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THE NATURE OF LEASE PAYMENTS ON GOLD LOANS Prepared by International and Financial Accounts Branch Australian Bureau of Statistics November 2004The Nature of Lease Payments on Gold Loans

By Gold Loans


Gold loans or deposits are undertaken by monetary authorities to obtain a non-holding gain return on gold. The physical stock of gold is "lent to " or "deposited with " a financial institution (such as a bullion bank) or another party in the gold market (such as an intermediary for a gold dealer or gold miner with a temporary shortage of gold). In return, the borrower may provide the monetary authority with high quality collateral, but no cash, and will make a series of payments, known as lease payments. The party who borrows the gold from a monetary authority may in turn "lend " the gold to a dealer or miner. This ability to on-lend indicates that, while the package of transactions which makes up a gold loan is clearly very different from an outright sale of the gold, the rights and privileges associated with ownership of the gold have changed from the monetary authority to the borrower. The loan or deposit may be placed on demand or for a fixed period. The amount of gold to be returned is based on the volume initially lent, regardless of any changes in the gold price. The security and liquidity aspects of the monetary authority's gold loan claims on the depository corporations are regarded as a substitute for physical gold, such that the loan values ar

Year: 2011
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