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

Tyler Durden's picture




 

Submitted by GoldCore

JP Morgan Accepts Gold Bullion as Collateral – Silver Backwardation to Lead to Short Squeeze?

Gold is marginally lower in euro, pound and dollar terms and marginally higher in Japanese yen and Swiss francs. Silver is higher in all currencies. With gold’s 0.51% higher close last week (first rise in 5 weeks) and silver’s 4% rally, the bears will be nervous that the recent downward trend may have reversed.

Cross Currency Table GoldCore

Cross Currency Table

Asian equities were higher except for the Hang Seng which fell 1.49% as developers fell on concerns regarding Chinese property prices. European indices have shrugged off the tensions in Egypt, North Africa and the Middle East and the Euro Stoxx 50 is up by 1.1%.


UK Gilts 10 Year (30 Days (Tick) GoldCore

UK Gilts 10 Year (30 Days (Tick)

European sovereign debt yields are flat. UK gilts have seen some selling again today with the yield rising to 3.86%. In just 5 weeks the yield on the UK 10 year has risen nearly 50 basis points from 3.393% to 3.86%.

Most commodities are higher today and NYMEX crude oil is up 0.2% to $89.21 and Brent up 0.7% to $100.56 a barrel.

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.

In October, the clearing house of global exchange CME Group – CME Clearing – announced it will now accept gold as collateral for trades on the exchange. Gold bullion can be used for margins for CME trades, ranging from crude oil, gold, grains, equity indexes and Treasury bonds.

Given the current monetary, macroeconomic and geopolitical risk gold is an attractive alternative to debt, equities or other paper assets as collateral.

JP Morgans’s move shows how gold bullion’s fungiblity and tangibility as an asset makes it attractive and shows gold’s increasing importance in the financial system.

Interestingly, the CME is storing their collateral gold at JP Morgan Chase Bank in London. The exchange said it hoped to add additional depositories in the future but there has been no announcement of developments in this regard.

Silver prices remain in backwardation, showing that buyers are willing to pay a premium for silver delivered sooner rather than later.

Both gold and particularly silver are vulnerable to a short squeeze that propels prices beyond their recent record nominal highs. In the gold market that are some 80,000 short contracts which is more than 30% than the average short position in 2010.

The concentrated shorts who the CFTC has been investigating will be nervous and given the strong fundamentals in the bullion market may be forced to buy back their positions in order to protect themselves from significant losses.

 

NEWS:

(Bloomberg) -- JPMorgan Will Accept Gold as Collateral for Securities Lending
JPMorgan Chase & Co. said it will accept physical gold as collateral “to satisfy securities lending and repo obligations with counterparties.”

The company expects to accept additional precious metals and commodities as collateral later this year, it said today in an e-mailed statement.

(Bloomberg) -- Investors Have $102 Billion Bet on Gold, Silver Gains
After the worst January for precious metals in two decades, investors still have a $102 billion bet on higher prices, hoarding more gold than all but four central banks and more silver than the U.S. can mine in almost 12 years.

The five analysts ranked by Bloomberg as the most accurate over two years expect silver to rise as much as 23 percent before the end of 2011 and gold 20 percent, the median of their estimates show. UBS AG predicts the strongest industrial demand for silver since at least 1990 and the second-highest sales of exchange-traded gold products on record.

The decade-long surge in gold attracted fund managers from John Paulson to George Soros and is now spurring central banks to add to their reserves for the first time in a generation. Once written off as demand for photographic film waned, silver found new uses in everything from solar panels to plasma screens, making it the precious metal most used in industry. As stocks rose 9 percent and Treasuries returned 67 percent since the end of 2000, gold surged fivefold and silver sixfold.

“I had to chuckle when I saw reports that it was over for gold,” said Michael Cuggino, who helps manage $10 billion at Permanent Portfolio Funds in San Francisco, and has about 20 percent of his assets in gold. “Some investors have taken money off the table after a significant run-up in 2010. If you look at the macro environment, the instability around the world, the worldwide currency devaluation, these factors all bode well.”

(Bloomberg) -- Venezuela’s Gold Reserves Rise 12%, Reserves Abroad Fall 37%
Venezuela’s central bank increased its gold reserves 12 percent in the second half of 2010 while its reserves in foreign banks fell 37 percent in the period, according to the bank’s year-end financial report published in today’s Ultimas Noticias.

The bank’s gold reserves increased to 42.4 billion bolivars ($9.86 billion) at the end of 2010 from 37.3 billion bolivars at the end of June, the bank report said. The central bank’s reserves held in foreign banks fell to 7.32 billion bolivars by year-end from 10 billion bolivars in June.

(Bloomberg) -- Sugar Shortage Looms as Storm Ruins Australian Crop
World sugar output will probably fall short of demand, said Rabobank, after a cyclone with winds stronger than Hurricane Katrina destroyed homes and smashed crops in Australia, driving prices to 30-year highs.

(Bloomberg) -- Corn Advances to 30-Month High as World Inventories Set to Drop
Corn climbed to the highest level since July 2008 on speculation that a U.S. government report on Feb. 9 will show global stockpiles declined before the 2011 harvests because of increasing demand.

(Bloomberg) -- South Korea’s Lee Calls for Food Crisis Task Force, Yonhap Says
South Korean President Lee Myung Bak said that the government needs to create a joint task force with civilian experts to tackle food security amid soaring global prices, Yonhap News reported.

(Bloomberg) -- Bernanke Bet Commodities Won’t Boost Inflation Wins Investors
Investors are betting with Ben S. Bernanke that surging food and energy prices won’t accelerate U.S. inflation, allowing him to maintain easy money.

(Bloomberg) -- Egypt Crisis to ‘Impact’ India Central Bank Actions
Egypt’s political crisis poses a risk to oil prices and will “impact” the Indian central bank’s actions, Deputy Governor Subir Gokarn said.

(Bloomberg) -- ‘Unhealthy’ Budget Safer Than Top-Rated France: Japan Credit
Japan is a safer investment than France even after Standard & Poor’s cut the Asian nation’s credit rating to three steps lower than its top-ranked European counterpart, credit-default swap prices show.

(Bloomberg) -- Euro Gains Before German Factory, Industrial-Production Reports
The euro rose against the dollar, snapping a three-day decline, before German reports this week that economists said will show factory orders climbed from a year earlier and industrial production expanded.

 

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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
SRV - ES339's picture

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!

Mon, 02/07/2011 - 10:14 | 940325 ArvUK
ArvUK's picture

Somewhat related...

 

In India, dried out cow dung is used as a fuel for fire.

Mon, 02/07/2011 - 09:00 | 940218 chubbar
chubbar's picture

Any takers on whether there is a depository clause that states JP can cash settle instead of returning the gold?

Mon, 02/07/2011 - 09:08 | 940227 savagegoose
savagegoose's picture

yeah i bet it runs something like cash settle at the price you depositted it , or  current spot price, what ever is lower.

Mon, 02/07/2011 - 09:03 | 940220 props2009
props2009's picture

China and US approch to solve the problem

China spends on infra and create spare capacity but increases wealth of its country while US buys stock market benefitting a few hedge funds. 

 

http://dawnwires.com/investment-news/china-a-trade-machine-ignore-at-your-risk/

 

Mon, 02/07/2011 - 09:04 | 940222 apberusdisvet
apberusdisvet's picture

This article and the other one this AM by smartknowledgeu are indicators that the PM bears who keep posting on sites are paid to do so by TPTB.

Mon, 02/07/2011 - 09:10 | 940230 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

You would have to be absolutely mad to let these evil criminals anywhere near your gold. Precious metals are one of the very few last places you can store your wealth away from these manpiluating criminal parasites.

Deposit your gold with these crooks and you'll probably get back a yellow painted piece of lead with your original serial number written in crayon on top.

Mon, 02/07/2011 - 09:13 | 940232 GetZeeGold
GetZeeGold's picture

 

Heh heh.....the shaking drug addict with wide eyes sez...

 

Sure...you can leave your heroin with me.

 

 

 

 

Mon, 02/07/2011 - 09:17 | 940235 gwar5
gwar5's picture

"And so it begins....."  Physical gold is confirmed king by JPM.

GLD persona non grata is an admission it is leveraged as high as 100:1.  Any fool that gives these crooks their physical PMs as collateral or to store in their new vaults deserves to lose it.

"Everybody now needs to be their own central banker" -- Marc Faber

 

Mon, 02/07/2011 - 09:21 | 940240 gwar5
gwar5's picture

Wonder if they will still take tonnes of Tungsten?

Mon, 02/07/2011 - 09:44 | 940251 TheGoldBug
TheGoldBug's picture

The concentrated shorts who the CFTC has been investigating will be nervous and given the strong fundamentals in the bullion market may be forced to buy back their positions in order to protect themselves from significant losses.

 

No way JPM and other "concentrated shorts" are going to be forced to buy back their shorts, as long as they retain profits from concentrated longs in copper through third, but probably related, parties, having access to unlimited credit through JPM, GS and other "commercial" banks. Check kiting is still in place.

The only option is to take delivery. This is the single option, that might squeeze shorts out. And one should advertise in Facebook/Twitter and other each and every interruption of physical deliveries of gold/silver.

 

 

 

 

Mon, 02/07/2011 - 09:53 | 940290 Snidley Whipsnae
Snidley Whipsnae's picture

Definitely take delivery. The sooner that the well of real physical runs dry the sooner the fake paper PM markets will explode.

Now they are between a rock and a hard place. If they drive the prices of PMs lower it sells/disappears faster. If they let the price of PMs rise they expose the counterfeit fiat currencies for what they are.

Mon, 02/07/2011 - 09:46 | 940272 HoofHearted
HoofHearted's picture

Now what was the name of that guy who said, "Gold is money and nothing else."?

I guess that is where the eponymous bank gets its ideas not to accept GLD or SLV ETF shares.

Mon, 02/07/2011 - 09:46 | 940273 Instant Karma
Instant Karma's picture

Stupid question, but which of the "liquid" ETFs trading near intrinsic value is better than GLD/SLV. Not Sproutt please. Thanks.

Mon, 02/07/2011 - 09:50 | 940284 ZeroPower
ZeroPower's picture

Not the most liquid, but i like SGOL/SIVR as 2 replacements. Swiss ETFs, physical backing. Pretty solid.

Mon, 02/07/2011 - 09:52 | 940288 KidDynamite
KidDynamite's picture

There's just one problem here, folks, and that's that Goldcore simply made up the "They will not accept ETF trust gold as collateral."

 

see, JPM put out a press release saying that they were adding bullion to their collateral list.  They didn't mention GLD et all because ETFs are already accepted as collateral.  THis was a press release about a NEW asset class for collateral.  GoldCore read the press release (maybe, maybe they didn't even read it), didn't see ETFs on there, and ran with the incorrect story "They will not accept ETF trust gold as collateral" which is leading all of you to draw incorrect conclusions.

Mon, 02/07/2011 - 10:12 | 940319 pazmaker
pazmaker's picture

KidDynamite, if you are correct on this   good catch and thank you for the correction.

There is a line in an old Simon and Garfunkel song that says, "A man hears what he wants to hear and disregards the rest"

Again, if you are right a correction should be made to this article by Tyler.

 

 

Mon, 02/07/2011 - 10:51 | 940368 KidDynamite
KidDynamite's picture

the actual JPM press release can be found here:

http://www.jpmorgan.com/tss/General/Collateral_Management_for_Securities...

 

on the right sidebar, "Precious Metals as Collateral"

Mon, 02/07/2011 - 11:56 | 940550 Boxed Merlot
Boxed Merlot's picture

..."Additional precious metals and commodities will become available for use as collateral. The ability to support any collateral type, settlement platform or region is a key component of J.P.Morgan’s Global Collateral Engine initiative. Designed to be asset and obligation neutral, Global Collateral Engine offers clients greater flexibility in how they mobilise collateral to extract maximum value."...

If they have "over 30 years experience" in this expertise, why only now is this being offered. This is the tell.

While Ben's issue of stimulated frns into the system is intended to produce organic growth, it will be as likely to produce pregnancy as a Bawney sex act. BIS issue is like Abraham's seed, as numerous as the stars in the sky and the sand at the sea.

Any economic solution being built on this sand is folly. Equally foolish is "buying" precious metals for storage. The stuff is like blood, intended for circulation. (90% "junk" is so by design, not for devaluation, but because it wears better in use.)

I can't speak for other central banks but the US mint needs to start issuing intrinsically valuable precious metal coinage and the US treasury needs to issue US notes redeemable in this coinage in order to flush this scourge from our shores before organic growth and freedom from servitude will take hold.

imho.

Mon, 02/07/2011 - 12:06 | 940596 KidDynamite
KidDynamite's picture

 I would guess it's because any collateral has to have a number of qualities, including, but not limited to: 1) easily valued (bullion: CHECK)  2) liquid (bullion: check)  3) easily "transportable" (bullion: not so much). .IN other words, most of the collateral that banks hold is probably electronic - it just gets moved around in DTC or other settlement systems.  You can't do that nearly as easily with bullion - which is probably why not everyone can accept it as collateral. 

Mon, 02/07/2011 - 09:56 | 940298 Raynja
Raynja's picture

They aren't going to steal the gold, they are going to engineer a flash crash, close your position and take your margin. Kinda like the old bucket shops.

Mon, 02/07/2011 - 09:57 | 940299 Bokkenrijder
Bokkenrijder's picture

"JP Morgan announced today that from now on they will accept physical gold bullion as collateral."

 

How will JPM use this collateral? Will they use it to surpress the Gold spot price by dumping it on the COMEX, hoping that the depositors will not all at the same time reclaim their Gold?

 

JPM apparently has a huge net short position in Gold and now they want people to deposit their Gold with JPM as collateral. Call me a conspiracy theorist, but something does not add up here...

Mon, 02/07/2011 - 09:57 | 940300 topcallingtroll
topcallingtroll's picture

Great news on jobs!

It was recently announced that due to the al queda threat that top bankers were hiring food tasters and letter openers. No experience required! If you dont know how to open letters or use a fork they will train you. Apply at your local unemployment office.

Mon, 02/07/2011 - 10:00 | 940301 bigkahuna
bigkahuna's picture

JP Morgan announced today that from now on they will accept physical gold bullion as collateral.

 

THIS IS A CRACK IN THE DAM PEOPLE!!!

get ready - it will get ugly when the dam breaks / genie gets out - pandoras lid flys off

 

It is also the overt start of the process that will lead to confiscation when the dollar goes in the toilet.

Mon, 02/07/2011 - 10:01 | 940303 Himalaya
Himalaya's picture

"They will not accept ETF trust gold as collateral" because there is no gold to back it up, its paper not the real stuff

 

Mon, 02/07/2011 - 10:13 | 940324 TooBearish
TooBearish's picture

On a fractional reserve system the more bullion JP morgue gets its hands on the more paper promises can be made, giving them more ammo to create paper supply and hammer the price down.

QED, market manipulated.

Mon, 02/07/2011 - 10:25 | 940338 monopoly
monopoly's picture

Giving your gold to one of these corrupt brokerage firms is akin to giving a deposit to a home builder, re: Pulte NY Times business section. Just kiss it good bye.

Then again, the idiots on cnbc only talk about the great economi recovery.

 

Mon, 02/07/2011 - 10:33 | 940350 Zero Govt
Zero Govt's picture

Gold and Silver ETF's do have to have a basis of real Gold or Silver as I understand it, which is why JPM accept ETF's storage of such. But ETF's are leveraged 30/1, 40/1 maybe 100/1 who knows!! That's why i presume they won't take them as collateral.... bit rich coming from a fractional reserve bank isn't it?

Mon, 02/07/2011 - 10:42 | 940360 Lazane
Lazane's picture

New here today, and thanks for that. The Morgue is not to be trusted with what I believe to be another bankster shell game set for unwary holders of physical, the Morgue's are in business to heist as many of the peas as possible for the Morgue and to leave the mices with only the shells.

Mon, 02/07/2011 - 11:10 | 940424 tmosley
tmosley's picture

Hey, excellent avatar.  I love the Scarecrow of Romney Marsh.  

Mon, 02/07/2011 - 10:58 | 940380 Camtender
Camtender's picture

But Dave Ramsey said gold was a horrible invetment.............

 

Dave went bankrupt in real estate, and now wants to sell you books on how to invest.

 

http://www.daveramsey.com/article/dont-buy-gold-sell-it/lifeandmoney_other/

Mon, 02/07/2011 - 12:18 | 940630 trav7777
trav7777's picture

the article is a pimp for Goldstash.com

IOW, Ramsey is being paid to convince people to sell Goldstash their gold because Goldstash apparently doesn't think it's a bad thing to buy.

Amazing how the articles shitting on gold are largely trying to get people to part with it.

After this episode with the USD is through, people will look at family jewelry completely differently.  This is a concept that people in the 3rd world who've seen national currencies come and go understand.

I still can't fathom how people who can watch reruns of Let's Make a Deal could think that a savings account is a good idea.

Mon, 02/07/2011 - 11:31 | 940494 Savonarola
Savonarola's picture

I must be missing something. The naysayers complain that GLD has no gold, and this announcement proves it. If JPM is the custodian for GLD, are they knowingling involved in a scam? If there is no gold, why would they allow their name as custodian on legal documents ? It does not make any sense.

Mon, 02/07/2011 - 11:33 | 940502 snowball777
snowball777's picture

They believed they could come up with it when they needed to deliver and this is how they're trying to fill their vault vacuum.

It's going to be very fun to watch what happens when they can't.

Mon, 02/07/2011 - 15:01 | 941059 KidDynamite
KidDynamite's picture

which part of this announcement proves it ?   JPM did not announce that they do not accept GLD as collateral.  GoldCore made that up (if that's what they were trying to say, which is uncertain, as the phrase "They will not accept ETF trust gold as collateral" is completely extraneous, since the ETF Trust would never lend their gold as collateral anyway.  If they meant "They will not accept ETF Trusts as collateral," well then, they just made that part up.  You can read JPM's press release yourself - it says nothing of the sort. I linked to it above.

Mon, 02/07/2011 - 11:31 | 940495 snowball777
snowball777's picture

Hmmmm....got some covering to do huh Jamie?

Tell you what...I'll accept your cold, dead body as collateral. Deal?

Mon, 02/07/2011 - 13:32 | 940833 darkaeye
darkaeye's picture

Zombies are already dead.

Mon, 02/07/2011 - 11:36 | 940508 Lazane
Lazane's picture

Ramsey and his financial wizardry does a disservice to the Christian brothers and sisters. In the current era of deceit Ramsey's Christian audience would be best served up a heaping portion of monetary truths and encouraged into holding some physical metals along with copious amounts of non-perishable food storage. 

Mon, 02/07/2011 - 13:26 | 940813 pazmaker
pazmaker's picture

Part of what Ramsey preaches is good... get out of debt and live with in your means.  He has found a way to capitalize on an age old truth and has many paying him just to tell them what they should already know through common sense.

So don't waste your money on Ramsey because this is what he says in a nutshell....

 

Get out of debt stay out of debt  pay cash. If you don't have the money for it don't buy it.  There I just saved you $119.00 that he charges for his Financial Peace University

Mon, 02/07/2011 - 13:29 | 940822 pazmaker
pazmaker's picture

delete

Mon, 02/07/2011 - 12:22 | 940638 Pat Hand
Pat Hand's picture

 

Silver prices remain in backwardation, showing that buyers are willing to pay a premium for silver delivered sooner rather than later.

Huh?  Spot is $0.25 above Feb future.  1% is not really meaningful backwardation.   It's another $0.10 "backwardated" out to 2014.  That's pretty weak evidence.

I don't doubt the squeeze potential, but futures aren't telling us anything.  Implied vols are ~ 30

Nothing in this blurb

Mon, 02/07/2011 - 14:03 | 940921 tmosley
tmosley's picture

I guess you missed the part where this has never happened before in the entire history of the exchange.

Mon, 02/07/2011 - 14:10 | 940939 Bay of Pigs
Bay of Pigs's picture

The Calm before the the Storm?

The GLD and SLV ETF's are frauds. It won't be pretty when they finally blow up. Gold and silver could literally double overnight one day with a panic rush for real metal. Be prepared. Own and store your own physical.

 

 

Mon, 02/07/2011 - 15:38 | 940691 FranSix
FranSix's picture

You know, if Jamie Dimon had a hairdo like an actor mebbee he wouldn't have come on like a ponce.

I guess the grand idea of buying all of the production out of the mines must have fallen flat.

Next step, trade in your old iPhone and get a line of credit and a toaster.

Mon, 02/07/2011 - 12:53 | 940731 Dr. Porkchop
Dr. Porkchop's picture

Who would hand anything over to these criminal douchebags?

Mon, 02/07/2011 - 13:25 | 940811 Bagbalm
Bagbalm's picture

I'm assuming they hold the gold collateral in their vaults? Trust them much?

Mon, 02/07/2011 - 13:46 | 940876 Downtoolong
Downtoolong's picture

I’m with everyone who favors holding real physical commodities over futures and paper. If you can’t manage that, don’t even try to get in the game. I’ve been around the futures markets long enough to know that it’s almost always a guaranteed loser for any small investor in the long run. Even when you bet right for the long run you usually get stopped out and lose in the short run. Practically speaking, the futures markets in Gold, Silver, Oil, and other major commodities only even exist for the big banks, which use them to hedge positions in their highly profitable OTC derivatives businesses. When you’re in these markets you are playing their game, on their field (which is slanted in their favor), by their rules (which they make up as they go along). I’ll take T-Bills and Tips over that scam.

I would love nothing more than to see Blythe get her ass handed to her in the silver futures market. Unfortunately, before that happens a lot of small investors will get hurt even more. Unless you really can’t find any better ways to gamble, my recommendation is to stay out of it altogether.

Mon, 02/07/2011 - 13:54 | 940898 darkaeye
darkaeye's picture

Imagine a wild-eyed psycho gambling addict, in so deep he can't even see a glimmer of light at the end of a very long dark tunnel, on the run from angry shylocks and vengeful mobsters.

Now imagining him offering to hold your life savings for you as a personal favour.

Just how monumentally stupid would you have to be to hand it over?

Almost as stupendously stupid as someone accepting JP Morgue's offer to store their physical bullion.

 

Mon, 02/07/2011 - 19:00 | 941715 FB24601
FB24601's picture

Can we find a way to hand them tungsten bars?

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