gold carry trade means: Carry trades are where you borrow money and then pay interest to purchase something that is higher in interest. This is how the gold carry trade works. The central bank lends gold to a bank, sometimes called a bullion banking. The lease rate for gold is typically very low. A bullion bank sells immediately the gold to invest in securities that offer a greater rate of return such as long-term government bonds. Carry return refers to the bond return less the gold lease rate. This trade can be risky in two ways. The trade may not be profitable if bullion bank invests in long-term bonds. The bullion bank effectively sold out the gold. The bullion bank must purchase more expensive gold if the loan is called off by the central banks. The gold price could rise if there are many short-term banks. Similar: Carry Trade. (in Stock Market Dictionary)
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