- Europe will implement Basel III regulations by the end of June, among other things, making physical gold a 0% risk asset, but not unallocated paper gold derivatives.
- This will likely constrict the supply of paper gold, pushing physical gold prices higher.
- Why would the banking establishment behind Basel III want this?
- The answer is they don't. More likely they think that the paper gold market supports gold prices, and therefore, constricting paper gold will push gold lower.
- This is what establishment economists also believed would happen when Nixon suspended the dollar's convertibility to gold at $35 in 1971. They were wrong then, and I believe they are wrong now as well.
For further details see:
Gold, Basel III, And A Time Warp To December 31, 1974