Friday, September 13, 2013

Gold is Qualified Collateral Says the BIS and IOSCO

Dear readers,

In a publication entitled "Margin Requirements for Non-Centrally Cleared Derivatives" just released by the BIS (Bank for International Settlement), the Central Bank for Central Bankers, and the IOSCO (International Organization of Securities Commissions), which oversees all security exchanges around the world, have clearly stated that GOLD is qualified collateral along with cash and government securities (bonds) for margin on derivative contracts. It clearly states, "in the event of a counterparty default, these assets should be highly liquid and should, after accounting for an appropriate haircut, be able to hold their value in a time of financial stress."

"As a guide, examples of the types of eligible collateral that satisfy the key principle would generally include:"
  • Cash;
  • High-quality government and central bank securities;
  • High-quality corporate bonds;
  • High-quality covered bonds;
  • Equities included in major stock indices; and
  • Gold.
Clearly if these requirements are set forth for systemically important banks and central banks to ensure their stability during a financial crisis, would it not be prudent for YOU, the individual to hold gold in your retirement plan! Is your financial advisor going to argue with these global bank regulators and tell you that gold is a "barbaric relic?" Why do you really think the Chinese are buying gold hand over fist and pursuing a strategy to become the alternative reserve currency of the world next to the USD? Time to put the old song and dance of a "balanced and diversified portfolio" to rest and get yourself some gold and just sit tight.


Bosko Kacarevic