“why would the lease rate be intrinsically linked to LIBOR?”
I agree that gold lease rates are correlated to funding rates. (LIBOR is only an indication of the funding rates.) The funding rate determines the “cost of carry” for gold - how much interest you would pay borrowing to fund a physical gold position or how much you would earn on the proceeds if you sold gold over a given period. In this way LIBOR or the cash rate can be used to calculate future gold prices and leasing costs.
Just because interest rates play a role in pricing gold does not mean the gold is important to banks or the payment system. They happily function without the need to transact gold bullion.
“Empirical evidence? Seems fundamental to me.”
There appears to be a divergence between what you see and what is happening in the market. For QE to be inflationary, the newly printed money would have to drive spending to a point where supply constraints force prices higher as consumers competed for scarce products. Plainly, that hasn’t happened.
"broke" – broken
If the banking system is "broken", why am I still able to get money from my ATM? How can I still buy Euros for my holiday? Why do shops and restaurants keep accepting my credit card?
