Physical Gold Inches Closer To Monetization, Now Allowed As Margin Collateral

Gold Vault

Here’s some hope for those who wish we could back to a gold standard.

Physical gold can now be posted as margin collateral with the CME Group for any exchange product.

Dow Jones: Clearing member firms will be allowed to post up to a maximum of $200 million worth of gold as collateral to cover performance bond, or margin, requirements, Hughes said.

The policy was a byproduct of CME’s recent launch of clearing services for over-the-counter London gold spot and forward‚ÄĄcontracts, he said.

“Many of the [trading] houses hold quite a lot of physical gold and would welcome using it more efficiently,” he said.

The gold will be held at J.P. Morgan Chase & Co.’s (JPM) bank in London.

Zero Hedge predictably believes there’s a conspiracy behind this move, wondering if J.P. Morgan is “in urgent need of gold replenishment.”

Zero Hedge: One wonders if this is merely a way for large banks to begin replenishing their depleted gold coffers (and continue shorting) after repatriation efforts by several key sovereigns in the past quarter.

It could also be that the CME Group just wants to take advantage of gold’s popularity and make life easier for their customers.

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