The CME On Gold As Collateral And Its Unsurprising London-Based Custodian

Tyler Durden's picture

While the increasing use of gold as accepted explicit (not implied) collateral has long been known, especially with an increasing push by Germany to receive gold as the ultimate guarantee backstop of the only viable Eurozone extension  scheme, the Redemption Fund, the other side's perspective, that of the exchanges has been missing. Now, courtesy of a report by Harriet Hunnable from the CME, titled "Some Insights into Changes in the Gold OTC market", we can see just how the status quo views gold's rising role in a world increasingly short of good collateral (even if, as the Chairman says, it is anything but money). And yes: that the CME has its gold custodian facilities with JPM London, where it is subsequently infinitely rehypothecatable and where it serves to restock the occasiona physical shortage here and there, does not surprise us at all.