5. What if you could presell all that gold to international refineries at prices at or above the spot price before you actually paid for the gold? This is the purest form of true arbitrage you’ll find in the financial markets, as it eliminates execution risk. You can lock in a profit before risking capital. This is precisely what I’ve perfected. This is how I won over the insurance industry, and this is how I have been able to consistently beat the S&P Index. Q. That is fascinating. Can you walk us through an example? Regan: Sure. The spot price of gold today is around $60,000 per kilo. Now let’s say I wanted to sell 100 kilos of gold at that price. I could move 100 kilos to any one of my refineries in minutes with no problem. So by selling those 100 kilos, I generate about $6 million. Upon locking in that sale price, I then go direct to my consortium of mining groups. These entities are all under exclusive contracts where I pay them 3% below the spot price for that same 100 kilos. That costs me $5.82 million. I then arrange shipping of those 100 kilos directly to my refineries. That’s it. I have now generated $180,000 with no risk by preselling the gold. This is just a modified form of arbitrage. That 3% net difference is the key. That’s prenegotiated and helps out the mining groups. These firms are happy to sell their product for a slight discount below spot with long term volume contracts, zero marketing costs, and access to capital that otherwise wouldn’t exist. So now we rinse and repeat. Turning our capital over three or four times every 30 days generates 9% to 12% returns each and every month. Instead of 100 kilos of gold, my fund is turning over closer to 800 kilos a month. That’s around $50 million in monthly transactional volume, and we have the capacity to grow to 5,000 kilos of monthly volume this year. This is where my investors win by placing their capital next to mine. At the end of the day, we are generating returns of around 80% per annum after expenses. About one-third of that goes straight back to investors in our fund. Q. Wow, that is innovative. Is there more to this strategy? Regan: Yes—and this aspect is even more of an innovation. We guarantee our investors a minimum 24% return, and guarantee against the loss of principal. As you might suspect, this makes the Next Level Fund quite unique. While many products guarantee principal protection, I am not aware of any that also guarantees a specific future strong return. (Annuities, for example, are the complete opposite, with notoriously low returns.) With our fund, we guarantee an annual return starting at 24% but increasing to 40% for those investors who invest with us for a longer term and agree to lock ups.
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