A year ago, I wrote about an investment that's
good as gold.
Now I'm writing an update because this is your last chance to participate in the MarketSafe Gold Bullion certificate of deposit sold by online bank Everbank.
It's an FDIC-insured, five-year CD with an interest return that's tied to the price of gold. You're guaranteed not to lose money: If the price of gold drops over that five-year period, you'll get your initial investment back but simply will earn no interest.
This product is not, strictly speaking, a traditional certificate of deposit, although it does carry FDIC insurance. Instead of interest, you get a "market upside payment" which is determined by the price of gold on ten specific, semi-annual dates during the five-year term of the CD.
At the end of the five-year term, the amount of your market upside payment equals the difference between the average price of gold on those ten dates, compared to the price of gold when you purchased the CD.
At the time I wrote the column a little over a year ago, gold was trading at about $470 an ounce, and the initial "reference point" of the CD was $472.25. Since then, gold bullion has traded at over $600 an ounce. In fact, the first two semiannual "observation points" for the Oct. 25, 2005 CD were $624.75 in April and $580.75 in October. That makes the average gold price to date $602.75 -- or 27% over the reference price. That's not a bad one-year performance!
Everbank has decided that the Dec. 12 edition of the MarketSafe Gold Bullion CD will be the
in the series. That means if you want to participate, you must go to Everbank's
Web site and apply online. That will lead you to a form that you can print out and send along with your check.
The check must be received by Dec. 12, but the CD will be based on the price of gold on Dec. 14.
The minimum investment on the CD is $1,500. This is a very illiquid product, and you cannot break the CD before the five-year term expires, except in case of death.
While you're at Everbank's Web site, you might also want to look at the bank's FDIC-insured money market deposit account. The company has promised that the yield on this account will always remain in the top 5% of all comparable accounts as tracked by Bank Rate Monitor's national index.
Currently, the money market account has a seven-day yield of 4.41%. But there also is an introductory special offer for a yield of 6.01% for the first three months the account is open for the first $50,000 invested. Subsequently, your yield will always be among the promised top 5%.
EverBank can make this promise because it is an online bank with no "bricks and mortar" and thus has lower costs. But it will accept your paper checks for deposit and will -- in the case of the money market account -- allow you to write three paper checks per month out of six allowed monthly withdrawals on your money market account. The minimum amount to open this "yield pledge" account is $1,500.
If you're still skeptical about these products, don't just take my word for it. EverBank has been voted
Best of the Web in banking, and its checking product has been acclaimed by
Kiplinger's Personal Finance
If you're willing to go a bit out of your way, these two unique products can give you FDIC safety, plus some additional interest, or -- in the case of the Gold Bullion CD -- additional protection against inflation. And that's The Savage Truth.
Terry Savage is an expert on personal finance and also appears as a commentator on national television on issues related to investing and the financial markets. Savage?s personal finance column in the Chicago Sun-Times is nationally syndicated, and she released her fourth book,
The Savage Number: How Much Money Do You Need?
in June 2005. Savage was the first woman trader on the Chicago Board Options Exchange and is a registered investment adviser for stocks and futures. A Phi Beta Kappa graduate of the University of Michigan, Savage currently serves as a director of the Chicago Mercantile Exchange Corp. She also has served on the boards of McDonald?s and Pennzoil.