JPMorgan (NYSE:JPM) Now Embracing Gold as Collateral

JPMorgan (NYSE:JPM) announced Monday it will start to allow physical gold bullion to be used as collateral with its counterparties.

That's in response to clients of the giant financial institution and their increasing demand for investing in gold as a hedge against inflation.

John Rivett, collateral management executive for J.P. Morgan Worldwide Securities Services, noted, “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…By combining our collateral management and vaulting capabilities, we provide clients with greater flexibility in how they mobilise collateral.”

JPMorgan added it doesn't matter what the "underlying obligation, to extract maximum value and manage risk,” is, gold can be used as collateral in it.

At this time, JPMorgan is now the only "tri-party collateral manager in the world to accept physical gold as collateral to satisfy securities lending and repo obligations with counterparties," according to Gold Alert.

JPMorgan added clients will now be able to use gold as collateral across international borders.

Investors have been increasingly gravitating toward gold to protect their capital as the Federal Reserve and other central banks continue to print money, debasing paper currencies around the world, including the U.S. dollar.