Gold Tier 1 = No Selling Pressure on Price Amid Market Collapse of the Future
With the metals stealthily trending higher today, I thought it would be a good time to tackle some fears that the precious metals community has of a pending market collapse. The fear is that, like in 2008, as the banking crisis gripped the markets, the precious metals will collapse. In 2008-2009 gold fell from $1,100 to below $800. Silver fell from more than $20 to less than $10. Platinum fell from $2200 to $800. Palladium also fell from $600 to below $200. Granted, as I have said before, the paper dollar price is totally meaningless. (Break out of the inculcated paradigm!) There is no point in valuing something by a clearly, consistently devaluing measure, like all fiat currencies across the board. The powers that be are jumping ship! Buying water, buying food, buying up the stuff-and-things that have made up omnipresent nature. They do not want to deal with their mediums of control. They are for us to deal with and run the rat race for. The masters of the universe are above-and-beyond that paradigm, and that is wherein their power lies: their disbelief, our continued belief.
But, this time could be different, in terms of paper, for the metals. Many people are waiting and worried about this precious metals price collapse amid a global selloff. But, it might not happen. Ever. Discussions are ongoing regarding making gold a tier 1 asset. Tier 1 capital is the ultimate measure that regulators use to gauge a bank’s financial strength. Generally speaking, green-folding cash is considered the most familiar tier 1 asset, alongside common stock and non-redeemable, non-cumulative preferred stocks. As The Basel Committee for Bank Supervision, or BCBS – this group is the maker of global capital requirements – debates making gold a tier 1 asset, the implications for gold and silver in future market panics and possible collapses run deep.
Institutions and investors who hold gold, if it becomes a tier 1 asset, will not need to sell gold to raise cash and other tier 1 assets. Instead, institutional gold will be seen by regulators as a measure of the institutions strength. So, as gold, silver, platinum and palladium trend quietly higher, don’t put too much emphasis on the probability of a future, general market collapse creating a massive dip in metals. A possible drought in physical supply aside, it could end-up being the case that, as confidence plummets in fiat cash, that gold – with its new tier 1 reputation – could escape the downside volatility that a major selloff has in the past signaled.
Nevertheless, the psychological gait has already been sent through the minds of those with assets paying attention, and this will already lead some investors and perhaps even institutions to think of this before selling their gold. That could already then change the dynamics of the precious metals amid a global selloff of paper. “Why would I sell my gold, if my gold is as good as cash? Banks are accumulating, regulators of fiat domination are even viewing it as safe. I best keep the yellow metal.” This will create support for silver also.
But, enough of all this talk about $’s. Moving onto bitcoin, actions taken against the decentralized, p2p currency by Brazil has not caused a dip. The implications out of Brazil are quite big, considering that no state as ever gone after bitcoin as Brazil as chosen to do. Threats of “bitcoin confiscation” a la gold confiscation comes to mind. Nevertheless, bitcoin has trended higher:
The news coming out of Brazil does not necessarily put the bitcoin platform at risk, as it would cost hundreds of millions of dollars or more to even research how to bring down the network, which will probably prove an impossible task. The news out of Brazil, however, does put bitcoin users at risk, as those who use the p2p currency could face persecution by the rogue states of the world.
The news out of Brazil, and gold becoming a tier 1 asset, makes the rebel’s ultimate diversified portfolio clear: bitcoin can be held as money, and insured by one’s precious metals holdings. Bitcoin is being attacked by the international financial powers, whilst gold is being held up as safe.