bluBuzzard is furnishing this document to you to provide some basic facts about using the “nugget benefit,” and to alert you to the risks involved with purchasing additional nuggets or withdrawing cash by means of the “nugget benefit.” A nugget is a digitized ounce of silver. As such, the price of a nugget fluctuates with market conditions. Each account consists of a cache that holds your nuggets, as well as your USD cash amount. Consult your bluBuzzard customer service representative regarding any questions or concerns you may have with your account.
When you purchase nuggets, you pay for the nuggets in full and may opt to borrow up to 25% of the current market value of your cache of nuggets from bluBuzzard (“nugget benefit”). If you choose to borrow funds from bluBuzzard, your account will be designated as receiving a credit (loan). The nuggets you purchased are bluBuzzard’s collateral for the loan to you. If the value of silver declines, then the nuggets in your cache decline in value. When this occurs, the value of the collateral supporting your loan declines; and as a result, bluBuzzard may take action. In order to maintain the required equity in the account, this action may include, but is not limited to, issuing a credit call and/or selling the nuggets from your cache.
It is important that you fully understand the risks involved in opting to utilize the “nugget benefit.” These risks include the following:
You can lose more funds than you deposit in the account. When choosing to use the “nugget benefit,” a decline in the value of nuggets when used as collateral may require you to provide additional funds to bluBuzzard, the company that has made the loan, to avoid the forced sale of those nuggets in your cache.
bluBuzzard can force the sale of nuggets in your cache. If the equity in your account falls below the maintenance requirement of 50%, which has been established by bluBuzzard, the company can sell the nuggets in your cache to cover the account deficiency. You will also be responsible for any shortfall in the account after such a sale.
bluBuzzard can sell your nuggets without contacting you. Some account holders mistakenly believe that the company must contact them for an account deficiency call to be valid, and that the company cannot liquidate nuggets in their caches to meet the call unless the company has contacted them first. This is not the case. bluBuzzard will attempt to notify our account holders of account deficiencies by email, but we are not required to do so. However, even if bluBuzzard has contacted an account holder and provided a specific time by which the account holder can meet an account deficiency call, the company can still take necessary steps to protect its financial interest, including immediately selling the nuggets without notice.
You are not entitled to choose which nugget in your account is liquidated or sold to meet an account deficiency call. Because the nuggets are collateral for the loan, the company has the right to decide which nugget(s) to sell in order to protect its interests.
bluBuzzard can increase its account maintenance requirement at any time and is not required to provide you advance written notice. These changes in company policy often take effect immediately and may result in the issuance of an account deficiency call. Your failure to satisfy the call may cause the company to liquidate or sell nuggets from your cache.
You are not entitled to an extension of time on an account deficiency call. While an extension of time to meet account requirements may be available to account holders under certain conditions, an account holder does not have a right to the extension.
bluBuzzard NUGGET BENEFIT TERMS AND POLICIES
The following Disclosure of bluBuzzard Nugget Benefit Terms and Policies is part of your bluBuzzard-Customer Account Agreement. It describes the terms under which we extend credit and charge interest and how your obligations are secured by nuggets in your cache.
Interest Charges. We will charge interest on a daily basis on the credit we extend to you. The daily interest charges are calculated by multiplying your "daily adjusted debit balance" by the "daily interest rate." Generally speaking, your daily adjusted debit balance is the actual settled debit balance in your account, and reduced by the amount of any settled credit balance carried in USD cash account.
We calculate your daily-adjusted debit balance each day by adjusting your previous day's balance by any debits and credits to your account. If your daily-adjusted debit balance is reduced because you deposit a check or other item that is later returned to us unpaid, we may adjust your account to reflect interest charges you have incurred.
We reserve the right to charge interest on debit balances in your account. Within the account management dashboard, you are able to view a breakdown showing the activity in your account, including applicable interest charges, interest rates, and adjusted daily debit balances.
Daily Account Maintenance Interest Rate. The "daily account maintenance interest rate" is based on a 360-day year. It is calculated for each day by dividing the base margin interest rate by 360. Note that the use of a 360-day year results in a higher effective rate of interest than if a year of 365 days were used.
The applicable account maintenance interest rate is the base rate for all daily adjusted debit balances. Your account maintenance interest rate will be adjusted automatically. If your interest rate increases for any reason other than a change in the Base Rate, we will give you notice via email at least 30 days prior to that change.
Compounding Interest Charges. We compound interest on a daily basis. Interest charges will accrue to your account each day. We will include the charges in the next day's opening debit balance and charge interest accordingly. The interest rates described above do not reflect compounding of unpaid interest charges. Based on compounding, the effective interest rate will be higher.
Account Maintenance Requirements.When you purchase your nuggets in full and opt to take advantage of the “nugget benefit,” you agree to deposit sufficient funds in your account in order to maintain your equity at the required levels. The maximum amount we currently loan for nuggets (equity) is 25% of the value of your cache of nuggets. If the market value of nuggets held as collateral in your cache increases after you have met the initial account maintenance requirements, your available credit may increase proportionately. Conversely, if the market value decreases, your available credit may proportionately decrease.
Initial account maintenance requirements may change without prior notice. We may impose anytime and without prior notice more stringent requirements on nuggets that in our sole discretion involve higher levels of risk; for example, stricter limits may apply during volatile silver market conditions. At our discretion, we reserve the right not to extend credit on any nugget purchase.
You must maintain a minimum amount of nuggets (equity) and or cash in your account to collateralize your outstanding loans and other obligations. Account maintenance requirements are set by the regulatory agencies in the jurisdiction of which we are subject, and, according to our sole discretion and judgment.
You agree to maintain the required collateral amount in accordance with our Disclosure of bluBuzzard Nugget Benefit Terms and Policies. This is required by us, and at our discretion.
Account maintenance requirements may change without prior notice.
We may issue an "account maintenance call" (that is, a notification to deposit additional collateral) if your account equity falls below the account maintenance requirements. This can happen for various reasons. The most common reason is a decrease in the value of nuggets held as collateral in your cache.
As a general guideline and when it is feasible to do so, we may (but are not required to) issue an account maintenance call. This occurs when the value of your cache falls below 50% of the market value of nuggets in your cache. The amount of additional collateral we require is an amount sufficient to raise your equity to minimum standards. For information on the current account maintenance requirements, please contact your customer service representative. If you fail to meet the minimum account maintenance requirements, the company can sell the nuggets from your cache to cover your account deficiencies.
In some situations, we may find it necessary to require a higher level of equity (nuggets or cash) in your account. We retain absolute discretion to determine whether, when and in what amounts we will require additional collateral. We also may consider silver market conditions and your financial resources.