JP Morgan Chase is permitting its clients to use gold as collateral in some transactions, The Wall Street Journal reports. The bank will allow a hedge fund looking to borrow money for a short period to put up gold as collateral and use the borrowings to invest elsewhere, betting on making a better return.
Banks usually accept only Treasury bonds and stocks in such agreements. The World Gold Council is also suggesting that the Basel Committee on banking supervision accept the precious metal as a tier one asset for banks, along with government bonds and currencies.
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