Why would anyone rent gold? It’s value isn’t based on the time you spend with it
For a jeweler, refiner or fabricator who needs gold to make jewelry or components, they don’t have to borrow cash and risk price swings while holding it. They can then sell their finished products at the current gold price. The borrower then pays a lease rate — a form of interest in gold — and at the end of the term, either returns an equivalent quantity of metal or rolls the lease forward. For borrowers, the appeal lies in simplicity and accounting clarity. “Gold leasing solves two problems,” said CEO of Kilo Capital, Wade Brennan. “It gives them the funding they need and removes the price risk. If they bought gold with a bank loan, they’d have to hedge, or they’d be exposed to the gold price.
Clipped the relevant part of the article so you don’t have to go trough the trouble of clicking the link and reading the thing.
I already read the article. What they describe isn’t exactly the same as renting. It’s more like lending.
The explanation is literally about a third of the linked article.
Gold leasing works much like a loan, except the asset is in ounces, not cash. Though the structures differ slightly, the underlying logic is the same: investors supply gold to a leasing platform or financier, who then lends that metal to a business. For a jeweler, refiner or fabricator who needs gold to make jewelry or components, they don’t have to borrow cash and risk price swings while holding it. They can then sell their finished products at the current gold price. The borrower then pays a lease rate — a form of interest in gold — and at the end of the term, either returns an equivalent quantity of metal or rolls the lease forward.
I know I read it. But if they use it to make jewelry and they sell it that’s not really renting now is it?
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