Important development in gold and silver lease rates
“Well another pin is falling … precious metals lease rates are tightening. Just as buying and selling affects prices, so borrowing and lending affect lease rates. If a market is undersupplied then it follows lease rates will rise, which can have a knock-on effect on prices upwards.”
USAGOLD note: With thanks to Ross Norman for spotting this important trend and laying out what it might mean for the gold market. A rising lease rate usually indicates that the bullion banks need gold and silver in physical form to meet the demands of depositors. Eventually, it does make its way into the pricing, and most notably, as Norman suggests, the prospect of rising lease rates will “concentrate the minds” of traders short the paper gold market.