Interest On Gold

Companies Paying Interest on Gold

The companies listed above are specialist bullion dealers who can pay interest on gold investments. Although this is still a comparatively small market and almost wholly unknown to a typical bullion investor, it has been an established method of obtaining yield from physical metals for over five years and is seeing rapid mainstream growth as bullion becomes an ever-more popular investment.

Companies who specialize in paying interest on gold and/or accounts paying interest in gold include the market leader Monetary Metals & Co.
 

Interest on Gold? But surely that’s not a thing… Is it?

After all it was Warren Buffet who famously said;

gold has two significant shortcomings, being neither of much use nor procreative… if you own one ounce of gold for an eternity, you will still have one ounce at its end.”

 
While those words have been true for most of the 20th and 21st century, this is no longer the case – and in fact there are a growing number of opportunities for investors to earn interest on physical gold, paid in physical gold.

Different Ways to Earn Interest on Gold

Gold Leases are used to finance gold inventory or work in progress for gold-using businesses.

Instead of borrowing to buy gold and having to hedge the price risk via futures, companies can lease the amount of gold they need for their business and pay interest on the gold they use. Gold leases are typically shorter-term agreements (one year or less) that are denominated in gold and pay interest in gold. Examples of companies that may lease gold include Mints, Refiners, Bullion Dealers, and Jewelry companies.

Gold bonds are another way to earn more interest on gold. Gold bonds are longer term agreements (2-5 years or more) with principal and interest payable in gold.

Unlike gold leases, gold bonds are structured as gold denominated debt. The gold bond’s face value is denominated in gold and it shows up on the debt side of borrower’s balance sheet. The gold bond borrower amortizes the bond using gold income from its business.

Any business with a gold-based income is a potential issuer of gold bonds.

As an example Monetary Metals offer both gold leases and gold bonds – and historically clients have earned anywhere from 2% to 4.5% per annum interest on gold through gold leases, and higher interest rates in their gold bonds.