HOW IT WORKS - Capital Asset

- COPPER, Cu
- Trading in the copper market is just about as old as civilization itself. Copper coins and artifacts date back to early Mesopotamian and Egyptian cultures where it was valued for its attractive red luster, its malleability and, as affirmed by its survival in ancient monuments, its resistance to corrosion. Click to read our Copper Market Summary > >
- LEAD, Pb
- This base metal was discovered in pre-history and has had innumerable uses down through the ages. Click to read our Lead Market Summary
- NICKEL, Ni
- Of all the base metals, none offers more diversified uses than nickel. Click to read our Nickel Market Summary > >
- TIN, Sn
- Tin is often referred to as the "survivor metal". Click to read our Tin Market Summary >>
- ZINC, Zn
- Zinc is commonly mined as a co-product with lead and both metals can depend on growing core markets for their consumption: lead in its use in batteries and zinc on galvanizing. Click to read our Zinc Market Summary > >
- GOLD, Au
- For thousands of years, gold has been a storehouse of value, medium of exchange, a standard for government-issued paper currency and the most highly prized metal for jewelry items. Click to read our Gold Market Summary > >
- SILVER, Ag
- In the Anglo-American world, silver's use as a monetary standard dates from 800 AD, and significantly predates that of gold. Click to read our Silver Market Summary > >
- PLATINUM, Pt
- One of the many attractions of platinum is its scarcity and its use in both jewelry and automotive systems. Click to read our Platinum Market Summary > >
- PALLADIUM, Pd
- Lightest and lowest-melting of platinum metals. This gray-white metal element occurs alloyed with platinum and iridium in Brazil, Colombia, and South Africa. Click to read our Palladium Market Summary > >
- ALUMINUM, Al
- This metallic element is the most abundant in the earth's crust but is found only in combination with other ores, chiefly in bauxite. Click to read our Aluminum Market Summary > >

HOW IT WORKS

The Capital Asset Group and its affiliates now offer you a unique way to trade some of the world’s most popular commodities – precious and industrial metals. The Capital Asset Group allows you to participate in those high-potential markets with added benefits:

Limited exposure and risk to a small amount of your commodity’s total purchase price.
No involvement in the time-sensitive futures or options markets. (To see how, read about the differences in our Physical Commodities Trading Program and typical futures and options trading in our FAQ section..)

How? By purchasing the physical commodity and therefore receiving title to the metal itself.

Under the Capital Asset Physical Commodity Trading Program, you buy the actual commodity. You own and take title to the metals you purchase.

Capital Asset’s program offers two alternatives for commodity purchases:

Fully-paid positions where you pay the full cash purchase price of the commodity.

Leveraged positions where you can buy four to fives times the amount of commodity through Capital Asset’s Physical Commodity Trading Program, which finances* a portion of the cost.

Fully Paid Positions

With a fully paid position, you purchase the commodity and pay the entire purchase price. You can either take delivery or store the metal with Capital Asset. Here’s how fully paid positions work:

Say gold is trading at $600 per troy ounce, and you believe the price will rise. You decide that an investment in gold suits your profit and portfolio criteria.

Gold comes in 100 troy ounce bars, so a basic investment costs $60,000 (plus commissions). You make the payment of $60,000 (plus commissions) and your purchase is either held in a depository confirmed by Capital Asset or you may take possession of the physical commodity yourself.

Leveraged Positions

With a leveraged position, you reduce your cash outlay and control a greater portion of your commodity. Capital Asset can finance a portion of your commodity trading through our Physical Commodity Trading Program*.

Say you decided to purchase two bars of gold (a total of 200 troy ounces) with a 20% down payment. In this case, your total purchase price would be $120,000, and your down payment would be $24,000 (plus commissions).

Capital Leverage. You have purchased a greater quantity of gold and reduced your cash outlay. This provides significant leverage, as every dollar you deposit could multiply its potential earning power as much as five times.

Risk Protection. In addition, the Capital Asset Physical Commodity Investment Program offers a special non-recourse loan feature that protects you and helps manage your downside risk. This unique loan feature ensures that you never lose more than the amount committed to your transaction.

In effect, you manage your downside risk of loss to an amount you decide in advance. Here’s how risk protection works:

In the example above, say the worst possible scenario occurs, and the price of gold collapses to $450 per ounce. Your $120,000 investment is now worth $90,000—a loss of $30,000.

Given that you only paid $24,000, it seems like you’re liable for another $6,000 to make up the loss. You are not. Under the Capital Asset Physical Commodity Trading Program, you cannot lose more than your initial $24,000 investment, no matter what the total loss. In fact, our agreements take you out of the market before all equity is lost, generally at a 6% equity level.

The Capital Asset Physical Commodity Trading Program provides powerful leverage and substantial profit potential on the upside, and a limitation of risk and loss on the downside, guaranteed by Capital Asset Financial Services*.

Buying and selling physical commodities carries significant risks. Leveraging physical commodity transactions increases the potential for loss as well as gain. Do not trade with more money than you can comfortably afford to lose and please read the Risk Disclosures that appear on the first few pages of the Capital Asset Customer Agreement before you decide to send money or trade.

*Capital Asset Financial Services, Ltd. is a licensed California Finance Lender.

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