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EverBank MarketSafe Diversified Metals CD – 50% Upside, Zero Downside
by G.E. Miller on April 22, 201016 Comments
I just discovered the EverBank MarketSafe Diversified Metals Certificate of Deposit (CD), and thought it was a unique enough offering to give it a highlight here (I’m strongly considering it myself). For the risk averse who aren’t satisfied with paltry 2.86% average yield on 5 year CD’s (and less on checking accounts/money markets) but aren’t brave enough for a volatile stock market, this might be an option worth taking a look at.
Since it’s a unique product, I thought it would be best to cover the questions that I had about it and provide the researched answers I found.
What is the EverBank Diversified Metals CD?
It is a 5-year CD that takes the spot price of gold, silver, and platinum and offers a potential 50% upside (plus the initial deposit), with a 100% principal deposit protection (meaning that your won’t lose money if the value of those commodities goes down).
What is the Term for the CD?
- 5-years. You cannot withdraw your funds early – it is a 5-year commitment.
What is the Minimum Deposit?
- $1,500
Is it FDIC insured?
- Yes
Any Fees?
- No
How does EverBank figure out the Return?
Is there a Downside? Only the Opportunity Cost of Having your Money Elsewhere
- Well, technically, no, if you were in cash the entire time. If you were in the stock market, your return would be unknown – and nobody knows where the stock market will be in 5 years. If you were in a CD over a 5 year period that earned 2.86%, your compound return would be approximately 15% on top of your original deposit.
Would you Give the Everbank Marketsafe Metals CD a Shot?
- Whether or not you put your money into this EverBank offering, I think it begs a discussion about where you will be putting your money over the next 5 years?
- Do you think the market run-up will continue over the next 5 years and exceed a 50% return?
- Do you think commodity prices will continue to grow?
- Have you had an experience with a unique bank product like this before?
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My name is G.E. Miller and 
I have a high yield savings account at Everbank and they are a good company that is customer focused. I have been hesitant to put money back in the stock market because it has gone up so fast and hasn’t had any breaks. This sounds like a creative way to get some upside for the risk averse. I don’t see any downside to this product. Thanks for giving the heads up.
Interesting to see structured products becoming a more mainstream marketing tool to entice client cash. It’s probably worth pointing out that IF the maximum return is achieved (+50%), this annualizes to 8.5%, which is a pretty fantastic return on a cash equivalent. G.E. – you stated in your post that you CAN withdraw your funds early, even though it’s a 5-year commitment. I believe that if you withdraw early, you’d be subject to a penalty (although probably not a huge dent) and are not necessarily guaranteed the 100% principal protection.
@ Brian – typo on my end – fixed now. You cannot withdraw early, it is a 5 years commitment (and if you withdraw early, you are subject to penalties).
I contacted Everbank about this CD, and apparently you cannot take an early withdrawal unless of death or adjudication of incompetence. So from my understanding your money will be stuck for 5 years, it does not have a normal early withdrawal penalty. Best to make sure you do not need access to it in an emergency.
please email me more info
Being a dragon, One would be right to assume that I collect my gold and silver physically.
The biggest problem I have with owning precious metals in paper holdings are for 2 reasons.
Reason #1 is that it’s putting money back into the hands of bankers. Banks these days have been speculating wildly with people’s money, and I’d dare not to trust them for it.
Reason #2 is that, either through rumor or audit, are said to have much, much less actual, physical bullion in storage than what they dole out in paper assets. And what of their bullion is actually theirs? These ETF’s and CD’s can end quite abruptly, whereas actual physical bullion is virtually timeless as an investment commodity.
I had a third reason, which is the fees they constantly charge for issuing the paper asset, but it doesn’t seem to be the case here in this CD.
If you’re also entrepreneurial, you’ll be able to find all kinds of creative angles of investing in precious metals. I know I got them! The market certainly makes things all the more favourable, as well!
Aside from loss of value of principal investment due to inflation, this is a wonderful investment option to boost your savings yields. Thanks for posting!
This article doesn’t mention the tax implications. You will get a 1099 tax form each year reporting taxable “phantom” interest. You will have to pay tax on this interest even though you don’t get any interest until the CD matures. It could get complicated if you end up paying too much tax – assume the commodities go up for a few years, then go down for the rest of the term. You could end up earning 0% interest and still paying tax. Something to think about anyway.
@Mort Guffman, If the value goes up and you pay taxes but in the last years it decreases in value you should be able to write this off as a capital loss (I say should as I am not a tax accountant).
I think you are right Zesty. I’m not a tax expert either, but the way I understand it you would have a long term capital loss, which could be used to offset a gain in another investment, which would reduce your taxes. If you don’t have another investment with a gain you might be able to carry the loss over to future years. You would definitely have to talk to a tax person about that.
I made a spreadsheet to experiment with different scenarios for this CD. If each commodity goes up 1% per quarter for the term of the CD you would make 10% interest (2% per year). This scenario seems reasonable to me.
At first I was excited about this product and ready to buy into it, but I’m not sure now.
1. You need to make a 5 year commitment. Regular CD’s allow you to get out early – you lose some interest.
2. The possible tax issue.
3. Commodities would have to appreciate pretty dang well for this CD to make high interest. And that could certainly happen…
(Please don’t allow my ramblings to influence your investment decisions – I am not an expert)
I purchased a $5000 Everbank “MarketSafe” Gold CD that just matured. It was explained to me that the yield would be based on the spot price of gold the day I bought the CD and the date it matured. That turned out to be a load of BS. Gold was $556 on the day I bought it, and it was ~$1340 the day it matured. So here I was expecting a check for (1340/556) x $5000 = ~$12,000. Silly me. I got a check for $8300 – a $3300 increase (not bad compared to regular CD rates) instead of a $7000 return, so LESS THAN HALF what I was lead to believe. Bottom line – if you want to invest in precious metals, buy the physical commodity. Stay away from EverBank. You lose all control to sell when the commodity reaches your profit threshhold, and many commoditoes are cyclical and seasonal, and you need that control to make a decent return.
1. Price point evaluation-Evergreen will not submit documentation to you indicating the gains per quarter nor per year.
2. Physical Bullion provides better liquidity and higher returns of gold, silver and platinum in case of any emergency. You are more in control
3. Their are tax consequences with your gains on this PM CD unlike physical precious metals sold back to dealers who won’t report when you sell.
4. In the end of locking your money up in this product the banks make all the money and you get peanuts. 8.5% is not a good return people. Do not compare to CD’s.. Pay attention to what is happening with the metals. In 1970′s Silver out performed gold by 1,733%….
5. When these CD’s mature in 5 years they will have to pay everyone their gains which could be hundreds of thousands or more all at once.. Will they have the money in 5 years. Evergreen is privately held and has only been around for 11 years. How many banks are going under these days!!
6. Silver and Gold and both growing at more than 20% annually.. So just by Silver bullion or coins and spare yourself the trouble of these paper bank products that butter you up…
Thanks SilverbuzzSuccess
The best case scenario is not of much use… what is the likely scenario? Rick says that silver and gold are growing 20% annually. So if that happens, what is the actual return you will get according to their formula? Is it substantially more than 2-3% annual?
@ Rudy – there really is no ‘likely’ scenario in investing, unfortunately. I wish there was, but if an investment has a guaranteed yield, it’s usually a low yield. The appeal of this investment is that it has a decent upside with no downside.
I have a 401k with Morgan Stanley. Is it possible to conver this to a 401k qualified precious metals account without suffering a tax penalty?
YES, I believe so! Give them a call.. You can roll it over with many other precious metal investments. Everbanks is not the only one out there. I suggest you research and get the one that provides the highest returns. You can also convert it over to a self directed precious metals IRA! Lots of options. But you also need to call Morgan Stanley and make sure they allow you to roll it over.. I wouldn’t put all your 401 K in Precious metals. I suggest strong diversification in all major commodities and focus on crisis investing and make money on all the volatility these days.
Hope this helps,
Rick Silverbuzz