Market Curiosity: Exploring Markets And Systems

February 7, 2011

JPM wants your gold

Filed under: Editorials — Tags: , , , — Jeff Fitzmyers @ 10:41 am

J.P. Morgan Chase said on Monday it would accept physical gold as collateral with its counterparties as a growing number of clients look to use bullion as a hedge against inflation.

That’s the second time JPM said entities could use gold as collateral. What, bonds aren’t good enough anymore? They must be getting desperate. Entities would have to be extremely ignorant of what’s allegedly going on to store gold with JPM.

… initiative would allow its clients to mobilize collateral across borders and trading activities, regardless of the underlying obligation, to extract maximum value and manage risk

How is that any different then what bonds do right now? How does one extract maximum value? How is risk managed when JPM has numerous lawsuits for metals manipulation pending?

I asked Interactive Brokers a few months ago if their liberal “base currency” options could include gold, and they said no. Maybe someday…

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