What is tender?

If I borrow 1 kg of gold from someone, what determines the legal tender exchange rate at which I can settle the debt?

• If I borrow 1 kg of gold from, say, a business, and promise to pay it back in a year, when that year passes - and I find out that I'm unable to pay back the debt in gold - what determines the gold-to-legal tender exchange rate at which the creditor is legally obligated to accept my payment (in legal tender) to settle the debt? Precisely which reference exchange rate is the business required to accept, when a gold-denominated debt is settled in US Dollars?

• Answer:

  With the price of Gold moving up or down (in the foreseeable year), an astute lender would quote you the money based on a 12 month forward Gold contract + mark-up. They would most likely get the rate from say CME or London.