The rich are ‘renting’ out their idle gold bars for income as prices remain at historic highs

It seems more like the futures market. The jewelers are “buying” gold at the current price to make things with gold, and they will need to repay the same amount of gold. If the price goes up, the jewelers will be paying more at that time, and the owners make a profit. If the price goes down, the owners lose money (same as if they simply held it)

It’s probably something like the loan thing, but wackier

Financial people lose the plot regularly, but they get real creative when it comes to the super wealthy. Time and time again, they’ll take on all the risk for basically reward, all just to chase a whale

Basically the borrowers are using gold-to-gold loans instead of cash loans to buy gold to avoid problems like price fluctuations.

They’re using the gold for jewelry making or industrial processes, and then returning different gold with interest paid back in gold.

So the lenders are lending out gold, and getting back more gold as interest with no money changing hands.

For a jeweler, refiner or fabricator who needs gold to make jewelry or components, they don’t have to borrow cash and risk price swings while holding it. They can then sell their finished products at the current gold price. The borrower then pays a lease rate — a form of interest in gold — and at the end of the term, either returns an equivalent quantity of metal or rolls the lease forward. For borrowers, the appeal lies in simplicity and accounting clarity. “Gold leasing solves two problems,” said CEO of Kilo Capital, Wade Brennan. “It gives them the funding they need and removes the price risk. If they bought gold with a bank loan, they’d have to hedge, or they’d be exposed to the gold price.

Clipped the relevant part of the article so you don’t have to go trough the trouble of clicking the link and reading the thing.

The explanation is literally about a third of the linked article.

Gold leasing works much like a loan, except the asset is in ounces, not cash. Though the structures differ slightly, the underlying logic is the same: investors supply gold to a leasing platform or financier, who then lends that metal to a business. For a jeweler, refiner or fabricator who needs gold to make jewelry or components, they don’t have to borrow cash and risk price swings while holding it. They can then sell their finished products at the current gold price. The borrower then pays a lease rate — a form of interest in gold — and at the end of the term, either returns an equivalent quantity of metal or rolls the lease forward.