Clients of SWP have a new and unique opportunity to borrow up to 75% of
the value of their gold and silver by receiving a low-interest rate loan issued by SWP Capital. Use the
cash to invest in other assets, pay down debt or however you would like. Apply
to borrow today.
The Fundamentals
Clients of SWP Capital can
borrow against their precious metals held in secure storage at
SWP’s Cayman Islands vault
by using their gold and silver as collateral security in support
of a metals margin loan
granted by SWP Capital.
Margin loan proceeds can be used by clients to increase their investment
in precious metals through SWP, invest in other assets and/or increase their liquidity position.
SWP Capital will lend up to 75% of the market value of precious metals
held with SWP that are segregated in the client’s precious metals account and secured by a repurchase
agreement. The minimum loan amount is USD $50,000, therefore a client must hold USD $66,750 in storage
with SWP to qualify.
Clients can hold on to their metals and stay invested, and at the same
time have access to cash when they need it.
Please contact Jeremy Varlow at jv@swpcayman.com
to obtain the current competitive interest rates for a loan from SWP Capital.
Complete an SWP Capital Metals Margin Loan
Application for review and approval. If you don’t currently meet our criteria, we can chat
about how to best increase your holdings for your desired loan amount. Applications are
turned around within 48 hours.
Step
2
Receive Your Loan
Once SWP Capital approves your margin loan you
can borrow up to 75% of the market value based on the spot price of the specified number of
ounces pledged to SWP Capital as collateral security. This portion is known as the initial
margin equal to 135%.
Step
3
Repay your Loan
When you repay the outstanding principal
balance borrowed, SWP Capital will instruct SWP to release the segregated precious metals
used as collateral back into your SWP account.
Margin Loan Explained
A margin loan is a simple loan agreement that follows a few
rules. The primary one being that a maintenance margin must be
maintained at all times. A maintenance margin is defined as the minimum market value of collateral
equivalent to 120% of the margin loan limit.
In the event the market value of the collateral falls
below the maintenance margin of 120%, SWP Capital will ask you to add to the collateral, sell
collateral and/or inject cash to pay down the outstanding principal balance under the margin loan,
that will be sufficient to restore the maintenance margin. When this happens, it's known as a margin call.
A margin call is effectively a demand by SWP Capital to
restore the maintenance margin. If you do not meet the margin call, SWP Capital can instruct SWP to
sell sufficient collateral to restore the maintenance margin. SWP Capital can do this without your
approval, but only if you fail to meet your margin call within 5 business days. In the event the
market value of the collateral falls below the liquidation margin of 110%, SWP Capital will
immediately instruct SWP to sell sufficient collateral to restore the maintenance margin. You are
responsible for any costs associated with maintaining your margin requirements during the term of
the loan.
Margin Loan Example
Let's say that a Borrower holds a market value of $2 million
in gold bullion with SWP and wishes to borrow $1 million to purchase more gold to add to their
position. To borrow $1 million, the Borrower would need to set aside $1.35 million in gold in a
segregated portfolio with SWP as collateral for their margin loan from SWP Capital, representing a
135% margin (the ‘initial margin’).
By purchasing an additional $1 million in gold bullion
with loan proceeds, the Borrower’s total position with SWP would equal $3 million of which $1.35
million has been used as collateral security with SWP Capital.
Let’s say that the market value of gold drops and the
value of the segregated portfolio drops to $1.19 million. This would mean that the margin between
the outstanding margin loan, say it remained at $1 million, would now drop below 120%, the
‘maintenance margin’. At this point a margin call would be triggered and SWP Capital would require
the Borrower to either, increase the amount of collateral held with SWP in favour of SWP Capital or
sell sufficient precious metals held in their segregated portfolio to paydown the margin loan to
restore the maintenance margin of 120%. The Borrower would be given 5 business days to do so.
In the event the Borrower does not restore the
maintenance margin, or the market value of the segregated portfolio does not restore the maintenance
margin, SWP Capital will instruct SWP to sell sufficient precious metals held in the segregated
portfolio to restore the maintenance margin.
In the event the market value of the segregated
portfolio drops further, and the margin cover drops to 110% or less, SWP Capital will immediately
instruct SWP to sell sufficient precious metals held in the segregated portfolio to restore the
maintenance margin. The Borrower would be notified after the fact.
Other Terms and Conditions
Metals Margin Loan Amount: minimum $50,000.
Interest Rate: Fixed for the term of the loan.
Term: 3 months to 5 years, subject to funding
availability.
Repayment: Interest only payable annually in advance,
with a balloon payment of the outstanding principal balance at the end of the term, unless
renewed.
