LONDON—J.P. Morgan Chase & Co. said it will accept physical gold as collateral against securities lending and repurchase obligations, a move that reinforces the precious metal's role as an alternative currency... http://online.wsj.com/article/SB10001424052748704422204576130192457252596.html?mod=googlenews_wsj
If you ever dealt with margin accounts in a brokerage, you probably should read the prospectus very very carefully. The amount of gold you actually own versus how much the bank actually will take as the margin calls start coming in for borrowing stocks to short. I would bet they could pay you back in USD$ if gold goes up or the actual metal based on spot $ if it goes down. That is how I would do it if I was Jamie.
I agree with Matt Lechner in the comments section that this really does add volatility to the collateral market and make it harder for a bank stabilization policy. Also, this will add tremendous volatility to the PM market, as positions go bad and banks have to liquidate physical PM stockpiles, this could reinforce a negative price movement. Great post though, lots to discuss.
I don't mind a negative price movement lol I do own some gold but mostly silver. However I have not bought any gold recently because it's out of my price range. I still buy silver coins and hope the prices don't get too much higher.
These trends should be spread over the country . All the companies should accept the gold as an alternative to the things and can be used as an asset .
If alot of banks start doing this and then gold tanks are we going to have a repeat of the housing crisis? I smell another bailout.
Yeah, sounds great. This way the bank can liquidate your position if gold drops too much in value or if the stuff you bought does. Good way to increase your risk.
Since the url here was not coin related and there was nothing to indicate a purpose, I deleted it as spam. Jim
