Gold

Is Gold a High-Quality Liquid Asset (HQLA) Under Basel III? Not officially… but it should be.

June 6, 2025

Gold’s regulatory status under Basel III

The World Gold Council addresses a key question:

Does gold qualify as an HQLA under Basel III?

Currently, gold is not recognized as an official HQLA, though it is:

• Assigned a 0% risk weight for capital purposes

• Accepted as collateral with a 20% haircut

Gold: An HQLA in practice

Even if not legally listed as HQLA, gold meets nearly all Basel III criteria for High-Quality Liquid Assets:

• Low risk and no credit exposure

• High daily liquidity (over $120 billion traded OTC)

• Stable volatility, comparable to 30-year US Treasuries

• Tight spreads even during market stress

• A proven flight-to-quality asset

New study: Gold behaves like a top-tier HQLA

A February 2025 study by Baur et al. finds gold:

• Matches the liquidity of top government bonds

• Outperforms many official Level 2B assets

Final thought: Should gold be reclassified?

No regulatory change is planned yet, but the WGC strongly recommends that gold’s market behavior warrants HQLA status in future Basel III updates.

Original article from gold.org

https://www.gold.org/goldhub/gold-focus/2025/06/you-asked-we-answered-does-gold-qualify-hqla-under-basel-iii 

Unprecedented Delivery Demand on Comex Signals Strong Bullish Momentum in Gold and Silver Markets 

May 31, 2025

The Comex has recently experienced record-breaking delivery volumes for both gold and silver, indicating a robust demand for physical precious metals. In May, over 25,000 gold contracts were delivered, surpassing previous records for minor months. This surge is largely attributed to an increase in net new contracts, which are agreements initiated mid-month and settled immediately, accounting for more than 60% of the total delivery volume.

Despite the high delivery rates, gold inventories in Comex vaults have declined since April, suggesting a substantial outflow of physical metal. Similarly, silver deliveries in May reached the second-highest volume since 2021, with a notable rise in net new contracts. While registered silver inventories have increased, the overall eligible silver stocks have shown signs of slowing. 

As we approach June, both gold and silver contracts exhibit elevated open interest, indicating sustained investor engagement. However, when compared to the physical stock levels, the relative open interest is not excessively high, due to the recent restocking of silver inventories.

These developments underscore a significant shift in the precious metals market, with the Comex serving as a critical indicator of underlying physical demand. The persistent high delivery volumes and declining inventories point towards continued bullish momentum in the gold and silver markets. 

Original article from SchiffGold via Seeking Alpha

https://seekingalpha.com/article/4790411-delivery-demand-comex-remains-record-levels-gold-silver

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This page offers strategic insights into the gold market, including gold supply and demand, central bank purchases, investment trends, inflation hedging, and macroeconomic drivers. Gold remains a core asset for portfolio protection, long-term value preservation, and crisis resilience in global financial markets.