Gold derivatives explained

Reginald H. Howe an author, private investor, and member of Golden Sextant Advisers LLC in Massachusetts explains what Gold derivatives are : "...basically central banks loan gold in one of three ways , they deposit it with other gold banks or with the bank like the Bank for international settlements which then may loan out part or all of that deposit , they loan it to the bullion banks or they engage in swaps with the bullion banks either gold swaps or frequently gold currency swaps why do they do this , the ostensible reason is to earn a return on their gold , otherwise refereed to as a sterile asset .and the return on gold is called a lease rate basically the lease rate of gold is the interest rate on gold and these transactions by in large are done between the central banks and the bullion banks ..."



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