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Gold/Mining/Energy : Gold Price Monitor
GDXJ 97.80+0.9%Nov 19 4:00 PM EST
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To: Zeev Hed who wrote (63917)2/17/2001 7:02:38 PM
From: Alex  Read Replies (1) of 116764
 
<<The term "lease" is a misnomer, confusing the basic difference between banking on the one hand and bailments and leases on the other. A bank deposit of currency or gold creates a liability for repayment in currency or gold, but the money actually deposited passes to the bank for use in its business as it sees fit. The depositor necessarily becomes a creditor of the bank. A bailment creates an obligation to return the item bailed and gives no right to use it. A lease creates an obligation to surrender the item leased at the end of the lease term, during which period the lessor has the right to use but not to convert or sell the leased property. A lessor does not become a creditor of the lessee except as he may agree to accept rent in arrears. A gold loan by a central bank is a deposit in a bullion bank, not a lease in the ordinary sense of that word. The gold "leased" is effectively put out for immediate sale into the physical market, where ultimately the gold for repayment will have to be purchased. The basic point: gold leasing is not leasing at all; it is banking. The great irony of gold banking as practiced today is that the central banks are the principal depositors. Like private depositors before the era of central banking, they must protect themselves.>>

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