Equity Releases may also be used to capture and return to the Account holder, portions of original funds invested, up to the total of an Account holders’ original funds, plus funds which would normally be recognized as profits, which would be created by increased product values over and above, the costs of product held in the Account.
This can be accomplished without ever selling product at the time such equity releases are taken.
Utilization of Equity Releases for this purpose should be properly managed, in the event of a down turn in Market value after such equity releases have taken place. The easiest way to accomplish this is with the use of “GTC Stop Sell” orders on sufficient volume of product to re-align the account to 20% equity, should the Account equity drop to 15%.
The following is an example of the use of equity releases for the purposes described in this section. (For Illustration purposes these examples do not reflect interest and storage/service costs).
Original Purchase
| 1. |
10,000 Silver @ $5.00 = |
$50,000 |
|
Downpayment to PMI |
($10,000) (Original Investment) |
|
Credit Balance Due PMI |
$40,000 |
| 2. |
Price Moves to $10.00 |
|
|
10,000 Silver @ $10.00 = |
$100,000 (Mkt Value) |
|
80% of $100,000 |
$80,000 (Amount PMI will Finance) |
|
Existing CB due PMI |
($40,000) |
|
Excess Equity |
$40,000 (Available for Equity Release) |
| 3. |
Account Holder takes Equity Release of $40,000 this is added to Account Holders Credit Balance Due PMI. |
Net Result
- Account Holder captures original invested funds of $10,000.
- Account Holder captures an additional $30,000 without selling product.
- Account Holder still owns original 10,000 oz of Silver valued at $100,000, has a Credit Balance due PMI of $80,000 and Account equity of $20,000.
- At this point the use of a GTC Stop Sell Order could now be employed using one of two approaches.
Approach One
Use Trailing Stop Sell Orders, 25¢ under the market, to sell enough product to clear loan – leaving the Account Holder with totally paid for product in the Account, which can be utilized to acquire additional, like or unlike product, at any time and any price level, utilizing PMI’s Credit Facilities, or as support collateral for the purpose of Equity Release.
Approach Two
Place GTC Stop Sell Order on 25% of the Product held (2500 oz at $9.42) which represents the price point at which the Account would be at 15% Equity. Should this occur the sale proceeds of $23,550 - would be applied to reduce the Credit Balance Due PMI, leaving the Account with 7500 oz of Silver valued @ $70,650, a Credit balance due of $56,450 and equity of 20% equaling $14,200.
Using Equity Releases as described herein accomplish constant ownership and provide the ability to capture funds generated by increased Product values (without selling product).
Should you have other questions, please E-mail us at
pmi@pmi.ky and we will be pleased to assist you.
