Gold to Be Reclassified; Special Report by Leading Financial Web Site Penny Stock Detectives

In a recent Penny Stock Detectives article, editor Danny Esposito points out that while the debate rages about whether gold bullion.

New York, NY (prHWY.com) July 27, 2012 - In a recent Penny Stock Detectives article, editor Danny Esposito points out that while the debate rages about whether gold bullion is a currency or not, changes are quietly being legislated in key institutions and central banks around the world. Esposito notes the institutions have concluded that gold bullion is a currency.
"The Bank of International Settlements (BIS) is an institution created by the central banks around the world," comments Esposito. "The BIS essentially is a bank for all of the world's central banks that aims to foster financial and monetary stability globally."
Since the financial crisis of 2008, the BIS has implemented measures in an attempt to prevent such crises in the future, observes Esposito. One such measure, which would be implemented on January 1, 2013, would find commercial banks around the world upping their Tier 1 capital ratios from the current four percent to six percent, he reports.
The Penny Stock Detectives editor explains Tier 1 capital is reserved for only the highest AAA-rated assets, as defined by regulators and rating agencies. The BIS has now opened the discussion to include gold bullion as part of the Tier 1 asset category.
"It is possible that beginning in 2013, the precious metal will be classified as a Tier 1 asset," says Esposito. "This would mean gold would be given the highest rating of all assets in the world."
In Esposito's opinion, the most influential central bank in the world, the U.S. Federal Reserve, tends to agree with the BIS, and, according to him, it has recently released a memo to possibly change the status of gold bullion.
Esposito also reports that currently in the U.S., gold bullion is classified as a risk asset. He speculates it is possible that as of January 1, 2013, the Federal Reserve will reclassify it as a zero-risk asset. This means, he explains, that gold will join the very short list of assets that are considered zero-risk by the central bank in the U.S.: U.S. Treasuries, U.S. dollars, and assets and/or claims with the International Monetary Fund.
"The implications of both these proposed changes are significant for gold bullion," comments Esposito. "Currently, banks in the U.S. and around the world can buy gold, and for every dollar they spend on it, roughly only $0.50 is recognized on their balance sheets, because gold bullion is considered a risk asset, subject to a decline in value."
He continues, saying "This possible reclassification means that the dollar-for-dollar buying of gold bullion would represent dollar-for-dollar value on the banks' balance sheets, because gold would no longer be considered a risk asset."
Esposito believes this will increase demand for gold by banks and central banks around the world. An investor can either listen to both sides of the debate about the precious metal being a risk asset or currency, or an investor can pick the side that central banks around the world are picking: gold bullion is a currency, he concludes.

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The editors of Penny Stock Detectives believe low-priced stocks, when researched properly, present investors with great opportunities to accumulate wealth and to increase the value of their investment portfolios. You can learn more about Penny Stock Detectives at www.pennystockdetectives.com.

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Tag Words: precious metals, gold, gold bullion, central bank

Categories: Business

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