World Gold Council chief aims to make gold as attractive and liquid as swaps

WHILE gold is often considered a safe-haven asset, the precious yellow metal falls short of being classified as a “high-quality liquid asset”, which is a key factor deterring investors,” said David Tait, chief executive of the World Gold Council.

In an interview with The Business Times on Tuesday (Mar 26), Tait noted that one key determinant for investment managers is the return on capital. The funding ratio for gold currently stands at around 85 per cent, he said.

Funding ratio

For instance, if a bank wanted to lend US$100 million worth of gold, it would have to keep aside cash or Tier 1 capital to the tune of US$85 million. 

“This will cost you tons to do nothing really, so your return…