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Margin Change – Risk Calculations: October 23, 2020

Interactive Brokers1 will begin phasing in a new methodology to calculate a portfolio’s concentration risk, effective Friday, October 23, 2020.

New Methodology

The potential loss for each stock and its derivatives will be calculated by subjecting them to a stress test which simulates, at a minimum, a price change in the underlying stock of +/- 30%.
The requirement for the stock (and its derivatives) which projects the greatest loss in the above scenario will be compared to what would otherwise be the aggregate portfolio margin requirement, and the greater of the two will be the margin requirement for the portfolio.

Timeline of Change

The increase will be phased in over a series of daily increments beginning after the New York close on October 23, 2020, and continuing through trade date October 30, 2020.

How will the new change impact my portfolio?

To evaluate the full impact of this new change on your portfolio and remain margin compliant, please see KB Article 2957: Risk Navigator: Alternative Margin Calculator, and from the margin mode setting in Risk Navigator, select “Margin 20201030.”

Accounts that are unable to carry a position under this new margin requirement are subject to liquidations to bring the account into margin compliance, so we suggest you manage your risk and capital positions accordingly.

1Euro Pacific Trader is offered by Euro Pacific Securities Inc. (“Euro Pacific Securities”), as an Introducing Broker to Interactive Brokers LLC. Interactive Brokers LLC is the custodian, technology provider, and clearing broker to all transactions executed through Euro Pacific Trader and thus the rates, conditions, and examples shown on this site may be subject to change and differ from what is displayed on Euro Pacific Trader. The rates, conditions, and examples on this site are provided on a best-efforts basis and should not be taken as final.

Euro Pacific Securities will not be held responsible for pricing and conditional discrepancies that may arise in the normal course of offering Euro Pacific Trader. Customers should always review and rely on the conditions that are shown directly on Euro Pacific Trader, and it is the responsibility of all customers to carefully review the conditions of every action before approving execution on Euro Pacific Trader.

Interactive Brokers LLC is a registered Broker-Dealer, Futures Commission Merchant and Forex Dealer Member, regulated by the U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA), and is a member of the Financial Industry Regulatory Authority (FINRA) and several other self-regulatory organizations. Interactive Brokers LLC does not endorse or recommend any introducing brokers, third-party financial advisors or hedge funds, including Euro Pacific Securities. Interactive Brokers LLC provides execution and clearing services to customers. None of the information contained herein constitutes a recommendation, offer, or solicitation of an offer by Interactive Brokers LLC to buy, sell or hold any security, financial product or instrument or to engage in any specific investment strategy. Interactive Brokers LLC makes no representation, and assumes no liability to the accuracy or completeness of the information provided on this website.

For more information regarding Interactive Brokers, please visit www.interactivebrokers.com.

Margin Change – Soft Edge Margining: October 26, 2020

Our brokerage custodian, Interactive Brokers1, is preparing for potential elevated volatility associated with the upcoming United States presidential election on November 3rd, 2020.

What will change?

Soft Edge Margining (SEM) will change temporarily, effective Monday, October 26, 2020. SEM will end 30 minutes prior to a product’s respective close. Currently, SEM ends only 15 minutes prior to a product’s respective close.

What is Soft Edge Margining?

In general, your account is subject to automated liquidation once its equity value falls below the minimum margin requirement. However, Interactive Brokers allows you some leniency prior to a liquidation.

During the trading day, if your margin deficiency is less than 10% of your account’s Net Liquidation Value, it will not be automatically liquidated. In other words, your account will only be liquidated if it falls below the Soft Edge Margin.

This allows your account to be in margin violation for a short period of time. Once your account falls below SEM however, it is then required to meet full maintenance margin and your account will be subject to automatic liquidation to bring it back to margin compliance.

Please note that Interactive Brokers reserves the right to restrict Soft Edge access on any given day and she may eliminate SEM completely in times of heightened volatility. Second, Soft Edge Margin is not displayed in your Euro Pacific Trader.

Press Statement – Our Response to Recent Inaccurate Media Stories

Published: October 19, 2020

In addition to yesterday’s press statement, Euro Pacific Bank confirms it has not been contacted by any foreign regulators or taxing authorities about the inaccurate allegations asserted as factual in a story published yesterday in The Age, an Australian news organization now working with the New York Times.

We welcome the opportunity to provide the correct information to any government authority and are willing to spend as much time in person with those agencies at the Bank’s offices as necessary to show them the strength of our first-class compliance programs.

The former Euro Pacific Bank employee who spoke to this news corporation made a number of baseless and unsubstantiated claims about the Bank, as did a former Australian law enforcement officer, now working as a for-hire consultant. Neither of them has had any contact with the Bank about its compliance policies and programs, nor has any knowledge about the Bank, its officers, nor its compliance practices.

As the Bank has repeatedly shared with the ever-persistent reporters, banking regulations and legal statutes restrict the public disclosure of private client account information. We follow the law and do not believe the press is entitled to private banking information. However, the Bank can share that all of our accounts are regularly subjected to additional review, and any non-compliant accounts are rejected or closed because of the Bank’s rigorous and on-going compliance programs.

Euro Pacific Bank complies with all laws, rules, and regulations applicable to its business operations and makes that clear on its website to all prospective and present clients and business partners.

Read our full presentation here

Press Statement – Claims Made by Australian Daily Newspaper

Published: October 18, 2020

Euro Pacific Bank has received some negative mention in news stories over the weekend. The stories claim that a relatively few citizens in one country have used their accounts at the Bank to evade taxes and that the Bank’s compliance programs have failed to catch and reject them as clients. Nothing could be further from the truth, as described in our new press statement.

While by law and regulation we are not permitted to discuss specific banking clients with the press and public, such accounts are regularly rejected or closed because our compliance programs and employees are first rate.

We are proud of our successes and our compliance department has grown dramatically over the last 4 years. For instance, our new compliance units ensure that we have robust tools to enhance our first line of defense in the business development, onboarding, and customer services departments.

Despite this recent negative press, the Bank remains fully compliant with all regulations and is very secure in the international banking and business communities. We are also pleased to say that despite the Covid 19 pandemic, which has badly hurt so many individuals and businesses and caused worldwide job insecurity, we remain successful, our accounts are secure, our clients are supportive, and the Bank’s staff remains fully employed and engaged with our clients.

No one likes to be the subject of negative stories but with your continued support, and with the excellent work of our compliance staff and programs, we will continue to ably serve our international clients with their personal and business banking needs.

Notice of Custodian Change for Precious Metals

Published: October 6, 2020

As you may be aware, The Perth Mint is the current custodian of all gold and silver backing the Precious Metals Account. Due to regulatory changes last month, they no longer offer this account type.

On October 29, 2020, we will be ending our relationship with The Perth Mint and moving all precious metals holdings to our new custodian, a global leader in high security bullion vault storage.

All bars will be stored in New York location initially, and we have plans to store at other international locations in the future, as described in the “new features & benefits” section below.

Action Required

Although there are numerous benefits from moving to a new custodian, unfortunately there are costs that we will incur, such as fabrication and transfer fees. To continue offering this product, we ask that you share some of these costs with us by accepting a Custodian Transfer Fee.

Your next steps

Option 1: Accept the Custodian Transfer Fee

If you would like to keep your holdings and migrate with us, we will deduct this one-time Custodian Transfer Fee from your bank account on October 29, 2020.

Type	Cost	Example
Gold	$2.00/oz	If you own 10 oz, we will deduct $20.00.
Silver	$0.35/oz	If you own 100 oz, we will deduct $35.00.

No further action is required of you at this time. Simply watch your account for the one-time fee on October 29, 2020 and use your account as normal. If the fee overdraws your bank account, cover the balance by converting funds or liquidating some precious metals to avoid interest charges.

Option 2: Liquidate your precious metals

If you do not want to migrate with us and incur a Custodian Transfer Fee, you must liquidate your precious metals by the deadline: October 28, 2020 at 5PM EST. If you do not sell your precious metals by this deadline, your holdings will be included in the migration; and you will therefore be charged a Custodian Transfer Fee.

Date	Event
October 6	Notice of Custodian Change for Precious Metals sent
October 26	Notice of Custodian Change reminder
October 28	Deadline to liquidate your precious metals at 5PM EST, if you want to opt out of Custodian Transfer Fee
October 29	Precious metals holdings will be migrated; and Custodian Transfer Fee debited from your account

If you are unsure about these options or have questions, please email Trading Support at [email protected] or schedule a call.

Schedule a call with us

New Features & Benefits

If you choose option 1 and allow your precious metals holdings to migrate to our new custodian, you can expect these new features and benefits.

Industry Standard Bars

We are migrating from Perth Mint “unallocated gold” and “pool allocated silver” to investment-grade LBMA or Good Delivery 1kg gold and 1000oz silver bars. These widely recognized bars improve the liquidity and transferability of our holdings.

Physically Stored & Insured

We’ve reduced your counterparty risk by buying investment-grade, fully insured and allocated bars that we fully own and store ourselves at our new custodian.

More Transparency

An internationally-recognized auditor will enter our vault and inspect our holdings, accounting for each bar we own. After we receive our audit letter, we intend to publish it to our website.

Additional Diversification

We are taking this opportunity to diversify precious metals holdings further, with the goal of mitigating economic and geographical risks. That’s why we are currently in discussion with new non-bank vaults around the world, which we will announce in the near future.

Frequently Asked Questions

Will buy/sell commissions or storage fees change?

Commissions and storage fees as published on the Precious Metals Account page are staying the same. We do intend to update the storage fees starting January 1, 2021, however at the moment future storage fees are not finalized.

Why did you choose New York as your new vault location?

Although we are starting our new vault relationship in New York, we intend to make use of their extensive international locations, which is consistent with our philosophy of diversifying assets internationally.

Update October 28, 2020: After reviewing customer feedback, we have decided to hold our metals at a high security vault in Singapore, instead of New York.

Can I take delivery of my precious metals?

We do not offer delivery because the Precious Metals Account is not an “allocated” program.

The purpose of the Precious Metals Account is to provide clients a convenient way to invest in gold and silver and convert those holdings for currency quickly and conveniently.

Is the Precious Metals Account an allocated program?

No. Clients have holdings in the Precious Metals Account, and our responsibility is to back the product 1:1 with physical precious metals in our network of reputable, non-bank vaults.

In return, clients receive true 1:1 price exposure to gold and silver, the convenience of buying and selling online, and 24 hour liquidity.

WARNING AGAINST www.summitinvestbank.com

Published 1-OCT-2020

It has been drawn to our attention that a scam website, www.summitinvestbank.com, has been created without our consent and has unlawfully copied all our website content and replaced our bank name with “Summit Private Investment Intl. Bank Inc.” in an effort to make it appear legitimate.

We can confirm that www.summitinvestbank.com is a fake website and is in no way connected to Euro Pacific Bank.

Please immediately report as spam and delete any emails or communications referencing this site, as the intention is to steal your login credentials or personal information and/or to help perpetrate an advance-fee scam or similar financial related scams.

Margin Change – US Elections: September 28, 2020

Our brokerage custodian, Interactive Brokers1, is preparing for elevated volatility before and after the 2020 United States presidential election in November. As a result, margin requirements2 on Futures & Derivatives will increase by as much as 35% above normal requirements, starting September 28, 2020.

What instruments are impacted?

Interactive Brokers plans to increase Equity Index Futures & Derivatives margins by the aforementioned 35%. For example, ES futures and similar products based on the S&P 500 index would go from a scanning range of approximately 7% to 9.6%.

These instruments will NOT be impacted, as their margin rates already exceed their futures equivalents:

Stocks
ETFs
Commodities
Forex
Bonds

Other instruments not mentioned above may also not be affected.

Schedule of Changes

Initial margin requirements: Gradual daily increases from normal levels starting September 28th to a rate that will be 35% higher by October 23rd.
Maintenance margin requirements: Gradual daily increases in a similar manner between October 5th and October 30th.

These new requirements will be implemented daily after the market closes in New York, and will be effective the next trading day.

Based on these new changes, accounts that are unable to meet the new margin requirements will be subject to automated liquidations3 in order to bring the account into margin compliance. Accounts subject to risk based margin will have their scanning ranges increased in a similar manner.

Example

Consider a Reg. T margin account with stock XYZ having an Initial Margin requirement of 50% and a Maintenance Margin requirement of 25%. With the increase fully implemented, the new requirements would be 67.5% Initial and 33.75% Maintenance.

Note: Interactive Brokers may make additional changes to the margin on certain products, or all products, depending on volatility. This includes changes built into the standard margin model as well as any new house margin requirements that may be imposed.

2 Information on Interactive Broker’s margin rules can be reviewed in this article. To monitor your Euro Pacific Trader available margin balance, please read this guide.

3 Interactive Brokers (IB) will liquidate your positions without prior notice until your account complies with margin requirements. IB automatic liquidation of under-margined accounts is designed to protect customers and to protect IB in times of market turmoil.

Margin Change – Hong Kong Exchanges: September 18, 2020

Interactive Brokers1 will begin to incorporate the following changes to their margin methodology2 calculations for HKFE and SEHK products3, effective Friday, September 18, 2020.

Methodology Update

Risk Scenarios: The Risk Scenarios will be computed based upon Interactive Brokers’ intraday mark price of the underlying stock, instead of previous end-of-day data.
Price Scans: Scanning ranges, which apply to stock or derivative products, will reflect the margin requirement percentage of the underlying stock. For example, if the underlying stock has a margin requirement of 40%, then the price scanning will also reflect 40%.
Volatility Scanning Range: Interactive Brokers will introduce implied volatility scans (at all price levels) in which the volatility is increased/decreased by 15%, 75% for broad-based indexes, and 150% for all remaining classes. Additionally, Interactive Brokers will recognize a given stock-specific implied volatility surface to predict the rate of change for implied volatility under each price scenario. For example, a stock with a daily volatility of 5% is unlikely to see much increase in the implied volatility of its options if the stock drops 10% because it is within its normal range of moves. However, a 10% drop for a stock with a daily volatility of 0.5% will probably experience a ten-fold increase in implied volatility as the volatility increases to 5%. Additionally, Interactive Brokers will apply a stock-specific implied volatility surface to predict the rate of change for implied volatility under each price scenario.

How will these changes impact my portfolio?

The increase will be phased in over a series of daily increments beginning, after the New York close on September 17, 2020 and continuing through trade date September 24, 2020.

To evaluate the full impact of this change on your portfolio so that your account may remain margin compliant, please see this related article and, from the margin mode setting in Risk Navigator, select “Margin 20200924.”

Based on these new changes, accounts that are unable to carry the positions under these new margin requirements are subject to automated liquidations in order to bring the account into margin compliance.

2 Risk-based margin methodology calculates margin requirements by analyzing the potential worst-case loss a portfolio can suffer over a given period (typically one day). The methodology uses a series of hypothetical market scenarios that reflect changes to underlying price moves and, in the case of options, time decay and changes to implied volatility. However, the market scenarios are static and based upon the previous end-of-day data (Source: Interactive Brokers).

3 HKFE: Hong Kong Futures Exchange; SEHK: Hong Kong Stock Exchange.

WARNING AGAINST europacoffshorebk.com

Published 27-AUG-2020

It has been brought to our attention that a domain called europacoffshorebk.com, has been created without our consent and has been used for sending unlawful phishing emails.

We can confirm that europacoffshorebk.com is a fake email domain and that all emails originating from it are in no way connected to Euro Pacific Bank.

Please immediately report as spam and delete any emails or communications related to this domain, as the intention is to steal your personal information and/or to help perpetrate an advance-fee scam or similar financial related scams.

Portfolio Commentary: Ongoing Economic risks

Published: August 26, 2020

euro pacific advisors fund manager portfolio
commentary

Relevant Strategies

Moderate
International Balanced
International Growth
Gold & Precious Metals
Natural Resources
Peter Schiff

Our Commentary

July continued to see a growing divergence between stock markets, buoyed by technology stocks and many economies stalling in the face of renewed flare-ups of infection.

The US Federal Reserve delivered a gloomy assessment of current economic conditions and the risks that lie ahead for the global economy. To counteract the most severe downturn “in our lifetime”, it left the doors open to using any tools at its disposal to support the US economy “until it is confident the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”

The diagram produced by J.P. Morgan below puts the recession into context.

Contracting economies, weakening forecasts

The US economy shrunk by 9.5% in the second quarter (annualised -32.9%) and personal spending was particularly hard hit, declining 34.5%, its steepest contraction since the 1940s. Meanwhile, the Eurozone’s economy contracted 12.1% in the second quarter – the most significant quarterly decline on record.

recession europe — European Commission projects decline in growth.

On a more positive note, PMI data moved past 50 for the first time since COVID-19 appeared in the US and Europe. This suggests expansion, although Goldman Sachs’ Current Activity Index pegs the recent economic slowdown in July at -3.8% versus a positive 0.5% the month before.

The path of the virus remains the dominant driver of near-term growth. As infections continue to spread, forecasts are weakening. Early in July, Goldman Sachs reduced its US GDP estimate for 2020 to -4.6% versus -4.2% previously, based on a 25% rebound in the third quarter, also lower than its previous 33% figure.

Meanwhile, the European Commission put forward a GDP Summer Forecast contraction of 8.3% for 2020, a steeper decline than its previous expectation of a 7.4% decrease in economic growth this year.

China bucks global downward trend

china economy — China projected to continue rebound.

The outlook for China looks more positive and authorities have acted quickly to prevent infection flare-ups spreading further. Economists expect the Chinese economy to grow by 2% this year, the slowest growth since 1976 (see the graph below), but still one of the few countries in the world likely to put in a positive performance for the year.

The stock market is not the economy

By the end of July, the S&P 500 had managed to get back into positive territory year-to-date, reminding us that the stock market is not the economy. Most companies in the S&P 500 reported earnings above analyst expectations, with particularly strong figures from the large technology companies.

Apple’s quarterly revenues were significantly above analyst forecasts, with sales of iPhones, iPads and Mac computers surging. Revenues for the period were $59.7 billion, an 11% increase on a year ago. Facebook’s second-quarter sales also exceeded the most optimistic analysts’ estimates, with almost 3 billion monthly active users during the period.

The value of Amazon, Apple, Facebook, Google owner Alphabet and Microsoft has increased 50% since the beginning of 2020. In comparison, the other 495 companies in the S&P500 Index remain down at -11.4% (see graph below from Williams Markets Analytics).

At the other end of the spectrum, Expedia, the online travel giant, reported an 82% decline in revenue in the second quarter with total gross bookings declining $2.71 billion (90% down on the previous year).

Portfolio Actions

We are currently maintaining a comfortable degree of cash in all portfolios.

Regards,

Euro Pacific Advisors Management Team

Euro Pacific Bank

Euro Pacific Bank Login

I'm Interested

New Methodology

Timeline of Change

How will the new change impact my portfolio?

What will change?

What is Soft Edge Margining?

Published: October 19, 2020

Published: October 18, 2020

Published: October 6, 2020

Action Required

Your next steps

Option 1: Accept the Custodian Transfer Fee

Option 2: Liquidate your precious metals

New Features & Benefits

Industry Standard Bars

Physically Stored & Insured

More Transparency

Additional Diversification

Frequently Asked Questions

Will buy/sell commissions or storage fees change?

Why did you choose New York as your new vault location?

Can I take delivery of my precious metals?

Is the Precious Metals Account an allocated program?

Published 1-OCT-2020

What instruments are impacted?

Schedule of Changes

Example

Methodology Update

How will these changes impact my portfolio?

Published 27-AUG-2020

Published: August 26, 2020

Relevant Strategies

Our Commentary

Contracting economies, weakening forecasts

China bucks global downward trend

The stock market is not the economy

Portfolio Actions