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JP Morganís Should Buy Gold Bullion

May 14, 2012 - JP Morgan should have hedged its most recent untenable position with gold bullion, which would have limited the investment banks exposure and minimized the risk. The major investment bank, which enjoyed billions of dollars in taxpayer bailouts, recently took positions that are questionable in regards to its behavior in the American marketplace. In retrospect, the company should have had better positions in gold bullion to reduce the trouble. In looking forward, the JP Morgan debacle will lend strength and support to gold bullion as the soundest form of investment and money in the current market environment.

Essentially, what JP Morgan did was underestimate the amount of money it needed to operate responsibly in the current market environment. The estimated cost of this bad estimate is currently at $2 billion. That’s a lot of money to lose when the bank in question received billions of dollars in taxpayer money less than five years ago.

The only public responsibility JP Morgan is showing is via a round of damage control by the CEO, Jamie Dimon, who is make the press with semi-apologies and vague descriptions. It is apparent in the American marketplace that investment banks can’t be trusted with their own client’s money, particularly after the MF Global debacle of October 2011.

Just over six months ago, MF Global, a 200-year-old American institution went bankrupt after it used its own customer’s money in a multi-million dollar bad bet on European debt. $1.2 billion of customer money went missing at that time, about 60 percent of which has been located and repaid.

Gold bullion may be the most responsible reaction to the current market environment because it is the most effective method of removing the money from the reach of these banks who cannot seem to use it appropriately. In the current market environment, it is difficult for these banks to achieve the kind of profits they require without stripping down and each trade and assuming the kind of risk that no bank should responsibly. Even though they can hedge their risks with gold bullion, JP Morgan may not have done so in this particular trade in order to keep costs low.

The lesson belongs both to JP Morgan and to the American market. Gold bullion is a necessity in this market environment as a hedge against risk and its necessary implications.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer -

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