Below are some common
questions we often hear about
the Capital Asset group of companies* and our Physical Commodity Investment
Program:
What exactly is meant
by a physical commodity investment?
Our program allows you to purchase the actual,
physical commodity - not just a piece of paper.
You can take title and ownership of your purchase with delivery to a
depository confirmed by
Capital Asset Trading or take
possession of the physical commodities yourself.**
I understand that CAFS will
finance a portion of the purchase price, how does that work?
Upon approval of your new account,
CAFS will accept an equity deposit from you, usually 15 to 20% of the purchase
price, and will then finance the balance. This enables you to purchase far more
of a commodity than you otherwise
could in an all-cash purchase...and gives you the benefit of powerful leverage,
so your investment dollars work
harder for you. Financing a portion of your purchase with Capital Asset
Financial Services entails certain interest
costs and service fees; you have the option of arranging financing on your own.
How does the physical commodity
investment program offered by Capital Asset
Trading compare to trading commodity futures contracts?
With our program you invest in the actual
commodity or currency, not a piece of paper and
there are no delivery dates or contract rollovers to worry about. Our program
is similar to the futures markets in
that you can create powerful investment leverage; but unlike the futures
markets that have the risk potential to
develop negative equity in your account, our non-recourse loan feature limits
your risk to your
equity deposit.
Could you explain how the
non-recourse loan works?
When you agree to have CAFS finance a portion
of the investment, the company does so through
the establishment of a non-recourse loan, which simply means that CAFS takes
the responsibility for any deficit that
may occur in your account due to unfavorable market movement. If the markets
you invest in move against you and the
equity in your account falls below minimum levels, you have the choice of
putting more equity into your account or
closing your position at a loss. Should you elect to deposit additional funds
to increase the equity in your
account, the total amount of the funds committed to margin the commodity will be at risk. However, if you
decide to liquidate your account,
you cannot lose more than you have already deposited.
Your limited-risk feature
sounds like your program is similar to trading options on futures.
Is that the case?
Our physical commodity investment
program is similar to purchasing options on futures in
that you do have pre-determined, limited risk; but unlike options, our program
has no expiration date! You won't
be forced out of a trade because time ran out on you; because our program
involves
the purchase or sale of physical commodities,
rather than an option on a "dated" futures contract, you have
staying power to ride out adverse or sideways market movement.
I understand that your Physical
Commodity Investment Program offers an
innovative way to purchase commodities, but does it also offer a way for
investors to sell commodities as an
opening transaction?
Yes, you can invest in rising or falling
physical commodity markets through Capital Asset Trading and enjoy the
opportunity to realize
significant investment profits no matter which way the markets are headed.
Through the use of
the "Commodity Loan"
feature offered by Capital Asset Financial Services, most of the commodities
and currencies available from Capital Asset Trading for purchase can also
be "sold" as new, opening positions. Be sure to review our brochure, our Account
Agreement, and our Disclosures and
Acknowledgements. Check with your Account Representative for full
details. Volatility means opportunity and
with our program you can take advantage of the effects of rapidly changing
commodity prices whether they're headed
up or down. A reminder: The purchase or sale of physical commodities is
speculative and should be engaged in by
investors who can comfortably lose part or all of their investment.
I often use "stop" and "limit"
orders in my trading, does your program permit these
types of orders?
Yes, you can control your entry and exit points
by using limit and stop-loss orders.
You can place a limit order to execute a trade at a price higher or lower than
the current price, enabling you
to enter the market at the price you feel is appropriate. To help prevent
losses from spinning out of control,
you can place a stop order to close out your position in the event prices rise
above or fall below a level you
decide in advance. It is important to understand that when a stop order is
triggered, it then becomes a "market
order" and your position will be closed at the next "market" price that could
be considerably higher or lower than
the price on your stop order.
How do I open an account with
Capital Asset
Trading?
Your first step is to acquire a
New Account Package and read the materials thoroughly before you
decide to invest. Just fill out the form and we will promptly mail you all the
required information or contact one
of our authorized introducing broker offices to speak to an account
executive, who will be glad to assist you.
*The
Capital Asset group of companies consists of
Capital Asset Trading, LLC, a California Limited Liability Company that sells
physical commodities to the public and Capital Asset Financial Services, Ltd.
("CAFS"), a Delaware corporation licensed by the State of California
as a Finance Lender. CAFS provides financing to those physical commodity
investors who wish to finance their investments. Capital Asset Trading
and
CAFS are subsidiaries of Capital Asset Holdings, LLC, an internationally owned
holding company.
**Taking personal possession of your physical commodities could result in the imposition of a value added tax. Before embarking on such a strategy, please consult your tax advisor.
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