Most people think of gold as a static store of value—but today, investors are increasingly using gold to generate yield.
In this episode, we sit down with Jeffrey Rhodes, the “Godfather of Gold Leasing,” to unpack how a decades-old idea is transforming the way gold is financed and deployed.
From the dominance of jewelry demand to innovations in security and structure, we explore how gold is evolving into a productive asset within a modern, global marketplace.
Watch the full video right now.
Follow Monetary Metals on X: @Monetary_Metals
Follow Jeffrey Rhodes on LinkedIn: Jeffrey Rhodes
Additional Resources
Transcript
Monetary Metals:
Welcome back to the Gold Exchange Podcast. I’m here with Jeffrey Rhodes. Jeffrey has joined Monetary Metals as the Managing Director of Business Development for Middle East and Asia. Jeffrey is one of the most respected figures in the global boolean market. He joins us today to talk all about Monetary Metals and the gold leasing world. Jeffrey, welcome to the podcast.
Jeffrey Rhodes:
Thank you.
Monetary Metals:
Jeffrey, for those who don’t know, you’re widely considered the Godfather of Gold Leasing, which is a great name. Tell us a bit about gold leasing. Maybe for those who don’t know, they’ve heard about the gold market, maybe they understand a bit about the gold market, but where does gold leasing sit in the gold market?
Jeffrey Rhodes:
Well, first of all, let’s talk about the other side, which is who uses gold, who needs gold, and frankly, it’s the jewelry sector. I think 60% of global demand is from jewelry. There’s a lot of demand for investment gold, obviously, demand from central banks, but really 60% going into the jewelry sector. So, why and where does the gold come from? They typically have borrowed gold from banks. There are bullion banks. You know, I set up a bullion bank in Dubai. And so that would be the normal way of doing things until now.
But that has an inherent risk because if you have a facility from a bank — $10 million let’s say — and that $10 million gets you so much gold, and then over the year, the gold price doubles, so suddenly that $10 million only gets you $5 million of gold. So that is a problem. Whereas if you have leased gold from someone like Monetary Metals and it’s denominated, the facility is denominated in gold. So it’s gold against gold because you’ve borrowed gold (typically kilobars) and you swap those kilobars into jewelry. So you owe the lessor you owe them physical gold, but you’ve turned it into physical gold. It’s just jewelry.
That gold against gold structure, it’s so simple, you wonder why wasn’t it done before? I can tell you, Monetary Metals, it was done in 1999, September 1999 to be precise, by myself and the bank I was working for, Standard Bank. And Standard Bank came up with this whole concept of taking jewelry as collateral and giving out kilobars against it. The problem with that is if the jewelry is with me in my vault, it can’t be sold. So we had a problem and we solved the problem for the market back in those days and then we came to the conclusion it needed to be a real business.
So back in 2005 Standard Bank launched lending gold collateralized by gold. It never took off. Not really. And the reason is it was set in the world of banking. There’s a lot of friction there. It was difficult. Then I have been helping banks to gravitate towards gold against gold lending RFID and that took me to RAKBANK in 2017. They became a bullion bank and they started lending but not on a gold against gold basis, not really. Then along comes Mr. Keith Weiner with Monetary Metals and suddenly I had a soulmate, someone who kind of believed in something that I’d created 25 years ago. So it’s been great and the journey so far has been brilliant.
Monetary Metals:
Yeah, it has been. So part of the Monetary Metals platform is connecting these jewelers who want to rent and lease gold with gold owners who want to earn a yield on gold. Talk a bit about the difference between a gold marketplace platform, where all these businesses and clients are coming to one platform, versus some of the weaknesses of the banking model where, you know, maybe a banking desk only has one or two people dedicated to the gold leasing.
Jeffrey Rhodes:
I think it’s more to do with that, the structure of a bank lending gold to a jeweler, right, but denominating that in dollars. And the one thing a jeweler should not do is keep money in the bank. Ben, I don’t know if you know, and maybe the jewelers wouldn’t like me to talk about this. They have a significant return on capital. That is a good business, trust me. And so if they keep their money not in gold jewelry, but in the bank to just protect themselves against margin calls, their opportunity cost is double digit.
Monetary Metals:
So it’s inefficient.
Jeffrey Rhodes:
It’s completely inefficient. So what we do, we come along and it’s completely efficient because they don’t have to keep $1 in the bank account to guard against margin calls because there will never be a margin call. It can’t happen. And so that in itself and also we’re competitive. So jeweler leasing from Monetary Metals, I don’t really want to talk about actual numbers because that can change. The principle is that when they take gold on lease through the platform from Monetary Metals, that is very very effective compared to what they would pay a bank.
Because when you take a facility from the bank, you don’t only pay the interest, you pay origination fee, you pay, you know, usage fee, so you pay fees. For us, it’s very simple; there is a lease cost — that’s it. And more importantly, whenever a jeweler makes money, he puts that money into gold, he takes more jewelry, right? So, what we do, we both charge and receive, the client charges and receives gold. So the interest is paid in gold. We have a gold ecosystem. And so the outside world dollar prices make have nothing to do with what we do.
And it gives the jeweler the opportunity to focus his efforts on marketing, getting the best possible product, getting efficiencies in the way they run the money. But more importantly, if clients ever see what we do and the surveillance that we have through company TJS, monitoring the jewelry 24/7, 365 days a year.
Monetary Metals:
Talk a bit about that monitoring and the security. So, when someone thinks about a jewelry store or a jewelry lease, they think, well, there’s this gold, it’s in a necklace, someone could maybe grab it or see it. It’s in a display case, maybe it moves around. Gold has a high weight to value ratio. Talk a bit about the insurance, the security, how it works.
Jeffrey Rhodes:
So what we did after that start by Standard Bank in 2005, and eventually when Monetary Metals came onto the picture, we actually turned the jewelry shops into a vault. It’s a virtual vault. It’s so secure that we called it virtual vault. And so with the jeweler, every piece of jewelry is tagged.
Monetary Metals:
And that’s an RFID tech…
Jeffrey Rhodes:
Radio-frequency identification device that was first created. Guess what for? Gillette razors.
Monetary Metals:
Really?
Jeffrey Rhodes:
Yeah, because Gabriel Nassa will tell you about this, but one of the biggest sort of items that was lost in supermarkets were razors. And so it was Gillette who put RFID into the case. So each piece of jewelry in the store has an RFID tag. And that tag contains thousands of pieces of information. So that’s there. And we got surveillance and so on and so forth. At the end of the day, every jeweler has what’s called a Jeweler’s Block policy. That’s all-encompassing.
Then, we overlay that with insurance of the insurance, because what could happen is a jeweler has taken out the Jeweler’s Block policy. That jeweler could run away. So we have insurance against that. So we have insurance against any theft. So firstly, if there’s theft, then we know about it. So how soon do we know about it? Within 24 hours. Let’s say it’s pilfered. The whole inventory is recorded and audited every single day of the year. Full audit every piece. Now we have a record of what was there yesterday. Now what’s there today? There are 10 pieces missing. Ah, what could have happened? They’ve been sold.
Monetary Metals:
Sold.
Jeffrey Rhodes:
Or no, they haven’t been sold. They’ve been stolen.
Monetary Metals:
They’ve been stolen.
Jeffrey Rhodes:
So there, within 24 hours, we know that’s an issue. I’ll tell you something: the safest place in the world for anything is the UAE. There isn’t a culture of theft. There really isn’t. So, we have this. We have the insurance, we have insurance on the insurance, we’ve got visual oversight 24/7. You know, there was one famous company who did do a runner. They did. And it was during my time at Standard Bank. And this particular jeweler borrowed gold from 16 banks. And the 17th bank was Standard Bank. Except we were the only ones who did RFID and everyone was just a normal gold loans. So that jewelry never was taken.
This family, they run off with everything except the jewelry that was tagged. It was left because if that had been taken, there would have been visual sight that there was something funny going on. So that was left. So it went on, time went on and eventually went to the highest court in the land who ruled that that jewelry belonged to Standard Bank. And so there is actually case law in the UAE that supports RFID gold jewelry lending. So it’s not without risk. There isn’t anything in the world that’s without risk, but it is as risk mitigated as you could possibly hope for.
Monetary Metals:
Jeffrey, as the Godfather of Gold Leasing — which I know you love the name — tell us a bit about where you started and how you ended up here at Monetary Metals.
Jeffrey Rhodes:
I started in markets in 1971.
Monetary Metals:
Good year for gold in some ways.
Jeffrey Rhodes:
Good year for gold. A good year. My football team won the FA Cup this year, that year actually. But anyway, so very good year. But I joined Samuel Montague, which was a merchant bank in the city of London, one of the five members of the London gold fixing. And eventually 1978, I joined the gold desk as a junior trader, ended up as Chief Bullion Dealer at Sammy Montague, was enticed away by Credit Swiss in London, Chief Bullion Dealer.
And then, in 1995, when South Africa had come out of apartheid years, Standard Bank of South Africa — which was very big in bullion because they banked all the major South African mining companies — they came to me and said will you set up a bullion desk? So I did. I went to set up a bullion desk. That was in 1995. And then, the bank decided to reinternationalize itself after the end of apartheid and wanted to set up in the Middle East.
I was with a group of management, made a tour of the Middle East and where we should open, and we decided on Dubai. The main reason we decided on Dubai had nothing to do with the business. Honestly, the CEO in London was a big golfer, and he loved the Emirates Golf Club, and he wanted us to be a member, have a membership at the Emirates Golf Club. So, the decision to go to Dubai was based on golf, not gold.
Monetary Metals:
Well, Dubai is obviously not only the golfing, but maybe the gold center of the world now. Talk to us about the future of gold before we end here. Where do you see the future of gold? Obviously, gold in motion, productive gold, gold leasing. In the past, gold has been kind of a static asset. Now, with Monetary Metals, it’s a productive asset.
Jeffrey Rhodes:
It is. It is. And the one argument against gold has always been the lack of yield. So, it’s a dormant asset which costs you money. You know, if you want that physical gold, look, you can keep it under the bed. Not a good idea. You can keep it in vaults. Yeah, a good idea, but you have to pay a lot. Or you can take that physical gold and you can use a platform such as Monetary Metals and get a yield on that. So now what we have is an asset which is the best performing asset class in the world over whichever time period since 1971. It went from $35 now $5,000. Zillions of percent. Okay.
But really, gold in 2001, in the summer of 2001, was $255 an ounce. Today, just 25 years later, it’s $5,000 an ounce. So, it’s performed better than any other asset class. And the outlook for me is, you know, the only way is up, frankly, because we have central banks buying gold in such a way they’ve never bought before, honestly. And now we’ve got private owners of gold. And those private owners of gold really want to make use of it. So gold is going up. It may not go up in a straight line. It never does, but over time it goes up.
It’s a bit like property. Over time it goes up. And they’re very similar. Property and gold are very similar. They’re both physical, not paper. See, paper is just a promise to pay. Whereas gold is gold. Gold is the only asset in the world that is no one’s liability. So for me the outlook for Monetary Metals is fantastic because the outlook for gold is double fantastic. And why am I here at Monetary Metals? Because of Keith Weiner, honestly.
Monetary Metals:
Let me ask you a question I ask all the guests: what’s a question I should be asking all future guests of the Gold Exchange Podcast?
Jeffrey Rhodes:
Yeah, I would say really their relationship with gold. Do you really believe in gold or is it just another foreign exchange currency or an asset? Do you have that golden gift? And if you do, you’ll do well.
Monetary Metals:
Jeffrey Rhodes, excited to have you at Monetary Metals.
Jeffrey Rhodes:
Thank you very much. Thanks so much.
