Do you own gold? If so, you’re not alone.
Private investors hold roughly 45,000 metric tons in bars and coins. That’s almost a quarter of all the gold ever mined![1]
But what’s your gold doing right now? Sitting in a vault, producing no income, and costing you money in storage fees?
Despite conventional wisdom, there is another option: lease your metal to qualified businesses in exchange for additional ounces.
However, gold leasing might not be appropriate for everyone. Explore the factors that can help you determine whether this strategy aligns with your goals.
Please note: All content is provided strictly for informational and/or educational use only. This information should not be interpreted as financial advice, nor should it replace professional consultation with an advisor.
Why do people lease their gold?
- To generate income without selling the asset.
- To produce additional ounces.
- To minimize the negative impact of price volatility.
- To minimize or eliminate the opportunity cost of owning gold.
- To generate income from a wider range of assets.
Many people lease their metal for the same reason they buy it in the first place: to preserve wealth over the long term.
The difference is that leasing makes gold productive. Unlike selling it for fiat currency, the yield earned remains denominated in the asset you bought to escape the dollar.
Generate income without selling the asset
Selling gold may generate cash, but it also means giving up ownership of the asset. With gold leasing, participants:
- Maintain ownership of their metal
- Remain exposed to dollar price changes
- Earn lease payments denominated in gold
Produce additional ounces
Traditional gold ownership often involves waiting for its dollar value to appreciate over time. Leasing enables gold owners to increase the value of their holdings from the other side of the equation: the number of ounces they own.
Minimize the negative impact of price volatility
Waiting for gold’s dollar price to appreciate means enduring periods in which it falls. While leasing doesn’t eliminate price volatility, additional ounces may help offset the effects of periods when gold prices are flat or declining.
Minimize (or eliminate) the costs of owning gold
Traditional gold ownership often incurs negative carry costs and opportunity costs. With gold leasing, there are no storage fees, most insurance is paid by the lessee, and earning a yield presents an additional opportunity for diversification.
Generate income from a wider range of assets
Many investors rely on stocks, bonds, or real estate to generate income, viewing gold as little more than a store of wealth. Gold yield offers potential income from an asset that has historically exhibited a low correlation with traditional investments.
Should you lease your gold?
Only you can answer this question, and it’s a decision you should make in consultation with a licensed financial advisor, where appropriate.
To help you decide whether gold leasing is right for you, consider the following:
- Investment horizon: How long you plan to own your gold.
- Liquidity needs: Whether you’ll need access to it during the lease term.
- Risk tolerance: Your comfort with potential risk.
- Physical possession: Your comfort with deploying your metal.
- Eligibility: Whether you meet the minimum requirements to open and fund an account.
| Gold leasing may be a good fit for you if… |
|---|
| You plan to hold your gold for several years rather than trade it frequently. |
| You can leave some of your gold committed for the duration of a lease. |
| You’re comfortable accepting potential risk in exchange for the opportunity to earn a yield on your gold. |
| You’re comfortable deploying your metal to vetted businesses. |
| You’re ready to fund an account with 10 ounces of gold or $30,000. |
Gold leasing may not be right for you if…
- …you may need immediate access to your gold.
- …you aren’t comfortable accepting potential risk.
- …you aren’t comfortable giving up physical possession of your gold.
Will you need immediate access to your gold?
Gold leases are established for defined terms. While your gold is deployed in an active lease, it can’t be withdrawn until the lease matures.
If you expect to need immediate access to your entire gold position, leasing may not be the right solution for those holdings.
Are you comfortable accepting potential risk?
At Monetary Metals, we perform extensive due diligence, structure leases carefully, and employ multiple layers of risk management.
Even still, these measures can’t eliminate risk entirely. You should understand these risks before deciding whether leasing fits your objectives.
Are you comfortable giving up physical possession of your gold?
While clients retain title to their metal, leasing requires gold to be deployed to a business for a defined term. If maintaining direct physical possession is an important part of why you own gold, leasing may not align with that objective.
Discuss your goals with a gold leasing specialist
The quiz above can help you explore whether gold leasing aligns with your goals, but your circumstances are unique.
Our experienced Relationship Managers can answer your questions, explain the process and current opportunities, and discuss your options for participating.
