We have been hearing lately how gold has been re-emerging as a Tier-1 asset by central banks; however, there has been some under the radar news regarding U.S. banks and gold as well. This summer, a quiet, and not widely known, event occurred.
The Federal Reserve sent a memo to U.S. banks informing them, that starting January 2013, there will be a zero percent risk assigned for both cash and physical gold bullion held in the banking organization’s own vaults, or held in another depository institution’s vaults on an allocated basis.
No rationale was given for this change that added gold bullion; however, perhaps Benji Bernanke was just getting too much international flack for his comical response that gold is not money and his “its tradition” to why central banks hold physical gold bullion. At any rate, it now appears that banks will no longer have to pile into government and private (muni) bonds that may be on the verge of default. Instead, they can choose to store physical gold. In addition, because of the rising concern of the lack of underlying physical to the paper, regional U.S. banks will most likely NOT be purchasing ETF’s when they can have, and safely store, the real thing.
So, what does this mean for regular people? Well, for individuals, the time between now and January represents a buying opportunity.
In regards to the political arena, in an attempt to lull Ron Paul supporters to sleep again, the Republican criminal enterprise is putting on a dog and pony show; however, do not believe this Republican farce for a gold standard for a second. Remember, the Republicans would not have put up ole “Goldman-Sachs” Romney if they were serious about auditing the Fed or returning to a gold standard.
But how about silver?
Well, with the Silver to Gold Ratio, or SGR, still way out of whack in relation to both historical norms and what they are pulling out of the ground, the very real possibility of quantitative easing by the Federal Reserve in the not-so-distant future, and the impending JP Morgan naked short scandal involving silver, those having physical silver are going to be jumping for joy unlike those who will be rioting in the streets when the SLV ETF goes to zero. So, after preparing, keep stacking physical.
Finally, please prepare now for the escalating economic and social unrest. Good Day!
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