Wealthy Investors Rent Out Gold Bars to Fuel Jewellery Production Amid Price Hike
Image Source: Internet
As gold prices surge, a growing number of affluent investors are turning to an unconventional side hustle: renting out gold bars stored in vaults. This trend, where investors lease their gold to jewellers, fabricators, and refiners, has seen a significant increase in recent months. According to Gaurav Mathur, founder of SafeGold, his company has witnessed a substantial jump in leasing volume, from $2 million to $40 million this year. Mathur revealed that wealthy customers are now more open to leasing their gold, citing the need for liquidity and reduced price risk. Industry expert Keith Weiner, founder and CEO of Monetary Metals, noted that investors are no longer buying gold solely in anticipation of a price increase. Weiner's company facilitates gold leases between industrial users and global investors. Jewellers and fabricators use the 'rented' gold to fund their daily production. A US entrepreneur, Joseph, has reportedly doubled his gold holdings through leasing, citing the benefits of accumulating gold in a world of unprecedented global debt. So, how does gold leasing work? It's similar to a loan, but with gold as the asset, not money. Investors lend their gold to a leasing platform or financier, who then lends it to businesses. Gold leasing has gained popularity due to its benefits, including providing funding and removing price risk. However, it also carries risks, such as the possibility of non-payment or 'fake' gold being returned. As World Gold Council's John Reade pointed out, 'lending gold – whether on a lease or a swap – carries a counterparty risk.' This highlights the importance of careful consideration and due diligence when engaging in gold leasing.
