Loading ...The Shanghai Gold Exchange said on Thursday it will allow A-shares, exchange-traded funds and treasuries to be used as collateral for gold trading. The move comes as Beijing unleashes a slew of measures to stave off a collapse in its stock market and restricts trading in stock index futures.
With counterparty and sovereign risk remaining high although unappreciated, gold is no longer being seen simply as a commodity – particularly in China, India and Asia. Rather, it is increasingly viewed by more astute market participants as an important asset and a currency with no counterparty risk.
Gradually, we are seeing the re-monetization of physical gold as it is being reincorporated into the modern financial and monetary system. Keynes’s ‘barbaric relic’ is becoming less barbaric by the day.
The development is an important one for the gold market and is bullish for the “pet rock.” It shows, once again, that gold is slowly but surely becoming a cash equivalent and as money again.
Gold’s re-monetisation in the international financial and monetary system continues.
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