How The Rich Are 'Renting' Out Their Gold For Income, Risks And Rewards Explained

Gold leasing or "renting" idle gold to jewellers and refiners is an emerging trend among investors. Gold prices have been hitting record highs this year, prompting wealthy investors to rethink how they use their bullion. Instead of letting their gold bars sit idle in vaults, many are now leasing them to refiners, jewellers, and manufacturers in exchange for interest, challenging the very notion of gold as a non-yielding asset.

"People are no longer just buying gold and waiting for it to go up to $5,000," Keith Weiner, founder and CEO of Monetary Metals told CNBC.

Demand for gold leasing has also spiked in India, driving lease rates from 2-3% to 6-7% in recent months. Factors like the festival season, weddings, and a supply shortage have pushed gold prices up. Digital gold apps and monetisation schemes have made it possible for everyday investors to earn extra income.

Turning Gold Into A Source Of Income

This strategy provides a way to generate passive income from a non-yielding asset, which appeals to investors looking for additional returns beyond gold's appreciation in value. Gold leasing activity has seen a sharp rise in 2025, with one firm reporting a jump in leasing volume from 2 million to 40 million, CNBC reported. It reflects a broader trend of investors looking to generate returns even from traditionally passive assets.

"We're getting a lot of calls from people saying, 'I have $2 million of gold bars, I have $1 million of gold bars, can you help me lease it out? There's been a huge change in the last few months, and a lot of wealthy clients are now receptive to the idea of leasing gold," said Gaurav Mathur, founder of SafeGold. 

How Does It Work?

The gold leasing process works like a loan, but instead of cash, the asset is denominated in ounces of gold.

Investors lend gold to a leasing platform or financial institution, which then loans it to businesses needing the metal for production. Jewellers, refiners, or manufacturers use the gold to make products, avoiding the need to borrow money or risk gold price fluctuations. They sell the finished items at current prices, pay a lease rate (interest in gold), and return the same amount of gold or renew the lease when it matures.

Investors receive returns, typically in the form of additional grams of gold, which can range from 2-7% annually. The lease tenure can vary from several weeks to months. At the end of the term, the original amount of gold, along with the accumulated yield, is credited back to the investor's digital account. It's a way to diversify portfolios and hedge against economic uncertainty, inflation, and currency fluctuations.

Billionaires like Eric Sprott and Seth Klarman endorse gold as a safeguard against financial instability.

What Are The Risks?

One of the primary risk is if the borrower, such as a jeweller or refiner, defaults or goes bankrupt, the lender may not recover their gold. There's also market volatility to consider. If gold prices rise sharply during the lease period, the lender may lose out on potential gains from selling.

Liquidity risk is another factor, as leased gold may not be immediately retrievable if the lender needs it back. Operational risks such as mishandling, loss, or theft during transport or use also pose threats. Additionally, interest rate risk exists, as returns from leasing may not keep pace with inflation or other investment opportunities. Lastly, lenders may face reputational risk if their gold is used by companies engaged in unethical practices.

To mitigate this, many platforms implement safety protocols. Many companies conduct extensive due diligence and partner with established jewellers. Some also secure the leased gold with a bank guarantee.

Risks For Small Investors

Leasing physical gold isn't ideal for small holders. It's better to hold or invest in structured gold instruments that match your scale and risk appetite.

• Most gold leasing programs, especially those run by refiners or institutions, require larger quantities, often in hundreds of grams or more, to make logistics and processing worthwhile.
• You may not get your gold back easily or quickly, which defeats one of gold's main purpose as a asset.
• Such leasing options are often available only to institutional or HNI investors (High Net-Worth Individuals) 
• For small investors, it's better to hold gold in forms like SGBs (Sovereign Gold Bonds), which offer fixed interest and capital appreciation, or invest through digital gold or ETFs if liquidity and security are priorities.