Gold Tsunami

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SteveW's picture
Status: Gold Member (Offline)
Joined: Jan 21 2010
Posts: 490
Gold Tsunami

Eric Sprott is banging the drum again saying that there is a shortage of physical gold. His commentary essentially reports the same Chinese New Year buying that was reported in the Financial Times last week, together with the Chinese ICBC gold accumulation accounts where the 1 million retail accounts have taken 10 tonnes this past year.


Even Jim Cramer has acknowledged the current shortage in minted US gold coins, stating on his CNBC television show in December that: “As someone who tried to buy U.S. coins in December, there was a real scarcity. My dealer reportedly just couldn’t get any coins – tried to sell me Australian bullion. Said there was a shortage. Very telling

I was then flabbergasted by today's report that JP Morgan will accept gold as collateral for repos.


The bank, which is one of the custodians of physical metals for some of the world's largest precious-metal backed exchange-traded funds, said it would take gold as collateral to satisfy securities lending and repurchase obligations with counterparties.

"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 for J.P. Morgan Worldwide Securities Services.

I guess since gold is fungible those who provide gold as collateral will be looking at a counterparty risk at such time as they plan to have their gold returned. In other words this is an additional source of gold for JPM to use in their business.

Normally I'd put this in DD but I'm interested if anyone has personal anecdotes about gold shortage and what you might think of the JPM move?

agitating prop's picture
agitating prop
Status: Platinum Member (Offline)
Joined: May 28 2009
Posts: 864
Re: Gold Tsunami

I don't have any personal anecdotes other than a personal opinion and revelation of my own situation. I am looking to purchase property near Fort Meyers, Florida...ground zero in the real estate bust.  It will be both an investment and a vacation home. I have enough cash to purchase clear title. I have also accumulated enough gold to do the same. I wouldn't trade gold right now, for property of this type, though some would. Those holding bullion, generally, will be playing a waiting game and regarding JPMorgan's edict as more of a reason to hold than to trade. 

sevenmmm's picture
Status: Silver Member (Offline)
Joined: Jan 19 2011
Posts: 108
Re: Gold Tsunami

My goal is one ounce of Gold for forty acres of the best farmland.Cool

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