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title: "Gold’s Tier One Status Explained: Banking Asset Insights"
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# Gold’s Tier One Status Explained: Banking Asset Insights

Sean Brazney and Jeffrey Christian · October 15, 2025

[Watch Video](https://player.vimeo.com/video/1127672675)

## Video Transcript

**Jeffrey Christian:**Just because gold is now 100% tier one, it doesn’t mean that the banks are going to run out and buy gold, or sell gold, or that they need to unwind leases. It’s simply a matter of them being able to count their assets at 100%, as opposed to 85% on a daily basis.

**Sean Brazney:** Is Basel III, I think I’ve been reading about Basel III gold as a tier one asset, I think going all the way back to maybe 2009. That’s kind of creeping out again… is that gold is now…is it now a tier one asset and does that mean banks are now going to hold it as collateral for loans, whether it be here in the States or around the world?

**Jeffrey Christian:** There’s a lot of confusion about Basel III and the BIS, Bank for International Settlements, regulations of central banks and commercial banks, how they deal with settings. Gold is a tier one asset under the guidelines of the Bank for International Settlement and Basel III, and it has been for several years, but a tier one asset is related to the assets of a bank, right? What happened was that prior to becoming a tier one asset, if you had gold on your book, it was a tier two asset or lower, you had to not count the full value, and that reflected the volatility of the value. If you have US dollars as your reserves, your bank reserves, and the value of them is 100% of the dollars, but if you have part of your reserves in gold, and the price of gold fluctuates in US dollars, if it wasn’t a tier one asset from an asset and reserve basis, you had to say, I can count 85% of the value of my gold against my requirements to have a certain number of assets in my reserves. When it became a tier one asset, you could revalue it and count 100% of the daily value.

Now, tier one assets have to do with asset levels. There’s a second thing which has come up, which is a high quality liquid asset and that has to do with liquidity issues. Tier one has nothing to do with the liquidity issues. They actually call it, I guess, level one. Gold is not a level one asset from a high-quality liquid asset regulatory perspective. There is a change that came into effect on July 1st with U.S. banks, whereby they changed the regulations about how they handle high-quality liquid assets. Had nothing to do with gold. Had nothing to do with gold being a tier one asset from an asset calculation perspective, right? So, gold is not a level one liquidity asset and so they have to measure it at 85% when they’re saying, “Do we have enough liquidity to survive a bank run or a other financial crisis?” They have to use 85% shake on it. So, that’s come around and people didn’t understand it. They were saying, “Well, okay, they didn’t understand several levels.” First, they didn’t understand the difference between the asset regulations and the liquidity regulations.

Then there’s a second thing, which is just because gold is now 100% tier one, it doesn’t mean that the banks are going to run out and buy gold, or sell gold, or that they need to unwind leases, because it’s simply a matter of them being able to count their assets at 100% as opposed to 85% on a daily basis. Again, it has nothing to do with the liquidity side and the high quality liquid asset thing, but there’s no impulse for a bank to necessarily run out and buy or sell its gold because it’s tier one. What it is, is it’s an incentive to be more comfortable with your gold, because you can value it at 100% and you saw this in Turkey in 2011, during the financial crisis and the sovereign debt crisis that was racking Europe, including and especially Greece. Greece is next to Turkey, I think, was at the time its major trading partner. You had all of these people in Europe who had their money in dollars and euros and they were very worried about the stability of the European central banking system, because it was relatively new. It had come into place in 1999. So, it was 12 years old and some of the regulations needed to be modified to make it more stable, which happened in 2013, 2014, but in 2011, they weren’t there. So, you had a lot of money and gold pouring out of Europe into Turkey. Turkey, meanwhile, had wanted to become part of the EU and been turned down. You’re not European enough to be part of the EU. In 2011, they said, “Thank you, because you’ve just insulated us from all of your financial problems. Plus, we had this flood of your assets coming into our banks, and there are problems and risks that we could be thrown into a recession, because our major trading partners in Europe are suffering under the sovereign debt crisis and the economic crisis that was occurring in 2011.” So what the Turkish Central Bank did was they said, “You can use your gold and your euros and your dollars, you can use a portion of them, and count them as your reserve, against your reserve requirement.” And they did that so that commercial banks could say, “Okay, we have these various gold deposits, euro deposits, dollar deposits, and we’ll use those to meet some of our up to 30% of our reserve requirements, banking reserve requirements, that frees up 30% of the lira that we have, Turkish lira, that we can then lend to Turkish consumers and companies.” Kept Turkey out of a recession. That was just pure genius, and one of the things that I’m sure somebody would say it’s a conspiracy, but I think it’s just pure stupidity, other central banks and other governments have not followed suit. It’s a real genius type of thing to do to increase the liquidity and the credit availability in your economy. Turkey’s done it, India’s done it, but other central banks and banking regulators have not done it.