CME Group to accept gold as collateral

On Friday October 16, CME Group (NYSE: CME) decided that it wants to allow customers across the globe to use gold, physical gold, as collateral on all of its exchange products (alternative investment products, futures and options, etc). The member notice was sent out on late Friday, giving instruction on how the use of gold would work. Firms are allowed to post gold as collateral up to $200 million, the collateral will cover performance bond (margin) requirements.

According to the CME Advisory Notice tied to the announcement, the gold will initially be posted to JP Morgan Chase Bank in London -- with the potential for more depositories in the future. I question why the gold will be held in London at first, but that is neither here nor there, as I am sure that success in this program will result in American banks involvement. What I worry about is that this decision is going to take some value away from the American dollar. Some believe that there is a global shift toward one single currency, what with the recent United Nations Conference on Trade and Development (UNCTAD) reporting that the current system of currencies and capital rules is the reason for the global economic crisis and that the U.S. dollar should be replaced as the world's reserve currency. Let's face it, the American dollar hasn't been very popular of late, and CME's decision could move us one step closer to a one-world currency. I am not trying to fear monger here, this is a possible scenario.

Continue reading CME Group to accept gold as collateral

CME Group to accept gold as collateral originally appeared on BloggingStocks on Mon, 19 Oct 2009 17:40:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments

Full story at http://www.pheedcontent.com/click.phdo?i=7988394e946126d2bec017e91758021d