3 analogies to help explain gold leasing

One of the most common questions we hear at Monetary Metals is: 

“How does a gold lease work?” 

It’s a fair question. While gold leasing might seem abstract at first, it’s actually a simple and time-tested concept—especially when you compare it to other, more familiar business models. 

Monetary Metals has been leasing gold for nearly a decade. We’ve seen firsthand how powerful this model can be—not just for investors looking to earn a yield on their metal, but also for the precious metals businesses that need gold to operate. 

To help explain how it works, here are three of our favorite analogies: 

1. Leasing gold is like renting an apartment (or a car) 

Let’s start with something we all understand: renting. 

If you’ve ever rented an apartment, you know how it works. Instead of buying the building (which takes a lot of capital), you pay monthly rent to use it. It’s the same with a car—you lease it, use it, and then return it. 

The landlord or car fleet owner doesn’t mind the exposure to real estate, or car values, and he gets consistent income. While the tenant or lessee wants to use the underlying asset, without having to worry about the price swings of real estate or vehicles.  

This same logic applies to gold. 

Precious metals businesses often need gold to operate—just like people need housing or cars. But they don’t want to tie up capital or take on gold price risk. So instead of buying gold outright, they lease it from you, through Monetary Metals.  

The gold owner retains title to the metal and earns a yield in gold. The business gets the gold it needs without buying it and pays interest—just like rent. 

Key Difference: No one pays rent in square footage of an apartment, or rubber, aluminum and glass. But with Monetary Metals, you get paid in more gold. Your gold literally grows over time. 

Plus, all leases are insured, professionally managed, and backed by legally binding personal and/or corporate guarantees. That’s not always true in the rental world. 

2. Gold leasing works like floor planning for car dealerships 

If you’ve ever visited a car dealership, you probably didn’t realize something important: 

Most of the cars on the lot aren’t owned by the dealership. 

Instead, they’re financed through a system called floor planning. Car manufacturers lease the vehicles to dealers, allowing them to fill their showroom with inventory without buying it all up front. 

This setup: 

• Minimizes capital outlay 

• Avoids exposure to fluctuating vehicle prices 

• Keeps inventory flowing efficiently 

Gold leasing works the same way. A jeweler, mint, or refiner can lease gold to support their operations—using it as working inventory, then replacing it after a sale. 

They don’t bet on the gold price. They don’t lock up cash. They run a lean, stable, and scalable business. 

Meanwhile, the gold investor (that’s you) earns a yield in gold, not in dollars. It’s a win-win. 

Key Difference: Unlike in the floor planning model, Monetary Metals requires businesses to maintain 110% of the lease amount at all times. Businesses must use the customer’s purchase funds to replace the gold first, before fulfilling the customer’s order.  

3. The jewelry display case: a real-world profit model 

Imagine a jewelry business with a display case full of gold jewelry. If it had to purchase all the gold upfront, it would need significant capital and revenue would fluctuate with gold’s market price.  

Instead, it can lease gold, using it to craft and display jewelry without tying up large sums of money. When a customer purchases a piece, the jeweler replaces the leased gold and pays a lease fee. 

Let’s go one step further and examine how the lease (or no lease) impacts the bottom line of the business.  

Imagine a jeweler who needs one ounce of gold to make a piece of jewelry. At the start of the quarter, gold is $2,000. The jeweler adds $1,000 of labor and profit markup and sells the finished piece for spot price + $1,000. 

Now let’s look at two scenarios: 

Scenario A: The jeweler buys the gold outright.  

• If gold rises to $3,000, they sell at $4,000 and profit $2,000. 

• If gold falls to $1,000, they sell at $2,000 and make… zero. 

In this model, the jeweler either wins or loses based on the price of gold, not their craftsmanship or business skill. That’s risky and unpredictable. 

Scenario B: The jeweler leases the gold at 4% per year (1% over 90 days). 

• If gold rises to $3,000, the jeweler earns $960. 

• If gold falls to $1,000, the jeweler still earns $990. 

Why the difference? 

Because they’re now getting paid for the value they add, not speculating on metal prices. Leasing the gold eliminates price risk and delivers stable profit margins. Sophisticated businesses will choose stable profit margins over speculative gains without hesitation.  

Even better, they don’t have to tie up the initial $2,000 in inventory. That capital can be used elsewhere to grow their business. 

Real yield from gold 

Gold leasing might sound unconventional at first. But in practice, it’s built on common, everyday business models—rental agreements, inventory financing, and supply chain financing.  

For gold-using businesses, leasing improves efficiency, lowers risk, and frees up working capital. For gold-owning investors, leasing turns a static asset into a productive one, generating a real yield, on real gold.  

Ready to put your gold to work? Earn 4% on gold when you open an account