J.P. Morgan (JPM) Collateral Management Says: 'Give Us the Gold!'

February 7, 2011 11:55 AM EST
J.P. Morgan (NYSE: JPM) Collateral Management will begin accepting physical gold from counterparties as collateral to satisfy securities lending and repo obligations as their clients look to hedge against inflation with the precious metal.

According to the release: "The ability to finance and leverage the broadest range of asset classes is important to our clients. Many clients are holding gold on their balance sheets as an inflation hedge and are looking to make these assets work for them as collateral" said John Rivett, Collateral Management Executive, J.P. Morgan Worldwide Securities Services. "By combining our collateral management and vaulting capabilities, we provide clients with greater flexibility in how they mobilise collateral"

Gold prices have fallen just over 4% since the start of the year, when bullion was trading over $1,420 per ounce. Gold rallied over 30% in 2010 as investors looked to the metal as a hedge against volatility in the markets and global economies.

The SPDR Gold Shares (NYSE: GLD) ETF is just about flat today, trading at $131.64. JPM is trading 2.2% better on strength in the financials.

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