Gold Added to FDIC Proposed Capital Rules (GLD, IAU, AUY, NEM, ABX)

The change also leads to the conclusion that there might be a serious uptick in the demand for gold. Not just among investors, but from the banks themselves. The impact on funds like the SPDR Gold Shares (AMEX: GLD) and iShares Gold Trust (AMEX: IAU) is likely to trail along behind any increased demand from banks. Gold miners like Yamana Gold Inc. (NYSE: AUY), Newmont Mining Corp. (NYSE: NEM), and Barrick Gold Corp. (NYSE: ABX) are very likely to see shares prices rise as demand increases.

It is still early days to predict that demand for gold will spike on the FDIC’s proposed rules. The comment period has just begun, and it’s not entirely clear that modern banks would welcome a return of gold as a riskless asset. For one thing, it’s totally unnecessary to modern finance. For another, it’s probably been included in the new rules as a sop to some goldbug or other. Another few months should tell the story.

Paul Ausick