Gold beats government bonds
The London Bullion Market Association affirms that gold has exchange volumes on the British market (according to figures at the end of 2018) of about 42 billion dollars a day.
The LBMA has also calculated the liquidity index for gold and other precious metals using the same parameters and same methods applied in 2013 by the European Banking Authority to evaluate other assets.
Results show how gold has an index of 0.000018: a higher score than that of «High quality liquid assets» (Hqla), such as corporate bonds (0.188) and government bonds, which, with a score of 0.058, the Banking Authority has placed in a special category as extremely liquid assets.
Moreover, at between 0.0002 and 0.0017, silver, platinum and palladium have higher liquidity indexes than debt securities.
«Thanks to these new figures» said Ruth Crowell, CEO at the LBMA, «regulators and investors will be able to see the precious metal OTC market in a different light».
The London association is indeed worried about the Net stable funding ratio (Nsfr) in terms of liquidity risk coverage in the long-term. In fact, as of 2021, banks will have to finance the following year’s activities with a volume equal to the stable resource volume.
And if gold were to be treated like the other “commodities”, according to the LBMA, many banks could decide to stop transactions with serious repercussions on the market.
