A Gold Bond is similar to a conventional dollar bond, except that the interest is paid in gold, the principal is paid in gold, and the face value of the bond is denominated in ounces of gold. The gold bond issuer amortizes the bond from income the same way that a dollar paper bond issuer does.
Prospective issuers of gold bonds include companies who have a gold income. They want to borrow gold, because then their income is matched to their debt service, with no price risk. Issuers may include refiners, depositories, miners, and other businesses.
Any sovereign government that has gold mining activity in its jurisdiction is a great candidate to issue a gold bond. Not only are there fiscal benefits and reduction of risk to the issuer, but of course it helps the world move forward to the use of gold as money—and the sovereign away from the challenges and risks of doing business in the US dollar.
Companies or sovereigns who have incomes from production of commodities will also stand to benefit from issuing gold bonds.
The benefit of the Gold Bond to the investor is even greater than with the True Gold Lease. A bond is a long-term investment. Who would fork over savings that has significant value today, to own a 10- or 20-year paper dollar bond? The risk is that by the time the issuer pays back the principal in nominal terms, the dollar will have lost a lot of value. With gold, this is never a question.
Gold bonds, like paper dollar bonds, are securities. This is an advantage, as it gives institutions a way to own gold who are otherwise prohibited from owning a physical commodity.
Monetary Metals’ CEO Keith Weiner is a member of the Arizona House of Representatives Ad Hoc Committee on Gold Bonds, to whom he presented the idea of a sovereign gold bond. Click here for a video of his presentation of the idea and download the report of the committee here.
Monetary Metals® is working with several prospective issuers of gold bonds. To be notified of the opportunity to invest in Gold Bonds when they become available, fill in our inquiry form on the right or contact one of our Relationship Managers at +1 (646) 653-9729.