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Precious Metal Financing
Keywords: Financing, Hedging, Liquidity
The presentation will provide an overview of precious metal leasing and the role a lease plays in hedging and/or financing precious metal containing assets or inventories. A precious metals lease is a loan denominated in “ounces” not dollars. This form of financing is suitable for businesses that have significant exposures to precious metal volatility. Precious metal leasing provides three benefits to the company: 1. Inexpensive Financing: In general, precious metal users can finance precious metal inventories and assets at lower rates than if the company chose to borrow dollars to pay for the precious metal assets. 2. Hedging: As the leased metal is owned by the precious metal lender, the company is protected against fluctuations in precious metal commodity prices. 3. Improved Liquidity: A lease/consignment financing program enables precious metal users to free up working capital that might normally be tied up in inventory or fixed assets. A lease may not be beneficial for small users of precious metals. There may also be tax consequences associated with the use of a lease for companies that value their inventories on a “LIFO” basis. The Precious Metal Lender’s willingness to provide precious metal financing to any company is contingent upon the credit profile of the company. The quality of the company’s credit profile is determined after careful analysis of various factors including profitability, net worth, quality of management, industry trends and collateral. A precious metals lease offers an alternative financing that provides qualified companies with liquidity, metals hedging and low cost financing.
Paul Angland, Vice President - Relationship Manager
HSBC Bank USA, National Association
Rehoboth, MA

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