27 January 2013

Kitco Shows Recent Plunge to Negative In Gold Lease Rates

Here is what they are showing.

I am wondering if Kitco did not use a bad LIBOR quote in calculating this.

As you may recall the lease rate calculation is LIBOR - GOFO (Gold Forward Offered Rates) = Lease Rate.

A drop in lease rates like this might presage a sell off attempt in gold, or an influx of leased gold to meet some short term delivery pressures or demands for allocation from unallocated sources.

Here is something I wrote about this in the past, when lease rates had dropped.

I suspect Kitco may have miscalculated the data by using a bad LIBOR number, but lets see what happens tomorrow, and I'll do the math myself if they do not correct this.

PS. Later, a reader informs me that he thinks they did miscalculate.  I will give it a day.