Precious Metals: Unlocking Value from Gold and Silver
Investors in precious metals like gold and silver use their bullion as collateral to secure loans, expecting long-term appreciation to offset borrowing costs.
Description of the Use Case
This strategy provides liquidity for investments or expenses while retaining ownership of metals, which are valued for their stability and historical growth, especially during economic uncertainty.
Step-by-Step Process in Traditional Finance
An expert appraises the bullion, e.g., $200,000 in gold.
The investor applies for a 50% LTV loan ($100,000) via a lender like Goldmoney.
The gold is stored in a secure vault to protect its value.
The $100,000 funds a business or investment.
Over 5 years, the gold appreciates to $300,000 (8.4% annual growth).
The investor repays the $100,000 (plus 4% interest) with investment profits, keeping the gold.
If gold prices dip, additional metal is added to maintain LTV.
Benefits of This Model
Investors access funds while retaining metals.
Gold has grown 400% since 2000, reducing loan costs.
Metals protect value during economic crises.
Funds can diversify portfolios.
Metals are universally valued, ensuring collateral strength.
Risks of This Model
Gold prices can dip (e.g., 2013-2015), risking margin calls.
Vault fees and insurance add expenses.
Rates of 3-7% increase repayment burdens.
Selling metals can be slower than other assets.
Physical metals are vulnerable to theft without secure storage.
Examples in Real Life and Links to Information
Example: An investor borrows $100,000 against $200,000 in gold in 2020 via Goldmoney to fund a startup. By 2025, the gold is worth $300,000. They repay with startup profits, keeping the gold. Link: World Gold Council – Details gold’s appreciation trends. Link: Goldmoney – Offers gold-backed loans.
More Case Studies
Supporting Quotes
Types accepted as collateral include but are not limited to – gold, silver, platinum or palladium bullion, and gold or silver coins.
MMCG’s loan advance rate is 75% of the current market value of your precious metal collateral. After you submit your loan application and transfer adequate precious metals collateral into your Money Metals Depository account, cash funding of your loan can usually occur within 48 hours.
Bullion Loans whether they be Gold Collateral Loans, Silver Collateral Loans or Numismatic-based are arrangements where a lender will lend money against a borrower’s existing precious metal assets.
Looking for a finance lender? Put up your precious metals, numismatic, bullion, or trading cards as collateral for a CFC loan. You don't need to sell anything!
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