|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. Whether we're talking about bars of silver bullion or a stack of 10,000 Swiss francs - we're talking about the real thing. 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 total 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 your deposits 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, Account Agreements, Disclosures and Acknowledgements, and 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. And, 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 branch offices to speak to an account executive, who will be glad to assist you.