Christ, I have to spell out even basic maths to you.

TOTAL silver in A is 80 oz.

TOTAL shares in C is 800 - corresponding to 80 oz (10 share per oz).  In C there's 276 UNSOLD shares of the 800 - so 27.6 oz of the 80 oz in A is unsold silver.  So when you add A into the total you're adding in unsold silver as well as sold.

To be fair you then suggest various other ways of valueing the shares.  But proposing valuing them on TU/SILVER's assets at all is just deceitful.  You may just as well propose valuing it based on shares of Microsoft - they get ownership of just as many Microsot assets as TU/SILVER ones (above the silver itself) when they buy a TU/SILVER share.  Which is to say NONE WHATSOEVER (other, of course, than the 1/10 oz of silver).

The questions are pretty simple:

1.  Do shares own anything other than silver?
2.  If answer to 1. is YES then How do they ever claim that back?  And are you ensuring you don't reduce that value by, for example, selling silver or issuing new shares
3.  If answer to 2. is NO then why do you price shares as if they did - and pretend the shares have earned income when they haven't (it's donated, not earned, as there's no contractual obligation or definition of what extra capital will be held to generate income.  A promise to give 30% of profits means absolutely NOTHING when there's no associated commitment to maintain a certain ratio of capital generating that income - and when the capital can be withdrawn at any time anyway due to not being owned by the shares)?

Seems answer to 1. is NO - they only own silver.  In which case you can't value them based on the income as there's no definition of how much investment capital will be maintained per share - so the value of your investments/options trading will vary (effectively at random) based on how much of your personal money you decide to put in TU.SILVER at a time.  And also on how much of the silver you personally buy you decide to try to make 1% on by selling options rather than just sell.  As those things can't be quantified and are not subject to any contract they can't conceivably be priced in - especially when any value associated with them has to be surrendered for free anyway if/when someone turns in shares for silver (there's zero mention of refunding any value above the silver on redemption).

You apparently can't even read your own report.

"A. Silver Backing: 80oz

B.
Issued Shares: 800

C.
Outstanding Shares: 524 (unsold shares: 276, valued at 34.37247926 BTC)"

Now you agree you only sold 524 shares?
You notice that you say there's 276 unsold shares?

You notice 524+276=800?  which is equal to 80 (ounces of silver you have) * 10 (number of tenths of an ounce in an ounce)?

The 27.6 oz of silver for the 276 unsold shares is .... drum-roll .. NOT sold.

That's the silver that you explicitly stated earlier does NOT belong to investors.
Nor do the investments, cash kitty and cash balance in D,E and F.

Now, in fairness, the total of all those things is being split between the sold shares AND the unsold shares - so the amount of silver per share IS 1/10th of an oz.  But the cash on hand logically CAN'T belong AT ALL to sold shares - or when you sold a share the funds from it would then increase the value/share.  And, conversely, when you bought silver nothing would chnage but then when you issued new shares the value/share would drop - as you'd be dividing same total by MORE shares despite no economic activity having occurred.  On the last point to osme extent, this may be mitigated by item C (where, perversely, a value is being given to unsold shares AS WELL AS to the silver backing them in A).  But that then makes calcualtion of share value recursive - as it includes the value of unsold shares which (if they have one) has to be based on the calculated value.  It's pretty much a fairy-tale calculation with no grounding in reality.

ISSUED is not same as SOLD.

You can't have it both ways.

EITHER :

A) The shares only own their 1/10th oz of silver - and should be valued based on 1/10th oz of silver.  And selling price of them should be based on that + storage/shipping costs.  Debatably you could add a bit to this for the donations you make from your private option-selling - but as I believe that'll make a loss or minimal profit it won't add much.

OR

B) The shares own the actual fund - and should be valued based on all assets, at which stage you have to price them according to fund valuation regardless of silver price.  And you also have to protect that value (an issue you've had prior problems with grasping on other securities).

The valuation calculated in your report is actually pretty meaningless.  It has no relation to the value of sold shares (as they don't own it) and it has no real meaning as a company valuation as it's calculated over ALL shares including unsold ones (which don't represent a liability or a meaningful divsor of any kind as they aren't sold).  Even if calculated just for sold shares (and excluding any value for unsold shares) all it represents is the amount of capital the company has for each unit that it has liability for.   It then has SOME meaning as demonstrating ability to honour commitments but no meaning as a VALUATION as the shares you're dividing it by are NOT shares owning the company (which are the ones that would be relevant - if they existed - for valuation purposes).

As I've said repeatedly you've totally confused the issue of ownership of company with ownership of the silver.  That I've also failed to grasp the details is because, in your confusion, you've posted contraictory statements which CAN'T be reconciled into any single, sensible explanation (apparently Investors DON'T own unsold silver or capital but the shares they own have those included in their valuation ... come again?).

Well now we're getting to where my confusion came from.

You see, take a look at your financial report.

http://kongzi.ca/silver/20130224TSR.pdf

Look at page 4.

See the bit where it says :

"(A + C + D + E + F) / B = G = 0.13091183 per share."

Well according to your report A is the unsold silver.  And some of the others are revenue from SELLING silver.  All of which you've just said belongs to you.

It's not just a misinterpretation by me of you saying that's the value of assets the COMPANY owns per share - as if you look at your forum psots after posting the report you then proceed to PRICE the shares based on that book value - which makes absolutely zero sense when it includes assets not OWNED by the shares.

As best I can make out you're selling silver, doing some investment and opton-selling at your OWN risk and donating some of any profit you make to investors.  All fine and well - though a misrepresentation when you claim they earned it (as they took no risk nor were their funds used in doing so).  But then you start pricing your units as though they were shares in the company and consistently talking as though the profit/options etc are somehow the investors when you've just clearly stated they aren't.

So here's a simple question:

Why are you including things that aren't owned by the shares when valuing the shares?

Here's your post to show you DO use that value for selling - even though it's entirely unrelated to the price on 1 unit of silver which all they actually buy.


You're totally inconsistent in what a share represents - at times it's just a means to sell (and represent) silver (plus an entitlement to an occasional donation from you), at other times a portion of the entire value of the company's holdings.  And you then try to sell the former at the price of the latter.

Which is presumably why you now charge more per share than you did in February - despite the price of silver in BTC having fallen a load in the interim.  I'm amazed you can try to sell silver at double spot and still claim (presumably with a straight face) to have good prices.

Who owns that unsold silver?  The current investors?

I still don't think you grasp the point I was making earlier.  And you also don't seem to have noticed that you are NOT selling options against silver but against shares.  That has ramifications which I don't think you've properly grasped.  Here's a clue, pointing you towards TWO potential issues:

Say you hold enough silver to back 400 shares and have 300 shares sold.

At this point, IF the silver is owned by the fund (which is owned by its investors) then each sold share is worth 1 and 1/3 units of silver plus a portion of whatever assets the fund owns.  If the silver is NOT owned by the fund OR the fund is not owned by the investors then obviously this isn't the case - and we just have some nice comingling of funds going on with no clear seperation of what belongs to investors and what to some abstract subset of the fund that is personally owned.

Getting back to the point, if it's owned by investors then you can no longer sell units for less that 1 and 1/3 the cost of a unit of silver without causing a loss to current investors.  Which would obviously make your prices horribly unattractive.

Now let's say you write CALLs on those 100 unsold shares and someone buys them.

You can then no longer try to sell those shares - so writing an option on unsold silver is something you do with silver INSTEAD of selling it: rather than writing options on the silver backing sold shares which is what you originally claimed to be intending to do.

Getting back to the ownership issue, IF that silver is owned by investors then you also have to price the options above 1 and 1/3 the cost to you of silver or anyone buying and executing an option causes loss for current investors without even a price movement needed.  If, on the other hand, the silver backing the options is NOT owned by investors then of what interest is it to them?  If they don't own it then what you do with it is none of their business and has no place in your accounts: if you want to trade silver yourself and donate profits from it then go ahead - but don't expect to recoup any loss from investors if they never owned the silver backing the options in the first place.

It seems to me that the whole thing is a bit of a mess.  Most silver funds start off with the operator giving silver to the fund in return for shares which the operator then sells on the market.  In your case it's not clear what happened - as somehow the fund has ended up with unsold shares AND silver without it being clear whether or how these have ended up being the communal property of investors.

The options you wrote (if those are yours on the market) would actually be quite tempting to me as a hedge - were it not for the fact that you seem to only sell silver at about double spot-price.  Really not sure how that meets your claims of (and I quote from your description on Bitfunder):

"The lowest price in BTC
Compare our prices to most online coin shops and we believe you will choose TU.SILVER."

I don't have to look very hard to find places charging less than double spot.  Which of course is the result of the point I've been making that you can't see or won't admit to: that adding a cash position to unit value makes your prices terrible for anyone who just wants to buy silver.

Or is this just a temporary thing - to try to make those who don't check prices think the Asks represent fair value and hence the options are steal (you can buy and execute an option for less than the lowest ask - and it's been like that for the last day)?

One point you may have missed is WHY you can't sell shares equivalent to ALL your silver if you have outstanding CALLs written.  Or maybe you DO realise you can't do that - and have decided to split the silver you buy between silver you sell and silver you write options on (with the ownership of the silver backing options a bit fuzzy).

I read it pretty much the opposite way to how Usagi does.

Nothing in the definition of third-parties exclude drop-shippers UNLESS the agreement with the purchaser includes reference to such a party.  Unless you actually mine the silver yourself there will ALWAYS be a third-party from whom the silver was obtained.  All that varies is the timing - whether you buy from the third-party before or after the customer orders from you.  And the regulations don't make any reference to time - as that isn't the (pretty obvious) purpose of them.

If you read what it says, the objective of those definitions is to prevent accepting, holding or transferring money from one party on behalf of another.  Unless there's an agreement between the purchaser and the third-party that can't happen (the agreement wouldn't have to be direct of course).  When a seller sends funds to the source they are NOT sending funds on behalf of the purchaser - they are sending funds on their OWN behalf so as to fulfil their obligation to the purchaser.  The purchaser has NO agreement with the third-party so there's no way funds can be sent on their behalf.  Where it WOULD get messy would be if instead of silver the seller was selling orders to be placed with a third-party.  But I've yet to see any PM site which works like that.

What puzzles me more is how usagi can honestly believe his fund is somehow more 'legal' than others.  Usagi's shares represent not just silver but a portion of profits - which very clearly makes them securities (Selling pieces of future profits is one of the key elements which defines something as a security).  That's WAY more on dodgy ground than selling PMs but not holding them in stock.  Pretending that buying such shares is somehow buying JUST silver fools noone.  Being possibly in accordance with one set of regulations whilst totally flouting others (TU.SILVER sells options and invests on behalf of its investors - which alone is sufficient to make it a business subject to regulation) is NOT a sound basis on which to claim to be whiter than white or more legal than your competition.

Do note that I run a fund myself (nothing to do with PMs) so would be on equally dodgy ground were I in the US.  But I'm not running around claiming I'm more 'legal' than my competition anyway.  Just mentioning that so as not to be accused of hypocrisy.

That's a decent guess but wrong.

All the ones listed on both exchanges are NOT dual listings.  For many the underlying asset is actually not listed on either - and the listings on them are pass-throughs.  So they're actually funds backed by shares of the underlying asset and shares in them are NOT shares in the underlying asset itself (the managers pass-through the benefits from the underlying asset).

There's NO share that's dual listed on both BTC.CO and Bitfunder (there's three that are listed on BTC.CO and have pass-throughs to them on Bitfunder).  There's one I can think of that is dual-listed, but it's on BTC.CO and LTC-Global.  Rest are either listed on MPEx, Listed on BTC.CO (with a pass-though on Bitfunder) or not listed anywhere (ASICMINER).

A pass-through is NOT the same as a dual-listing, as investors in pass-throughs have ZERO rights, entitlements or claims directly on the underlying asset.  So, for example, if the manager of the pass-through vanishes you have zero rights to anything from the underlieing asset.  And you may well have to pay a premium to buy in and only receive part of dividends.

Oops - somehow managed to edit last week's report instead of this weeks when making a minor change.  Will fix shortly.

EDIT: Both fixed.  Luckily all major posts are duplicated on LTC-talk, so was easy enough to copy the correct ones across.

WEEKLY REPORT




Another week of LTC rising sharply - but, much to my surprise, we managed to make a profit anyway.  In fact we've almost exactly made back last week's loss (I've been watching the NAV/U as I updated for changes - and am intentionally doing the report just after we got back to where we were).  My spreadsheet indicates  trading profits of a bit over 16%, however that's overestimating it slightly - I converted some LTC into BTC at the second peak (after hitting $.75 then dropping and rebounding) as that was clear sign LTC wouldn't go through $.75 again in the short-term.  That tend to exaggerate trading profts as the crude calculation used assumes the conversion into BTC occurred gradually when it didn't.

Profits were helped by people panicking on LTC-Global: selling down too low when LTC rose then buying back too high today after it looked like LTC was going to dive.  The fund picked up a bunch of stuff cheap during the rise - and sold a fair bit off it off for a nice profit, especially last night/today.  Not everything went so smoothly of course - there were a few buy orders I left up too long which had to be marked down immediately.  But some failed trades is the price you have to pay to get a bunch of good ones.

I've held off for now on my next expansion plans - as there's a significant possibility I may be very busy with work for 2-3 days in the coming week.  I have, however, sold more of our bonds whenever I've seen bids up at a good markup to face-value (in general looking for around 6% over face so the first 10 weeks of interest are already paid by the purchaser, giving more than ample time to get the bonds into profitable use).

All the ratios are in good shape for us - bonds are only about 1/3 of NAV, meaning if LTC stayed at current area we could potentially issue around 300 BTC more of them safely.  I'm not confident enough in LTC's stability in this range to do that - nor could we usefully use anything like that much more capital now anyway.  But having the capability is great - and it would take a pretty huge drop in LTC price for us to need to sell more units.

Our ASICMINER shares have now been sold on the pass-through on BTC.CO.  They definitely justified being my first pick of shares to hold long-term.  The sharp rise in LTC means their sale hasn't had the sort of impact on NAV/U that it otherwise would have - which brings me to a more general point.  The recent trading profits of 10%+ per week are just not going to be sustainable with LTC having risen so much.  Normally the overwhelming bulk of out profits comes from BTC (this week was an exception with the irrational behaviour of some investors to the price swings in LTC).  With LTC having risen to around 5 times what it was a few weeks back, each BTC of profit now has 1/5th the impact on NAV/U.  We made around 5 BTC profit selling our ASICMINER shares.  Not too long ago that would have been the best part of a 10% rise in our NAV/U.  With our growth and the huge increase in LTC value, a 5 BTC profit is now not much over a 1% rise in NAV/U.

A further factor is that a lot of the growth from LTC's rise is tied up in LTC that aren't in use (having said that, a few days back we actually had nearly 25% of the fund invested in securities on LTC-Global - over half of which have now been sold at a profit).  We've gone from having nearly 100% of NAV matched by .B1 bonds to only 32.4%.  In practice that means a much smaller percentage of the NAV/U backing each unit is actively being used.  There's no simple solution to that - as there just aren't the range of liquid, viable securities on BTC.CO/Bitfunder to deploy three times our current BTC-denominated capital whilst maintaining what I consider to be a reasonable risk profile.  I can't just do three times the volume of the same things I do already - as there's not enough volume on a lot of what I do to do more than I already do.

To get a 10% growth in NAV/U next week (assuming no change in LTC price) would require a profit of about 42 BTC - the best part of $2000.  I don't see me being able to consistently deliver that.  Before the rise in LTC price it would only have taken 1/5th that - far more manageable.  I know I've said it before (and been wrong) but this time I really don't see double figure growth/week continuing.  Obviously I hope I'm wrong (I get about half of growth with my near 50% holding of units plus management fees).

Both LTC-Global and Bitfunder have released option trading (with BTC.CO following shortly).  I'll be buying, writing and rewriting options a bit - but I don't see it becoming a major part of our activity.  Very few securities have the kind of profile where I'm willing to commit to holding them for a period of time just to make an option fee writing CALLs - and writing PUTs isn't attractive to me as it ties up funds for what is likely a low rate of return with a significant down-side.  Writing options is more for long-term investors happy with a few percent per month.  Buying options, on the other hand, is something I'm fine with doing - if the price is right of course.  For accounting purposes if we buy options then the fee we pay will just be deducted from NAV immediately - and any profits from executing the option added in full if/when we actually execute.  I won't make any effort to value options we hold.  If we write CALLs then I'll ensure the backing securities are on the books at under the strike price - so no drop to NAV/U is possible from the buyer executing the option.  I'd say it's highly unlikely we'll write PUTs at all - unless to hedge a position: when I'd have to enter and maintain a liability onto the books equivalent to the difference between strike price and highest bid.  Essentially, as with the way I value our normal holdings, I'll err on the side of undervaluing rather than overvaluing.

The last two weeks may not have made any overall profit - but I view them as the best two weeks of trading I've done for the fund.  We've managed to come through a five-fold increase in LTC's value with the entire value increase maintained - total justification (in my view) of our decision to be valued in LTC and to issue the .B1 bonds to keep BTC exposure down.

No management fee taken this week (rounded down from next to nothing).
HWM will be updated slightly to the new adjusted NAV/U.
Bid up at 55.5

Didn't actually notice the transaction issues until a lot later, but my balance changed in line with what I expected when I bought the options (I don't double-check balances in detail but would usually notice any significant error).

You're not wrong.  Liquidity adds to the value of shares (provided there's no ceiling in place).  Being able to sell/trade them makes them worth more - you still have all the benefits you had when they were impossible/hard to trade and now also have the ability to sell them if you need/want to.  That increases demand - as people who wouldn't buy them if they were hard/difficult to sell (if necessary) now can/will.

Further to above post it occurs to me that the credit is probably the one that should have showed up to whoever wrote the options - it looks like what I paid less the 10% fee.  Think it's just a reporting glitch - don't think I actually got creditted with it.

Seems to be some confusion in the reporting of options trading in transactions.

I bought calls on 13 ASICMINER.PT with a strike of .9 and an option price of .009 each (yeah - 1%).

My transactions shows 2 entries in respect of it:

2013-03-17 08:25:07    Option Purchase: (ABM)
CALL: 13 Share/s @ ฿0.90 each    ฿0.11700000    

2013-03-17 08:25:07    Option Sale: (ABM)
CALL: 13 Share/s @ ฿0.90 each         ฿0.10530000

The first one shows as a debit, the second as a credit.  The debit is the correct amount for the trade.  I've no idea why the credit shows - doesn't seem like it altered my balance as afar as I can tell.  Also no idea why both say ABM when the option is on ASICMINER.  I've not bought or sold any other options (though I have rewritten the ASICMINER ones in case anyone feels like locking me in an immediate profit).

One pitfall to be wary of is that COG.F shares are fungible.

If you sell 50 shares and order an ASIC then sell another 20 shares you have no way of determining which 50 shares of the 70 outstanding are the ones that should be converted when the ASIC arrives.  Only way around this is to start a new ticker every time you place an order.  That also makes sense as if you sold 50 and ordered an ASIC, then sold 50 more and ordered another ASIC, the price of the first 50 sold SHOULD rise due to them being nearer arrival than the second 50.

Not seeing any other way to do it short of manually tracking the shares and then manually upgrading just the ones entitled to an upgrade as each ASIC arrives.

Not sure why you need a contract change at all.  ASICMINER shareholders own the company.  Therefore they own any mining gear owned by the company.  Only reason why ASICMINER wouldn't be valid under contract contract is if the contract were interpreted as meaning you'd invest only in companies that only mined.  But that's not what contract says - so as far as I can see you can invest in ANY company that has mining as part of its activities AND where the company is owned by shareholders (i.e. no bonds).

Just did an exchange with Projects.  Cash was in my bank account within 10 minutes of me sending the BTC (he sent on 1 confirm and faster transfer was definitely faster this time).  Will definitely use again.

Getting shares from all the scammers has never been a problem.  It's getting BTC that's always the hard part.

Somewhere you've managed to get yourself totally confused over the whole purpose of your Silver Fund.

You're trying to accomplish two objectives with a single security - and the two objectives are incompatible.

Those two objectives being:

1.  To sell ownership of silver and allow redemption of such ownership into physical silver via redemption of shares at a competitive price.
2.  To try to make a profit for investors and increase share value.

Why are they incompatible?  Simple.  Imagine a scenario where each share in your fund is backed by 1 unit of silver and X BTC.

If you sell shares at below the value of 1 unit of silver + X then by doing so, you immediately lose value for existing invetsors by dilution.
But if you try to maintain value for investors then that means your selling price has to be raised by X per share above the cost you could otherwise sell at.

And, of course, if someone redeems shares for silver then have to forfeit the extra X BTC that each share was nominally worth.

That's the problem when you try to use a single security to represent both a fixed-price asset (silver) and also ownership of the profits/losses/equity/debts of a business.  There should be two securities for it - a fund which just has 1 unit = 1 bit of silver and a company which buys/sells the silver, sells options (if you're still going with that idea - you rarely stick with one plan for long) and handles the management.  Then the units can be sold at good price and any profit gos to the company issuing the units.

This confusion extends to this idea of what to do with funds.  If the funds are for operating expenses then y ou cna't do anything with them other than hold them in cash.  If they're for buying silver then you need to buy silver.  If they aren't needed for operating expenses then they should be dividended out - that's only way to go to some way to achieving a balance between the interests of current investors and being able to sell more units at a good price.

Comparing TU.SILVER to my fund (LTC-ATF) is comparing apples and oranges.  You should be comparing to a fixed-asset security I issue such as S.DICE-PT.  Yours is a pass-through to silver, mine to S.DICE.  No way my pass-through would ever hold anything other other than S.DICE - as people buying shares in it want to buy a share of S.DICE - they don't want exposure to anything else.  And they don't want to have to pay a premium because for some perverse reason I decided to try to assign past profits to shares.  If they want to diversify they do it by buying different securities.  Similarly, you can't market your security as way to invest in silver then start having each share/unit of it own bits of other things - as it then ceases to be a silver fund and becomes a trading/investment company that happens to hold a lot of silver.  And if you make a profit/do well then redemption of shares for silver would cease to make sense.

The revenue/profit needs to be seperated from the ownership of silver.  All your other confusion arises from your failure to grasp that.

Not clear what platform you're talking about.

On BTC.CO he paid out the dividend for February on 28th February rather than on March 1st - a few hours early.  Haven't checked on Crypto so can only guess the complaint is about there.

It would hardly be likely he ran given he paid out for the bigger ones on BTC.CO and LTC Global.  More likely he somehow messed up paying the Crypto one and never noticed.  Just would make no sense if someone was going to run to pay out all the big dividends and miss a tiny one (think there's only a few units of it actually outstanding on Crypto).

Not sure why it's even an issue.

The fund was founded on the basis that Silver is a good investment.  The updates from the fund all talk about how Silver is going to outperform BTC in the medium term, how BTC is likely to fall back within the next few months, how silver is underpriced etc.

Then the second the fund has some idle funds you want to try to find ANY alternative to silver to keep them in!  It reads almost as though you believe silver is a bad investment (compared to holding BTC) but have to pretend otherwise to sell shares.

I mean, if the fund won't keep it's OWN idle funds in silver then how do you expect to convince potential investors that THEY should buy silver?

The accounts haven't been published yet.  Friedcat is going to do them once deployment's done.