This page has been archived and commenting is disabled.
Is Gold Money? LCH Accepts Shiny Yellow Metal As Collateral
Whether it is because the CME just did it; or it's all their clients have left; or Gold volatility is lower than EURUSD volatility (9.0% vs 9.6% in last 3 weeks); or they see the painting on the wall of Draghi's grand-plans, the LCH-Clearnet just announced that as of August 28th, unallocated gold will be accepted as collateral for margin cover purposes. This now means all the major exchanges accept worthless barbarous relics as collateral - as well as worthless fiat paper 'money'.
Gold as Collateral Acceptable for Margin Cover Purposes
From 28 August 2012 unallocated Gold (Loco London) will be accepted by LCH.Clearnet Limited (LCH.Clearnet) as collateral for margin cover purposes.
This addition to acceptable margin collateral will be subject to the following criteria;
• Available for members clearing OTC precious metals forwards (LCH EnClear Precious Metals division) or precious metals contracts on the Hong Kong Mercantile Exchange. Acceptable to cover margin requirements for all markets cleared on both House and ‘Segregated’ omnibus Client accounts.
• Daily valuation, with an initial haircut of 14% applied.
• Concentration limits will be applied as follows;
o lodgement not to represent more than 40% of total margin requirement of participating members across all products, including for contingent variation margin (but not realised variation margin), applied at a legal entity sub account level.
o a maximum lodgement limit per member group of USD 200m (currently approximately 130,000 troy ounces).
• LCH.Clearnet will make an accommodation charge of 20 basis points (bps) on utilised collateral amounts based upon member defined usage ordering rules. Costs incurred from the custodian will be passed on to clearing members on a pro rata basis and based on the value of the collateral lodged.
• Members who are eligible and wish to lodge gold for margin cover purposes will be required to submit an executed Gold as collateral ‘charge’ document for the ‘House’ and/or ‘Client’ accounts together with supporting paperwork. Please contact the Membership Team to request the relevant legal documentation needed for approval to lodge gold as collateral.
• Procedures and account details can be found in at the link below prior to the live date and thereafter in Section 4 – Collateral, of the LCH.Clearnet Ltd Rulebook. http://www.lchclearnet.com/rules_and_regulations/ltd/proposed_rules.asp
• For further details of acceptable margin collateral please see the following link, which will be updated to reflect the addition of Gold Bullion from 28 August 2012. www.lchclearnet.com/risk_management/ltd/acceptable_collateral.asp
- 11823 reads
- Printer-friendly version
- Send to friend
- advertisements -


If anyone bites this bait, wow.
Enjoy the coming margin calls.
Unallocated
LOL ....
Talk about shit disappearing with no recourse.
Ah, the fair City of London
This is desperation, deluxe
But then again, is not desperation the English way?
Unallocated. Because TPTB know the allocated gold has been vaporized already.
One man's unallocated is another man's rehypothecated.
I wonder if 100 firms can use the same brick of gold to collateral.......that is the London way
Yes.
I thought it was quite despiration.
Yeah, what a novel way of stealing gold. I wonder what they have in mind...I wonder...
Weird...the Canadian dollar has been retracing all along the hike in gold....can someone offer an explanation?
Confucious says "Fawk, I give up with this"
Somebody at CNBC really ought to tell LCH Clearnet that you can't eat gold.
Makes a lot more sense to accept gold than one's and zero's!
binary ones and zeros, no?
No, The Count singing one of his songs on Sesame Street for Christ's sake.
About equal value...
A lot of interest lately in this barberous relic. It must be tradition.
Tradition is to carry on the flame, not worshiping the ashes. What irony if out of EURUSD's ashes a new GLDstandard rises...
Gold Bitchez, Gold!
Yeah sure...I'll be letting them hold my gold for collateral so they can rehypothecate it just before it's vaporized.
They can have my gold whey they pry it out of the mud at the bottom of Lake Feneketlen.
They will hold my gold for me as collateral!? Gee whiz what a swell group of folks. I bet they'd even give me a receipt printed on fancy paper.
e-mail
By time this goes mainstream most people will have long ago parted with their color.
http://www.telegraph.co.uk/finance/financialcrisis/9487198/Debt-crisis-Italian-cash-for-gold-shops-quadruple-as-financial-crisis-deepens.html
Paper gold or physical gold?
I doubt it will work to well as collateral...but as a payoff it might....do they accept my shares...I don´t have any by the way...of the ETF GLD....which we all know does not have any gold....or just some allocated stuff in a JPM warehouse???
"Gold as Collateral Acceptable for Margin Cover Purposes", Daily valuation with a "14% " HAIRCUT! f..king CROOKS!Hell just send your gold over to the waaay secure Ant Vaults, and we will only give you a 10% hair STYLE FOR FREE. Hurry now storage space is LIEMITED.
End of Line
No wonder Chinese are loading up on undervalued Gold. Their stock market ha sbeen poor and Housing is a Super-Bubble:
The Chinese Stock Market Tumbles To A Post-Crisis Low
The Shanghai Composite closed down 0.38 percent on Monday, to a three-year low. This came after rise in Chinese home prices caused investors to speculate that Beijing would announce more property curbs to maintain a "firm grip" on its real estate market.
Moreover, a newspaper run by the People's Bank of China said the central bank does not intend to cut reserve requirement ratios (RRR) in the near-term. This also disappointed markets that were looking for more interest rate and RRR cuts and easing following disappointing economic data.
In fact, the Shanghai Composite has diverged vastly from the S&P500. Global Macro Monitor points out "the Shanghai is down 39.2 percent from its post crash high while the S&P500 is up 42.3 percent over the same period"
http://www.businessinsider.com/chart-of-the-day-shanghai-composite-post-...
Also their bank accounts yield less than inflation. And the banks are insolvent... And the biggest cash denomination of the RMB (100RMB) is worth $16, and gets mouldy if you keep wads of them in a drawer in some parts of the country. :P
The Shanghai Composite has diverged vastly fromt he S&P 500; on the other hand, the S&P 500 has diverged vastly from reality.
I wonder how quickly the collateral gets rehypothecated and ends up in the vaults of some poor victimized bank...
YES...!....now i can buy more FB and short AAPL...WINNING.
It still is not money, because it can only be used to cover same metals...We need to see gold being able to be used to cover fiat. That's the catch!
Wait, Bernanke told the congress that Gold isn't money. Who is right? Did Bernanke lie to the congress? That's the punishment if he is proven to have lied to the US congress?
Congress and the Bernak are ALWAYS right. Nobody in Congress or the Fed has or will ever lie. If anybody who is not rich, powerful or connected ever lies to Congress, and those are the only people who do, they will be used for target practice with all the new ammo they're buying.
Don't these people know you can't eat gold. Four out of five doctors recommend eating paper over gold.
Newsflash; "Obamacare doctors reccomend eating paper." "Healthfull, and controls inflation".
Wouldnt really call this a vote of confidence for gold seeing as LCH also apparently accepts spanish and Italian 10yrs at a 10% haircut.
>unallocated gold
>money
Pick one.
Guess this means they get to use every step of an infinite chain of rehypothecation scheme as collateral. Fitting, as one oz of gold can back the entire financial system, meaning that gold has an infinite value when "priced" in fiat--any fiat.
Nice.
<-- unallocated gold
<-- real money
LCH is only doing this because of "Tradition".....right BenDover ?
The difference between gold and money is that gold can't easily be printed or created out of thin air. Therefore, the value of gold may swing greatly in each direction given what people are willing to pay for it, but it will never be worthless... like Federal Reserve Notes.... or Confederate Dollars. Neat to look at, but not very good for purchasing power.
this is very true but if you bought gold in the late 70's or early 80's and needed to use that gold anytime in the next 25 years your gold would have got you alot less stuff. So hopefully you have a long time horizon.
It doesn't earn interest, or return dividends or create a product to sell to people. It's not there to EARN you moremoney. It's value is it's inability to be worthless. It's a way to preserve capital.
I think the US is going to default. It's currency (the dollar) is going to plummet in value. I'd like to preserve what I have been able to save and then transfer back into the OldDollar or NewDollar as I need it.
To hell with dollars.
And I mean "new dollars", "old dollars", "pesos", "euros", "pounds", "lira" and all other forms of fiat, fake, fraud, fiction, fantasy toilet-paper. And let me be perfectly clear. To supposedly "link" a piece of paper to gold or other physical asset is a 100% INTENTIONAL SCAM.
The only honest, ethical way to transact with others is to exchange real, physical, valuable goods for other real, physical, valuable goods. In practice, this includes bananas and cattle, and also silver and gold.
BOTH sides of transactions must be real, known by both parties, and have value in and of itself.
Four generations, that's how long it's been since the Federal Reserve mandate was installed.
Three generations, that's how long it's been since FDR made gold possession illegal to US citizens.
Two generations, that's how long it's been since Nixon dispensed altogether with a hard currency "temporarily".
One generation, that's a bit more than the length of the current bull run.
A Question for Tyler or anyone with a coherent thought............
Unallocated gold is imaginary gold , at best only worth a fractonal value to the nominal amount of the unallocated contract's par value. LCH must know this, so why would they accept it as collaterall?
http://seekingalpha.com/article/257237-time-to-get-precious-metals-out-of-storage-in-london
I wonder, do they do Fractional Gold banking? Do they tell every purchaser that they hold X ounces of their gold in Vaults, but couldn't possibly cover a gold deposit run? What is their leverage, 40:1? just Wondering.
Sounds like allocated gold, defined by Corzine as unallocatted will find its way to their warehouses, now protected by the U.S. Federal court system. The theft of gold can begin in earnest.
This has the odor of a Corzine operation, no?
Any physical gold holder worth his grams wouldn't tough this even with a tungsten tuning fork.
Money is the measure (a qualitative term) of integrity and or substance of the man
of a transaction,
Gold is the only Universal Standard known to man,
Gold is Royalty; Effect dervived from accomplished Cause,
Yes, indeed, Gold is Money.
The error is to mistake tokens as "money"
http://verbewarp.blogspot.com.au/2012/05/on-money.html
No Economist knows this; or it seems, even cares,
Economists are the apologiests of the Major Bankers,
and designers of the efficiency of the transfer of productivity from the people
to their Bankers (the original un-natural system, designed by the Bnakers themselves),
But it is the Bureaucrats that control and destroy Society,
while the politicans who call themselves "leaders",
dine at the expense of those whom pays their wages,
with of course, the Bankers who they live to serve.
Government is the natural Enemy and Predator of Society
and Humanity.
unallocated gold is so... fungible.
Is gold money? Who cares? So-called "money" is fiction, at least beyond meaning "that real, physical, valuable good that is most commonly adopted to determine exchange rates for other goods".
The only thing that matters is --- that all transactions are an exchange of "real known valuable goods" for "real known valuable goods". This way both parties know what they traded-for and get what they traded-for. And no third party has a way to insert their grubby paws into transactions and rip off the owners of those goods.
How barbaric of them.