There are many circumstances where it is quite reasonable for money to be lent at a negative interest rate. In fact, many assets are “rented” (interest is simply a type of rent payment) for a negative amount. Most people who don’t own houses rent them. They pay for the right to use the house. But in some circumstances, people are _paid_ to live in a particular house. (It is usually called house sitting.)

Why? Because there are holding costs. It takes time and effort to maintain a house, so if I’m maintaining someone else’s house, they will pay me a fee. If that fee is greater than the fee I would normally pay to rent that person’s house, then that person is paying me to live in his house. Gold also has high holding costs; it requires vaults, guards, and security systems.

In addition, there are very few people who want to borrow gold to finance capital investment. If I want financing to start my own business, I want dollars, not gold, because all my expenses will be priced in dollars. Because demand for borrowing gold is small, then interest rate borrows must pay is small.

Ultimately the central banks are just outsourcing the storage and security costs of storing that gold. Of course that may not be their primary goal. They may be trying to manipulate gold prices or do any number of other things. However, paying someone to borrow your gold is not inherently wrong.

We’re sorry that you assumed.

First you mentioned the ‘unexpected’ event, then followed by “Kyle explained”. You obviously put it in a way that follows chronological order. You made it look that way. So swallow up and just admit it.

Btw, I found out about Kyle before I even posted that question. That was used to get you to respond the way I totally anticipated you would as someone who think he knows it all. That was part of the Darden MBA value investing conference.

And I stand by my statement that he is an opportunist. He bought many CDS and of course preaching the eurozone to collapse is in his favor.