Morning Gold Fixing: JP Morgan Accepts Gold Bullion As Collateral – Silver Backwardation To Lead To Short Squeeze?

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Mon, 02/07/2011 - 08:38 | 940191 whopper
whopper's picture

One health care system

One central bank

One Fuhrer

Mon, 02/07/2011 - 10:05 | 940310 bankrupt JPM bu...
bankrupt JPM buy silver's picture

Here comes another CME hike on silver....I can smell it

 

www.silvergoldsilver.blogspot.com

Mon, 02/07/2011 - 11:13 | 940435 flaunt
flaunt's picture

They just raised margin requirements the other day.

Mon, 02/07/2011 - 13:43 | 940867 tmosley
tmosley's picture

And the day before, and the day before that too!

Mon, 02/07/2011 - 12:34 | 940682 truont
truont's picture

Rumor has it that wealthy Chinese are exchanging their GLD shares into physical bullion through "authorized participants".

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/2/7_KWN_Source_-_Expect_Massive_Chinese_Gold_Buying_Using_GLD.html

Ruh, roh, Blight Masters!

Mon, 02/07/2011 - 15:11 | 941078 SRV - ES339
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Dear Whopper,

We regret our assumption that America was ready for a black president, and for the resulting psychological challenges you face as a result of our indiscretion.

Sincerely,

52% of America

Mon, 02/07/2011 - 08:38 | 940192 Cookie
Cookie's picture

JP Morgan announced today that from now on they will accept physical gold bullion as collateral. This is a sign of gold’s further remonetisation in the global financial and monetary system. It may signal that JP Morgan is having difficulty in securing gold bullion in volume. JP Morgan is the custodian for many of the gold and silver exchange traded funds. They will not accept ETF trust gold as collateral.

 

But, but...gold isn't money, right??

Mon, 02/07/2011 - 09:34 | 940259 Freewheelin Franklin
Freewheelin Franklin's picture

I thought ETFs were "as-good-as-gold".

 

Silly me.

Mon, 02/07/2011 - 09:40 | 940263 Quinvarius
Quinvarius's picture

Sine JPM is the custodian of IAU and GLD, I think they have good reason not to accept either as collateral.

Mon, 02/07/2011 - 10:01 | 940302 Freewheelin Franklin
Freewheelin Franklin's picture

Yeah, I caught that, too. Didn't they also recently open their vaultst to the public for personal storage of gold?

Mon, 02/07/2011 - 10:01 | 940304 bigdumbnugly
bigdumbnugly's picture

lol.  right.  they can reach down into their own pockets as far as they want and they know almost all they'll get is lint.

Mon, 02/07/2011 - 11:16 | 940443 Jean Valjean
Jean Valjean's picture

This is a huge "tell" and should be shouted from the rooftops.  I know most ZHers know this but most investors don't and don't understand the implications.

Think about it.  If GLD was chock full of physical bullion and not a fractional reserve scam full of bankrupt paper promises, JPM would have no reason not to accept GLD shares as collateral.  The fact that they don't actually PROVES beyond doubt that GLD is a scam.

Mon, 02/07/2011 - 11:48 | 940539 SilverIsKing
SilverIsKing's picture

When you call in your gold collateral, they will surely offer you shares of GLD or cash back instead.

Mon, 02/07/2011 - 14:30 | 940986 DosZap
DosZap's picture

Bingo,

You will play hell getting Phsical from GLD.

Mon, 02/07/2011 - 21:18 | 942011 ChookChoker
ChookChoker's picture

If you insist on physical you will get your gold plated tungsten back. They will probably even stamp the same number on it as the bar that you gave them.

Mon, 02/07/2011 - 12:05 | 940593 trav7777
trav7777's picture

GLD is described as a trading instrument whose purpose is to track the price of gold through use of derivatives instruments.  I'm not sure whose idea it was that GLD or similar vehicles should ever have held any real physical.

Perhaps there is some actual gold held because that was necessary to get the instrument off the ground, get people to buy into it as pseudo-unallocated ownership, but you have to expect any BANK to start to back out its investment just as soon as possible.  I mean, jeez, even in the illustrious history of central banking, look at the BOE; the original investors backed their capital out of that within less time than GLD has been around.

Mon, 02/07/2011 - 13:46 | 940875 tmosley
tmosley's picture

Whether they should or not is moot.  They claim they do, and they update their "inventory" every business day.  

Harvey reports the changes every day.  harveyorgan.blogspot.com

Mon, 02/07/2011 - 12:13 | 940615 the rookie cynic
the rookie cynic's picture

+ 1 I'm getting on my roof right now.

Mon, 02/07/2011 - 11:25 | 940469 snowball777
snowball777's picture

The company expects to accept additional precious metals and commodities as collateral later this year, ...

 

Does that mean sugar and wheat are going to be 'money' too?

Mon, 02/07/2011 - 13:47 | 940881 tmosley
tmosley's picture

No, but they are assets.

"But you can't eat cake!"

Mon, 02/07/2011 - 08:39 | 940193 ZeroPower
ZeroPower's picture

And copper. Keeps making the highs. I've mentioned this before, but higher copper is the big tell everything is 'ok' aka higher values across the board.

Mon, 02/07/2011 - 09:24 | 940245 4xaddict
4xaddict's picture

traditionally copper has had a degree in economics however in a rigged market it's hard to trust it as much as before.

Interesting that gold was 0.51% higher and up for the first time in 5 weeks and the author is already calling an end to the latest healthy correction.

Above 1380 on a weekly timeframe and we could see things higher, below that and we are more likely just seeing a retest under the recetnly broker rising trendline that would lead to further falls into the 1250 area once 1300 is cleared.

Gold will go miles higher than here however an 0.5% increase for the first time in 5 weeks is hardly a reason to pop champagne for all those who bought in at 1430+.

It will happen but why make silly calls like this, it just reduces the credibility of the other information in your article that was interesting.

Call me a troll if you like people but I am a PM bull too, just remain a realist.

Mon, 02/07/2011 - 14:40 | 941016 ciscokid
ciscokid's picture

Your spot on mate.

Mon, 02/07/2011 - 17:15 | 941428 DeltaFunctionToronto
DeltaFunctionToronto's picture

Perhaps the author in his "naivety" has taken a hint from the tbond market, and a 5 week trading range breakdown. Long term, the gold price is a function of confidence in debt, and thus major price-time intersections in this market overrides all technical indicators. This means, expect bearish formations under certain circumstances to yield violent bullish reversals.

Oh and, I don't know, a significantly skewed OI distribution OTM/NTM in unusual places that supports his thesis?

Then there's a mass of anecdotal evidence large interests have been left in the cold following inquiries for physical delivery.

Add on top of all of this the fact we've elicited an overdue target for a short-term cyclical low -- thus you have a bottom.

Mon, 02/07/2011 - 08:40 | 940197 jeff montanye
jeff montanye's picture

that jpm will accept gold bullion as collateral but not gold etf pretty much says it all.

Mon, 02/07/2011 - 08:51 | 940205 gwar5
gwar5's picture

Exactly. Spot on. That's an admission there's no gold in GLD or they'd take it in a heartbeat.

Mon, 02/07/2011 - 09:03 | 940221 bob_dabolina
bob_dabolina's picture

Really? When was the last time the bank let you pledge your neighbors house as collateral?

Mon, 02/07/2011 - 09:33 | 940258 tmosley
tmosley's picture

When I owned the mortgage.

You can pledge anything you own as collateral, including ownership of loans you have made, or shares of stock or ETFs.  Of course, if the banks knows that something is worthless or likely to become worthless, then they WON'T take it.

Mon, 02/07/2011 - 10:02 | 940305 Canuckistan Al
Canuckistan Al's picture

Well, you'd tend to think so, but I can tell you from experience. I once tried to offer a significant amount of shares that I owned in the actual bank (that I was trying to acquire a Line of Credit from).

They wouldn't accept them as collateral, even though the value of those shares was nearly double the amount of the credit line.

I asked my banker what she thought that that said about their faith in their own financial institution. All I got was a blank look in return.

Mon, 02/07/2011 - 11:05 | 940401 Womb Service
Womb Service's picture

I think you guys are missing the point though. GLD is supposed to be as good as gold. If they ARE accepting gold, why wouldn't they accept GLD? One should be the same as the other.

Rhetorical question of course. We know exactly why they won't take it.

Mon, 02/07/2011 - 11:07 | 940413 tmosley
tmosley's picture

Yes, you can pledge anything you like as collateral.  That doesn't mean they will accept it.  The point is that accepting gold as collateral, but not GLD is both hilarious and telling.

Mon, 02/07/2011 - 09:48 | 940277 dearth vader
dearth vader's picture

Wait, according to Ed Steer JPM owns the GLD ETF, for the greater part, that is.
So, they know exactly what it's worth, and the same goes for the other ETFs into the bargain.

Mon, 02/07/2011 - 08:52 | 940207 attst487
attst487's picture

+1 imaginary ounce

Mon, 02/07/2011 - 11:28 | 940480 snowball777
snowball777's picture

Take delivery at "End of Rainbow".

Mon, 02/07/2011 - 09:46 | 940266 Snidley Whipsnae
Snidley Whipsnae's picture

Agreed... JPM doesn't want a claim on 100:1 levered PMs as collateral.

JPM already has vaults full of that crap!

Mon, 02/07/2011 - 10:32 | 940351 Hephasteus
Hephasteus's picture

But they won't push hard for a gold standard till they can rob it back.

People ought to use trash cash as collarteral. Play fair.

Mon, 02/07/2011 - 08:40 | 940198 LoneStarHog
LoneStarHog's picture

"They will not accept ETF trust gold as collateral." -- Could it be that there is very little or no physical gold for collateral?

Mon, 02/07/2011 - 09:01 | 940201 bob_dabolina
bob_dabolina's picture

You can't accept something as collateral that is owned by other people.

GLD is widely owned by investors all around the world.

I don't see how it makes a difference though. It's not like the banks have ever followed the rules in the past.

Mon, 02/07/2011 - 09:50 | 940283 HoofHearted
HoofHearted's picture

Since when are my ETF shares owned by someone else? I paid for the damn things; they had better be mine. And with a large enough number of shares I can theoretically demand that they give me a proportionate share of the gold to take away and store in my own vault or under my mattress or whatever. Notice the "theoretically" part.

I don't own GLD or SLV for the trolls out there. I might own some physical gold and silver, but I cannot confirm or deny that. I've read about FDR and 1933.

Mon, 02/07/2011 - 11:27 | 940477 Attitude_Check
Attitude_Check's picture

Soo when I buy a share in GLD it is really "owned" by others, and in reality I have bought nothing!   Yep that sounds about right.  And is the whole point being made here in the comments.  You are in violent agreement it seems.

Mon, 02/07/2011 - 08:48 | 940203 Twindrives
Twindrives's picture

In other words.... JPM will take your physical gold as collateral.......and keep it. 

 

Mon, 02/07/2011 - 09:31 | 940255 Careless Whisper
Careless Whisper's picture

Bernie Madoff's aider & abettor isn't getting within a fifty mile radius of my gold.

Mon, 02/07/2011 - 12:08 | 940602 trav7777
trav7777's picture

I shot this squirrel for lookin' at my gold

Mon, 02/07/2011 - 08:51 | 940206 Cash_is_Trash
Cash_is_Trash's picture

A fresh batch of backwardation comin' up!

Mon, 02/07/2011 - 08:56 | 940215 BrianOFlanagan
BrianOFlanagan's picture

I've thought the 100oz story was overblown, but this backwardation plus registered inventories at 5-year lows is indeed indicative of a shortage.  

Mon, 02/07/2011 - 08:59 | 940217 savagegoose
savagegoose's picture

i wouldnt store my stinking pile of feces with JPM never mind real money. dream on assholes

Mon, 02/07/2011 - 09:10 | 940229 Apostle of Unknown
Apostle of Unknown's picture

you're hoarding your own feces?

Mon, 02/07/2011 - 09:20 | 940238 sharkbait
sharkbait's picture

they may be worth more thn FRN's some day!  Can be used as fertilizer.  Fece stacking put's a whole new perspective on the meaning of SHTF.

Mon, 02/07/2011 - 09:28 | 940250 savagegoose
savagegoose's picture

yeah i like t5o mix it with water and spray on fresh fruit i grow, then export to china.

Mon, 02/07/2011 - 11:08 | 940422 weinerdog43
weinerdog43's picture

Gross....but funny!

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