Gaurav Mathur, founder of SafeGold, a digital platform for investing in gold, said many of the company’s wealthier clients have grown more comfortable with renting out their holdings in recent months.

So far this year, gold prices have gone up by around 55% even after it retreated from a peak of $4,381.21 per ounce hit last month, fueled by economic and geopolitical concerns, rising exchange-traded fund inflows and expectations of further U.S. interest rate cuts, according to Reuters.

During the same period, SafeGold’s leasing volumes have surged from US$2 million to $40 million, Mathur said.

“We’ve got a whole bunch of phone calls with people saying, I have $2 million of gold bars, I have a million dollars-worth of gold bars. Can you lease it out for me?” he told CNBC.

Similarly, Patrick Tuohy, CEO of Singapore-based precious metals trader Goldstrom, noted that demand for gold leasing among his jewelry-sector clients has doubled in the last four months.

Gold leasing is not a new concept; it functions similarly to a loan, where investors provide gold to a leasing platform or financier who then lends it to a business.

The borrower pays a lease rate, essentially an interest in gold, and at the end of the term, either returns the same quantity of metal or extends the lease.

While the market has long been dominated by large players like central banks and bullion banks, more individual wealthy investors have been entering the market via digital leasing platforms lately, according to Tuohy.

The appeal for investors, according to experts in the industry, is the yields paid in gold through lease payments.

For refiners, jewelers, and fabricators, these leases supply the gold required for daily production without exposing them to price fluctuations as they do not have to borrow cash while holding it. They can sell their finished products and buy gold to repay the lease at current market prices, so both their selling price and repayment cost increase alongside gold prices.

But leasing comes with counterparty and operational risks, the biggest being a borrower defaulting on the lease or repaying with counterfeit gold.

To address these risks, many platforms have implemented robust safety measures and often conduct thorough due diligence, partner with reputable jewelers, and in some cases, secure the leased gold with a bank guarantee, NDTV reported.

At Goldstrom, Tuohy said every piece of jewelry is fitted with radio chips, and the RFID-tag system provides real-time inventory updates to the platform.

“We literally turn the jeweler’s shop into a vault,” Tuohy said, adding that cameras and sensors monitor activity around the clock while insurers cover risks such as theft or employee fraud.

In the event of a default, Goldstrom can legally seize and melt the jewelry to reclaim the gold, making losses extremely rare.

“This model has been running in the Middle East since 2006 — and there’s never been a default,” Tuohy said.

Still, despite the potentially attractive returns from lending gold, John Reade of the World Gold Council warned that holders should carefully evaluate borrowers’ creditworthiness and reliability and proceed with caution.