Gold and Silver are the Only RISK FREE Assets in the World
We don't see this changing but navigating "do-overs" and "rule changes" along the way will give you whiplash
Sorry, everyone, it’s time for my sports analogy again (coming right out of the gates)
Yesterday I didn’t publish the SA newsletter; I confess I was watching “The Players Championship” (Next to The Masters this is my favorite tournament of the season)
I don’t have a favorite player in this current era. In the past, my favorite was Lee Trevino because I met him a few times while I worked at Four Hills Country Club in Albuquerque, NM.
Trevino, prior to turning pro, was a club pro in El Paso and a friend of my boss, Don Klein (the club pro in Albuquerque). Both played in the PGA Sun Country section. You could go to Don’s desk (he had one of those old tin Rolodex where you dial on the left and hit a button). Under T, Lee Trevino would appear.
I began thinking during the broadcast about Silver and Gold markets, LBMA, COMEX, and all the rules that keep changing that interfere with true price discovery.
What if this happened in sports?
Constantly changing rules in sports, like golf or baseball, would disrupt the essence of competition. In golf, increasing the cup size threefold would nullify the skill of precise putting, leveling the field but removing the challenge.
I watch the Pirates live about 10 times per year (Our team is horrendous), but we have one of the best arms in Major League Baseball, Paul Skenes.
Though the rest of the team struggles, this kid is astounding with a live arm and a repertoire of junk, leaving hitters puzzled. In baseball, the refrain goes, “Three strikes and you’re out.”
Everyone knows this. But what if the rule were changed to five strikes per out? This would diminish Paul Skenes's advantage (which he has worked his entire life to refine).
Additionally, Silver and gold stackers have accumulated gold and silver for what seems like their entire lives, only to face rule changes that leave us whipsawed from rule to rule, forcing us to "study up" on the latest shenanigans by the banksters.
Arbitrarily, making the putting hole circumference larger or moving it to five strikes per out would deprive exceptional talents of an advantage.
Such changes would undermine the strategies and skills that define these sports, leading to a homogenized experience where talent and practice are less rewarded. This would ultimately detract from the excitement and integrity of the game.
Do-Over
I recall Super Bowl about 50 years ago , Minnesota Viking quarterback Fran Tarkenton threw a costly interception late in the game, which was returned for a pick 6 by the opposing defense, sealing the win. If Tarkenton could then call for a "do-over," it would strip the game of its tension and fairness, leaving fans disillusioned with the sport
Basel III regulations, Net Stable Funding Ratio
Under Basel III regulations implemented post-2008 financial crisis, the Net Stable Funding Ratio (NSFR) introduces distinct liquidity requirements for allocated and unallocated gold, reshaping banks’ balance sheet management. The NSFR mandates that banks maintain stable funding sources proportional to asset liquidity risks, calculated as Available Stable Funding (ASF) divided by Required Stable Funding (RSF).
Allocated gold—physically held, client-owned bars stored in secure vaults—is classified as a Tier 1 asset with 0% risk weighting, equivalent to cash. This reclassification recognizes allocated gold’s role as a high-quality liquid asset (HQLA), eliminating capital buffer requirements and incentivizing banks to hold physical bullion for liquidity stability. Conversely, unallocated gold—a paper claim representing gold owed by banks—is treated as a Tier 3 asset, subject to an 85% RSF factor. This means banks must hold 85% of unallocated gold’s value in stable funding (e.g., long-term debt or equity), sharply raising operational costs compared to pre-Basel III norms.
The stringent RSF for unallocated gold targets systemic risks from leveraged paper gold markets, where derivatives historically exceeded physical reserves by up to 400:1. By penalizing uncollateralized exposures, Basel III discourages speculative gold lending, swaps, and futures, pushing banks toward physical holdings. However, the London Bullion Market Association (LBMA) and World Gold Council (WGC) successfully lobbied for exemptions: clearing banks in London’s $30B/day market can apply for NSFR waivers to preserve settlement liquidity.
These rules amplify gold’s bifurcation: allocated gold’s Tier 1 status bolsters its appeal as a “risk-free” reserve, while unallocated positions face margin compression. Critics argue the 85% RSF mischaracterizes gold’s liquidity, as it lacks default risk and historically hedges portfolio volatility. Nevertheless, the reforms accelerate a structural shift from paper to physical gold markets, tightening supply and potentially elevating prices as banks accumulate bullion. As of 2025, U.S. adoption further entrenches these dynamics, with long-term implications for monetary policy and commodity trading.
end of segment
HUGE NEWS
The failing & flailing US dollar is now worth only 1/3,000th the price of Gold per ounce
