Gold Leverage Programs

Gold leverage programs involve borrowing to finance the purchase of gold bullion and then paying interest on the loan. Individuals enter into gold leverage programs when they expect to see a large increase in the price of gold. A typical down payment for gold in a gold leverage program is 40%. Interest is paid to gold leverage programs by investors and gold is stored in depositories.

This system works very well if the price of gold rises significantly. The investor can sell a portion of his or her gold at a much higher price to pay off the loan and keep the remainder of the now higher priced gold.

This system does not work when the price of gold goes down. In that circumstance the investor is still paying interest on a loan and the loan is for more than the value of the gold he or she owns.

The sort of example typically used in ads for gold leverage programs is the purchase of ten ounces of gold with a down payment of 40%. Using $1,000 an ounce as an easy number for this example the investor buys 10 ounces of gold for $10,000. He or she pays $4,000 and finances $6,000. The gold is stored in a depository and is essentially collateral for the loan. The investor pays interest and storage costs. If the price of gold rises significantly he can sell the gold, pay off the loan and take a profit. If gold does not change in price he or she pays monthly interest on the loan and storage fees. If gold drops significantly the investor's 40% equity in the gold could be forfeit as the gold leverage program could repossess the gold, and leave the investor with a - $4,000 + interest + plus storage fees - lesson.

For useful information on solid investments in physical gold feel free to talk to one of our gold experts at 1-800-300-0715. We will be pleased to listen to your investment needs and help you choose an effective means of investing in gold. Also feel free to read the material listed below.