The people’s money–gold–is turning up in the news this week as collateral and security in the turbulent financial world.
Precious metals dealer Apmex is signing a lease at Donald Trump’s 70-story skyscraper located at 40 Wall Street and The Donald has agreed to accept for a security deposit, “just three 32-ounce bars of gold, each about the size of a television remote control,” according to the Wall Street Journal.
Over on Park Avenue South, the Provident Loan Society of New York is lending to consumers who pledge gold jewelry to borrow enough to pay their bills and cover the 6-month interest rate of 13%.
It’s tough getting a loan at the bank, so consumers and small business are pledging their gold to get operating cash. “It’s a big problem now with the banks,” Pepa Abad Toledo told the WSJ. She uses Provident loans to buy merchandise for her business selling costume jewelry.
Across the pond, Jack Farchy reports for the Financial Times, “European banks are rushing to use their gold to access much-needed dollar funding, in the latest sign of the growing liquidity crunch for the continent’s financial institutions.”
Farchy explains that the cost of swapping euros for dollars has increased fivefold just since June. It’s normal for large bullion banks to lend some of their gold out at the end of each quarter, but, “the latest move is unusually dramatic and highlights the stresses in the dollar funding market, according to bankers.”
When money is tight and currencies are weak, gold comes in handy.