Reply #136: Gold lease trends

[Danascot]

"For those of you who are unfamiliar with the concept, central banks lease out gold and silver at very low metal interest rates. For gold, this is down around .1% per year. The gold is loaned to a bullion bank who then lends it to consumers at these low rates and it is then quickly sold on the spot market. Some is fabricated into jewelry, marked up 4 to 12 times and sold, but it is all sold. The central bank gets back a lease contract and puts this in the vault as a gold credit and counts the gold as still there in the vault. Upwards of two thirds of central bank gold being dumped on the markets is this invisible form of selling. If asked, the Western central banks will say they have close to 30,000 tons of gold in their vaults, when the actual tonnage is closer to 15,000 tons."

http://www.financialsense.com/fsu/editorials/2006/0119.html#silverlease