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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: bull_dozer who wrote (161069)	8/8/2020 10:55:05 PM
From: TobagoJack	Respond to of 219167

Re <<Short on Money, Cities Around the World Try Making Their Own>> ... and so it starts, and in the meantime, the total story comes together vortex-ing, phase-changing, crescendo-ing, to tell the tale of our time, that in a nutshell, this time is not different ask-socrates.com Gold Leasing & Negative Rates Gold does not bear interest which is why it has often been called a dead asset. It costs to store it and with no income from the investment without selling it has always been one of the major obstacles to institutional investing in gold. Others have argued that central banks were the biggest lenders of gold and they did so to manipulate prices. That myth has never stood the test of time for they were lending gold in up and down markets which never altered the natural cycle. In general, any entity which owns gold has always sought to lease it out to earn income. The borrowers have been generally mines who may need to smooth their cash flow and will borrow gold to sell now which is replaced when the newly mined gold is refined and then used to repay the loan. Other borrowers have tended to be jewelry manufacturers who may be operating on a contract basis to buy gold and again need to borrow to smooth out the flow of manufacture. When I was in the gold business back in the 70s & 80s, I would make markets for dealers who were buying scrap gold over the counter. They would ship the scrap gold to me which we would process and deliver to Englehard to be refined into 100-ounce bars for delivery on COMEX. However, I would make markets even after COMEX closed and everyone thought I was just speculating when in fact I would sell on the Hong Kong market which was oddly for delivery in London. I would borrow gold in London to make that delivery and then swap it for a COMEX contract which became EFP (Exchange for Physical). I eventually show a firm in London how to do this so I could get some sleep at night. Hence, borrowing gold is not always plain vanilla. In addition, borrowing gold has normally been conducted at interest rates which are below that of borrowing cash because there are costs to physically deliver gold. Consequently, there have been also arbitrages on the interest rates between gold loans and cash loans. This is another whole new area of complexity. Therefore, the fact that gold loans have gone negative is indeed a reflection of lower demand from some industries like the jewelry trade as stores are locked down and people have lost their jobs and marriages have crashed. If we look at the numbers from the Gold Council you will see that in 2019 new mine gold declined. The sharp rise in the gold supply is coming from people selling their old gold jewelry we called scrap. The rise in gold scrap is reflecting the decline in demand from the jewelry trade. Indeed, the World Gold Council put out that the gold jewelry trade declined 6% in 2019. As the recession expands into 2022, the retail jewelry demand will decline rather than expand. With retail down, this is contributing to gold lease rates moving negative.