Banks Finally Allowed To Count Gold As 100% Money

Posted: August 22, 2012 in Uncategorized
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This summer, a quiet change was made to the accounting rules for gold in bank vaults. It made headlines almost nowhere, but it has the potential to dramatically change how gold is viewed relative to cash in the broader economy. For informed and prepared minds, it’s also the chance to stock up up on gold at an attractive price before the mainstream masses really process the change.

Basically, for banks, gold is now 100 percent money.

How is that different than it was before? Previously, banks could only count gold as 50 percent money.

Confused? Well, welcome to the wonderful world of bank reserve accounting. This is the system that allows banks to have $1 in actual cash but make $5, $10, or even $20 in loans on that same dollar. Reading the fine print of the regulations around this system is better than NyQuil on a late night.

But the fine print has a wealth of gems for informed minds that care about the factors influencing the value of the money supply. Under the former rules of banking reserves, cash, U.S. Treasuries, and bonds of certain other developed nations were counted as 100 percent assets, since they were perceived to be “zero risk” assets by banking regulators. Gold, on the other hand, was counted as a 50 percent asset, since gold was perceived to be a riskier asset to hold by the regulators.

Obviously, this system provided incentives for banks to hold cash and bonds instead of gold, because they could account for the whole value of the cash and bonds on their books, but only half of the value of their gold. The rules didn’t account for the falling value of the U.S. dollar or gold’s power to hedge against inflation of the money supply. Bankers had to make their own choices, but playing by the system’s rules was encouraged.

New book reveals gold-buying secrets that dealers don’t want you to know about…

And then there was this memo from the U.S. Federal Reserve, FDIC, and Treasury Department…

“In this NPR [notices of proposed rulemaking], the agencies propose to apply the following risk weights for exposures… 1) A zero percent risk weight to cash owned and held in all of a banking organization’s offices or in transit; gold bullion held in the banking organization’s own vaults, or held in another depository institution’s vaults on an allocated basis…”



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  1. Emery Elieff says:

    How do I copyright articles and newsletters that I am wanting to publish?

  2. Ambrose Mesia says:

    I have seen this a few times online. Is this actually true? I mean are we now so far under that everything is going to skyrocket in prices? If they use the full price, then everything for sale will be so expensive, we won’t be able to afford it!

  3. Angelic Simokat says:

    I guess this could be a good thing. Time to stock up on gold stuff. Thanks for the extra motivation 🙂

  4. George Happ says:

    Good collection of tutorialsposts.
    Each of them is quite useful and inspirational

  5. Lucienne Mahaney says:

    Thinking this will ultimately be a bad thing. We wont be able to afford anything if the price of gold goes up to much.

  6. Nickolas91 says:

    Keep up the good work. God Bless

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