I’m about as pro-gold as it gets, and even I was surprised when JP Morgan Chase — a billion dollar bank — announced that they would now accept gold as collateral for loans in the future. This is amazing — it means over the next few years to the next few decades, they honestly think gold is going to be as valuable as AAA rated treasury bills.
Basically, the bank says they’ll accept gold when considering giving someone a loan — as long as they can access your gold, probably via third party storage company, they’ll use the metal as collateral. I’m not sure if this includes gold coins, gold bars, or what type of gold specifically, because the announcement is fairly new. What does this mean? The WSJ reports:
“By making the announcement, J.P. Morgan is effectively saying gold is as rock solid an investment as triple-A rated Treasurys, adding to a movement that places gold at the top tier of asset classes. It also is trying to capitalize on all the gold now owned by hedge funds and private investors that is sitting idle in warehouses.”
They’re not the only financial company accepting gold as collateral. The International Clearing House has already done something very similar, according to Goldseek. Other stock exchanges have talked about using gold as collateral as well.
In the end, this is just proof to something we’ve known all along. Stocks can collapse. T-Bills can become worthless. Paper assets can disappear. But gold? Gold has never lost value. It won’t disappear. Gold is forever.
Hat tip to the Mises Institute’s main blog.