Open Letter to Dave McGowan, CEO., page-9

Basel 111 is a set of banking regulations brought in by the BIS (Central bank of the central banks). Next Monday is effectively the day the re-monetization of gold takes place after 42 years of being mis-priced by the banks. It has been a tier 3 Bank asset that can be valued at only 50% of its value like eg art works but now it will become a tier 1 asset to be considered as good as cash, bonds etc so it is as good as cash in valuing reserves for lending against assets.

Banks look to hold a mix of assets but there was no incentive to buy or hold gold if you took a 50% immediate hair cut and could never value gold at more than 50% of its value. Banks have already been purchasing gold ahead of Basel 111 and this will likely continue.

Central banks buying most gold last year since 1971. They added 651 tons of gold in 2018. Under Basel III, banks can now use 100% of gold market value towards reserves.

How will this affect the gold price going forward? It adds even more demand for gold going forward to add to all the existing demand. The paper gold Comex price suppression scheme is near to breaking. This may be the straw that breaks the camels back.Think of $1,900+ gold which we got to in 2011. Then think a lot more in the coming years .....