financial survival of the West is to inflate (debase) their currencies. The ability to count gold as a reserve from which banks can create monetary inflation is not only to allow gold to become a reserve on the balance sheet of banks, but to have a much higher gold price to build up equity in line with the massive debt in the system.

Nick Barisheff also wrote an article on this subject entitled: Gold: A Zero-Risk Monetary Asset

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