Monetary Metals Review: Gold Leases And Bonds

Monetary Metals is a unique take on investing in gold (and other precious metals).

Today’s economic climate is characterized by high inflation and bank instability, economic conditions that push some investors toward “safe” assets like precious metals. But these assets haven’t historically produced high returns over time relative to other investments, like stocks.

Monetary Metals is an online platform seeking to increase the return on investment that you can get from precious metals. The company hopes to supercharge returns on precious metals by allowing investors to lease or loan out their bullion and earn interest that is repaid in gold or silver. 

With Monetary Metals, gold investors can enjoy compound growth in their gold holdings no matter the price of gold. Our Monetary Metals review tells you what you need to know about this unusual gold investment platform.

What Is Monetary Metals?

Monetary Metals is a financial marketplace designed to allow gold investors to earn more gold on their investments. The company exists because its founder, Keith Weiner, hypothesizes that gold will only circulate as money if it can earn interest, regardless of price.  

Monetary Metals finds productive gold businesses (jewelers, miners, refiners, mints, electronics manufacturers, recyclers, etc.) and and leases or loans physical gold to them. The businesses use the gold to finance their inventory, work-in-progress, or growth, without the need to worry about the fluctuating gold price. This allows productive gold users to reduce the risk of commodity price changes without engaging in futures trading or tying up their working capital in inventories. 

Monetary Metals’ main financial product, the gold lease, is designed to allow productive gold users to focus on their core crafts, like making jewelry, minting coins, or manufacturing products. These businesses pay their rental fee or loan back in ounces which allows them to gain access to hedge-free financing and helps clients earn a return on their precious metals. 

By matching gold owners and gold businesses, Monetary Metals serves as a market maker. Gold businesses (lessees) typically pay Monetary Metals a fee of 2% to 3% for the gold they lease or own. Monetary Metals takes this fee from the gross interest rate. That means that if investors are earning 2% to 5% in leases, then businesses are paying between 4% and 8% to lease the gold. 

What Does It Offer?

Monetary Metals provides gold and silver financing to small and medium-sized companies that use precious metals as part of their production process. It offers gold and silver leases, in which investors lease physical precious metals to companies. It also offers gold bonds, which are debt products that are denominated in gold for the borrowers and lenders, rather than dollars. 

Gold And Silver Leases

Monetary Metals primarily issues gold leases, but it occasionally issues silver leases as well. These allow companies to rent physical gold or silver for a year (in most cases). This means that the borrower repays the precious metals they leased plus additional ounces in the form of fixed monthly interest payments throughout the duration of the lease.  

No matter what the nominal price of gold is, investors should always end the investment with more gold than they originally invested. Unlike most forms of bullion investing, using Monetary Metals can result in compound growth for your investments.

There is, however, some risk of loss associated with Monetary Metals investments. If a borrower goes bankrupt, Monetary Metals may have delays in getting a principal investment back. And in an extreme case, it may not receive all the gold it lent to borrowers.

However, the biggest risk of loss is the nominal loss of value. If the dollar value of gold decreases during a lease, the investment may lose value in dollar terms, even if you have more gold at the end of the lease than you did at the beginning (because remember - you're being repaid in ounces of gold).

Investment Minimums

To invest in a gold lease, you must put up at least 10 ounces of gold. As of this article’s publication, that’s worth about $20,300 for a minimum investment. You’re required to hold that lease for a full year. At the end of the lease, you will have the 10 ounces of gold that made up your principal investment and the additional gold that you earned as interest via the monthly interest payments. 

Monetary Metals’ current average rate of return for gold leases is 3%. So, in an average lease, an investor who puts up 10 ounces of gold for principal can expect to get 10.3 ounces of gold back at the end of the year. The price of gold may fluctuate up or down during that time, so the investment’s dollar value could increase or decrease by the lease’s end.

When Monetary Metals has silver leases to offer, it requires a minimum investment of 1,000 ounces. At today’s price, that’s a minimum investment of about $24,700.

The investment minimum for a gold bond is usually similar to the investment minimums for leases.

Expected Returns Are Net Of Fees

As with other types of securities, Monetary Metals's advertised returns are the expected return net of fees. There’s no mysterious sleight of hand that would lead to lower returns for investors. The only way that you’ll get less than the expected return is if the gold lessee fails to return the gold with interest.

Liquid Investment

Although gold leases and gold bonds are not common investments, Monetary Metals ensures the liquidity of assets by using an oversubscription model. Before issuing a gold lease to any company seeking gold financing, it ensures that there are more investors who want to invest than there is room for financing. This makes it fairly easy for current investors to withdraw their gold if they need to do so. 

Accreditation May Be Required

Gold and silver leases are available for all investors, but the gold bonds require you to be an accredited investor. Accreditation is required because the gold bond is a security that mimics gold ownership and gold leasing, but it isn’t exactly the same thing.

Related: What Is An Accredited Investor?

Are There Any Fees?

The primary fee that Monetary Metals charges is a market-making fee. When a borrowing company returns the physical gold, it must return the principal investment plus additional gold. Monetary Metals takes a cut of the additional gold (usually 2% of the principal), and the remainder goes to investors.

There are also a few miscellaneous fees that could add up if you’re an active bullion investor. First, you will pay a small “spread” if you purchase gold through Monetary Metals. As an investor, you can either ship gold to Monetary Metals or you can buy physical gold through the site. The spread you will pay is under 1% of the purchase price of gold.

You will not pay insurance or storage fees because the gold borrowers pay for these fees. There are also no additional management fees since these are covered by the market-making fee.

How Does Monetary Metals Compare?

Monetary Metals offers a unique value proposition in the world of bullion investing. It enables investors to earn gold on their gold, allowing them to grow their gold holdings over time. While the dollar value of an investor’s gold holdings may fluctuate up or down, their actual asset base will continue to compound.

By contrast, other bullion-ownership companies don’t allow an investor’s gold holdings to grow via that model and instead provide alternative means of investing in and using gold.

For example, Glint, a gold “spending” platform, allows you to utilize your gold bullion to make purchases via a debit Mastercard. When the Mastercard is used for a transaction, Glint sells a portion of your physical gold, and the transaction is completed in the vendor’s local currency. When U.S. residents make a domestic purchase with the Glint card, there are no transaction fees. Glint’s foreign transaction fee is 0.5%, which is lower than the 1% to 3% foreign transaction fees charged by most banks for their debit cards.

Glint holds its clients’ physical gold in a Swiss vault. But unlike investing with Monetary Metals, Glint clients don’t earn any interest on their gold deposits, and Glint’s monthly storage fee of 0.02% can add up. For example, if you hold $50,000 worth of gold with Glint, that’s $120 in annual storage fees.

If you prefer to take physical possession of your precious metals, you can buy from a company like Vaulted instead. While Vaulted charges higher fees than Glint, it allows you to buy both gold and silver easily from its mobile app, and you have the option of either holding your metals in Vaulted’s secure storage or having them delivered to your home. Vaulted does not, however, allow its clients to lease their gold like Monetary Metals, nor does it offer additional gold investing opportunities, like gold bonds.

Monetary Metals allows for easy buying and selling of gold and silver. Monetary Metals has an opt-out program for all of their leases. Clients can select for all of their available gold to be leased, but can still opt out of any lease they don't want to participate in. 

Bonds are private securities (and therefore only available to accredited investors) and do require active participation before they can put their ounces to work in a bond.

How Do I Open An Account?

To open a Monetary Metals account, you will need to provide your name, email, phone number, and the type of account you want to open (individual, joint, trust, or company account). You’ll answer questions about your financial situation and upload a picture of a government-issued ID.

Then you need to decide how to fund your account. You can either choose to ship your bullion to Monetary Metals or fund the account with cash, which Monetary Metals will use to buy gold on your behalf. Finally, you sign your account documents and log in to start investing.

Is It Safe And Secure?

Monetary Metals takes online security and personal privacy seriously. It doesn’t share any of its clients’ personal information with third parties unless it is legally required to do so. The company encrypts all information and stores encrypted data in secure server locations. Overall, Monetary Metals seems to have an above-average security and privacy policy that should reduce the risk of your information falling into the wrong hands.

Monetary Metals leases out physical gold and silver, so there is some risk of loss associated with the investment.

Additionally, investors must understand that, while they’ll usually end up with more gold than they initially invested, the value of that gold in fiat currency may be higher or lower than the initial investment due to market swings.

How Do I Contact Money Metals?

Monetary Metals’ headquarters is located at 4343 N. Scottsdale Road, Suite 150, Scottsdale, Arizona 85251. You can get in contact with a relationship manager by calling 1-646-653-9729. Finally, you can use the company’s contact form to get more information via email.

Who Is This For And Is It Worth It?

In general, it does not make sense to convert your entire investment portfolio to gold or silver. But having a small amount in alternative investments like gold or silver can help you boost returns and decrease volatility in your portfolio. Monetary Metals offers a unique way for precious metals investors to earn interest from their gold investments. This makes the investment opportunity even more compelling than typical bullion investing.

Overall, it’s worth considering using Monetary Metals to diversify your investment portfolio with gold, as bullion investing has historically had decent returns compared with other low-risk investments like bonds and cash.

In fact, gold has seen an average annual return of 7.78% since the United States left the gold standard in 1971, and a Monetary Metals investment could help improve that return if you can meet its minimum investment requirement.

Monetary Metals Features