Gold Leasing

Category: Gold and Precious Metals Leasing Companies

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Gold Leasing Companies

The companies listed above are specialist bullion dealers who can assist with raising capital from precious metals, or help extract a return from your precious metal investments by enabling the lending of your bullion to a third party.
 

What is a Gold Lease?

A gold lease has traditionally been a vehicle for financing the inventory or work-in-progress of gold-using businesses.

As an example, take a gold mint who orders gold blanks or sheets to stamp out gold coins and bars. They always have some gold inventory flowing through their business – but how do they pay for it while managing the volatility associated with the precious metals?

Equity capital is expensive and requires hedging via futures, while debt capital weighs down the balance sheet and mismatches the asset (gold) and with the liability (dollar, euro etc.), and also requires hedging.

A gold lease is a cost-effective option that avoids the need to hedge price risk via futures.

To lease gold, the mint would approach a provider of gold leases. After negotiating with the provider, the mint agrees to pay an annualized interest rate to use as much gold as they need for their business. The provider of the gold lease receives the interest payments in return for making the gold available to the business.
 

Who Provides Gold Leases?

bullion leases from bullion banksUntil recently, these opportunities have been exclusive to bullion banking desks within large investment banks – with only ultra-high net worth clients of such banks having access.

This created an opaque and non-standard market for gold leasing. For example, lease contracts might have significant differences depending on the provider of the lease, or the leasing company. Or the “leases” would look more like gold collateral loans, than what is commonly understood by a lease.

Now however, specialist bullion dealers have opened catering to a far wider market than those large Bullion Banks, finally allowing smaller-scale investors as well as mid-sized and smaller retail bullion dealers take advantage of the opportunities allowed by true gold leasing.

Unlike bullion collateral lenders who will hold your bullion as security and lend you money based on it’s market value, metals leasing companies lend out the metals themselves and generate a form of ‘interest’ on your gold.

Some companies will pay your returns in cash while others such as Monetary Metals enable this ‘interest’ to be paid in physical Gold – putting to bed once and for all the myth that gold doesn’t pay interest!