
Gold reclassified as Tier 1 asset under Basel III: U.S. Global Investors CEO sees demand to surge
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U.S. Global Investors CEO Frank Holmes joined Steve Darling from Proactive to discuss a seismic shift in the financial treatment of gold ahead of new Basel III regulations set to take effect on July 1, 2025. Under the updated rules, physical gold will be recognized as a Tier 1 High-Quality Liquid Asset (HQLA) — the same category as cash and government bonds — fundamentally changing how banks and institutions view and utilize gold.
“This reclassification legitimizes gold as cash or better than cash,” Holmes stated, emphasizing that the change could eliminate existing regulatory disincentives and fuel substantial new institutional demand. By elevating physical gold’s liquidity status, Basel III could incentivize banks, particularly in Europe and Canada, to hold more gold as part of their reserve requirements.
Holmes also highlighted broader macroeconomic tailwinds, including surging M2 money supply growth in China and India — historically strong precursors to rising gold prices — as well as escalating global de-dollarization efforts and central bank gold accumulation. He cited monetary policies across countries representing over 40% of the global population as further catalysts.
Reflecting these trends, Holmes revised his long-term gold forecast upward, now projecting USD 6,000 per ounce by the end of a potential second Trump presidency, pointing to favorable policy conditions and accelerating monetary expansion.
With Basel III implementation looming, Holmes believes this could mark a historic turning point in gold’s role within the global financial system.
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