A substantial increase in demand for gold could be on the horizon if new international banking regulations are established, according to the firm run by billionaire investor Eric Sprott.
"In an article published on Sprott Asset Management’s website, entitled Gold: Solution to the Banking Crisis, Sprott and his colleague David Baker discussed the potential for banks to significantly raise their gold holdings under the proposed Basel III system.
“The Basel Committee on Banking Supervision is an exclusive and somewhat mysterious entity that issues banking guidelines for the world’s largest financial institutions,” Sprott began by noting. “Ever since the financial meltdown four years ago, the Basel Committee has been hard at work devising new international regulatory rules designed to minimize the potential for another large-scale financial meltdown. The Committee’s latest ‘framework’, as they call it, is referred to as ‘Basel III’, and involves tougher capital rules that will force all banks to more than triple the amount of core capital they hold from 2% to 7% in order to avoid future taxpayer bailouts. ...”