Leasing Gold

Central banks can lend (LEASE) gold to specialized brokerage firms, called bullion banks.

The Gold Bullion Banks borrow this gold at low interest rates – under 1% per year. They sell gold certificates (against this leased gold) on the gold markets. This helps keeps gold prices down : adding a paper supply of gold on the open market. (See IMF Gold Lease Policy)

Bullion bankers take the money generated from the sale of borrowed gold and purchase higher yielding money certificates, and other finacial istruments. So, Gold Bullion Bankers borrow gold on the short – and transfer into higher yield markets - long on bonds.

However, Gold Bullion Bankers owe gold, not money. But there is no leased gold in central banks’ vaults. The central banks still list this leased/sold gold on their books. The central banks do not report that it is gone, because it is still subject to re-claim/ repo should the Gold Bullion Bankers default and fail to make cash payments on the premium (interest) -or- a major call on all gold loans.

But the Gold has been leased out, transfered to the Gold Bullion Bankers vault, then sold on the open market ... the central bank and the gold certificate investor both hold a gold certificate to claim this same gold ... most of the gold on the books is held in investor hands ... in gold bullion, gold coins, necklaces, gold rings, etc.

If there is any public panick then gold prices will hyper-inflate. But, for now, the general public is ignorant or indifferent to the Fact -- that there is little gold in any Vault which can be redeemed by gold certificate.

GOLD-LEASING ... Live Gold Lease Rates