JPMorgan Allowing Gold to Be Used as Collateral for Some Types of Trading

February 8th, 2011

Is JPM trying to get its tentacles around enough metal to cover physical withdrawals from clients?

Via: Bloomberg:

Gold may get a boost as JPMorgan Chase & Co. joins exchanges in allowing the metal to be used as collateral for trading, according to MF Global Holdings Ltd.

JPMorgan yesterday said it will accept bullion “to satisfy securities lending and repo obligations” as more clients seek to use gold as an inflation hedge and to post as collateral. CME Group Inc. in October 2009 allowed gold to be used as collateral for trades on all its markets as an alternative to debt or equities, and Intercontinental Exchange Inc. in November allowed gold’s use as collateral for energy and credit default swaps on its ICE Clear Europe clearinghouse.

“The announcement should be slightly positive for gold prices, as it further grows the belief that gold is a currency and has more uses than simply acting as a safe haven or portfolio diversifier,” Tom Pawlicki, an analyst at MF Global in Chicago, said today in a report.

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