I posted my last reply just as TTBit posted their's, so let me comment...

Yes, I agree with this.


Yes,  I'm beginning to think that the "Futures without expiration" or "ETF w/ delivery" idea may be the way to go.  It seems like people may use this more to speculate on the price of silver rather than as a way to purchase bullion (which I thought would be the other way around).  The great thing about GLBSE is that the listing rates are very reasonable so I could try a few different variations of these contracts and see what works the best.

Wow, these are all really good ideas.  Let me tell you the direction I was initially planning on going with offering these contracts, and if you have any feedback feel free to comment.

I was planning on offering separate contracts delivering a very specific type of bullion product so there would be separate contracts for say:
1 oz generic silver rounds
1 oz silver American Eagles
1 oz bars
10 oz bars
100 oz bar
1/10 oz Gold American Eagles
1/4 oz Gold American Eagles
etc...

The reason for the separate contracts is that each of these products carries a different premium (as you mentioned) above the spot price of the metal, so a 1oz Generic round would cost you less than a 1oz silver American Eagle. 

As far as delivery goes, since there is no extra cost in exercising the right to take delivery (its embedded in the contract price), I figured that's what most people would want in the end, so there would be no need to haggle in the end about adding/removing premium or shipping charges if the person wanted the physical bullion.  If they own the contract, they can request delivery and there are no further negotiations on charges/credits required.

It was a few years ago that I was selling quite a bit of bullion on ebay (userId: black-swan-bullion), but due to the rising costs of doing business there the profit margin shrank to the point where it wasn't worth it anymore. I see the GLBSE as a venue to allow people to purchase bullion and keep the costs down as much as possible because the reasonable listing and transaction fees they have in place.

Yes, there are 8 contracts at 5 oz each.  Part of the reason for the 5oz size is the hassle, but also the fact that the shipping and insurance would make up a disproportional amount of the contract price if the contracts were 1 ounce each.

I like the idea however of making the contract 1 ounce and requiring at least 5 contracts to take delivery, this would probably improve liquidity and allow those that want to speculate in the SLV/BTC price to participate without needing much capital nor needing to take delivery if they didn't want to.

As far as running the contracts continually, from what I had read on GLBSE, the futures contracts needed to have an expiration date, but after filling out the New Asset form on the website, there wasn't anywhere to enter an expiration, so in theory these could potentially run continually

I 100% agree with you.  Its a matter of insurance.  I won't ship these items unless I can provide insurance for them.  The shipments are currently insured domestically under coverage I have, but I need to work out the details with my insurance carrier regarding international shipments.  USPS only insures up to a certain limit, and UPS and FedEx will not insure bullion products.  

If there is enough interest in the bullion futures I'm listing through GLBSE I will be happy to purchase the additional coverage for international shipments.

Reserved

I'm going to go ahead and give this a go and see what the actual interest is.  I will be offering the first silver bullion contract on GLBSE.  
I realize that the price of these contracts' value compared to the stocks and bonds that are trading on GLBSE, as well as the low contract count (I'll be offering 8 contracts) will limit the liquidity of the contracts, and I am open to suggestions on how to possibly improve this moving forward.

I'm targeting an IPO date of Friday 7/27.


Contract Specs
ticker: SLV-BUFFALO

Description: Generic “Buffalo Design” Coins
Grade: .999 Silver
Weight: 1 Troy Ounce each
Quantity: 5
Total Contract Size: 5 Troy Ounces (5 coins)

Contract Expiration: Saturday September 1st 00:00 UTC
This contract will NOT expire.

Settlement Type: Physical Delivery to anywhere in the United States.

Settlement Details:  

• Contract price includes shipping, and insurance charges to anywhere in the United States.
• Shipment to international buyers is not available at this time.
• If you hold this contract at expiration there will be no further charges in order to take delivery of the underlying asset(s).
• Buyer of the contract will contact me within 3 days of contract expiration to arrange delivery details.
• Buyer of the contract may request delivery of the underlying assets before contract expiration at any time.

Seems like an interesting idea.  You would basically become a broker, lending your own funds to allow customers to use leverage, charging them interest to do so.  Along the same lines you could also allow customers to short sell by lending them shares from your own inventory.

Here's what the initial futures contract will likely look like:

Contract Specs

Description: Generic “Buffalo Design” Coins
Grade: .999 Silver
Weight: 1 Troy Ounce each
Quantity: 5
Total Contract Size: 5 Troy Ounces (5 coins)

Contract Expiration: Saturday August 3rd 00:00 UTC

Settlement Type: Physical Delivery to anywhere in the United States.

Settlement Details: 

• Contract price includes shipping, and insurance charges to anywhere in the United States.  Shipment to international buyers is not available at this time. If you hold this contract at expiration there will be no further charges in order to take delivery of the underlying asset(s).
• Buyer of the contract will contact me within 3 days of contract expiration to arrange delivery details.
• Contract cannot be delivered before expiration.

Thanks Coinabul,
I'm not going to have nearly the breadth of products that you offer on your site, which may be the reason my costs would be lower. 

I think the legality of GLBSE itself will come into question at some point, but my guess is that its small potatoes to the SEC right now.  (I'm sure this has been discussed ad nauseum in other threads.)

The question of shorting is a good one, which I was thinking about as well.  My guess is that GLBSE doesn't offer true futures contracts, where one could be long or short.  Also with true futures, one usually just has to put a margin deposit of only 10% down in order to hold the contract (thereby giving the holder quite a bit of leverage), whereas my guess is that GLBSE will require 100% of the contract value in order to purchase it.

The other wrinkle is that by being short the contract you would be obligated to deliver the underlying asset when the contract expires. 

I'll think about this a little more and see if maybe there's a way to construct the contract so that one could make a bearish bet on the BTC/GLD, BTC/SLV price but have the contract be settled in BTC rather than in the actual underlying asset.


I was running through the math last night on some of the bullion products that I would potentially offer, and I'm confident I could beat coinabul.com's prices by close to 10% for US customers.  I'll need to do some more homework for international customers as the shipping and insurance options are a bit more complicated.

So it looks like I'll be targeting a slightly different market than what's out there right now for the metal ETFs as the futures contract sizes I would be looking at would be a bit larger since I'd like to try to minimize the percentage that the shipping and insurance costs make up for the total value of the contract.  So probably a minimum contract size for silver would be 5 oz, with the possibility of contracts for 10oz and 100oz bars as well.  Then gold is a bit easier to sell in smaller units due to the $1500/oz price, but I'd be interested to see if there would be a market for larger units such as 1oz coins and bars.

I'll probably due a test run with some existing silver rounds I have and see how things go before committing to making any bulk purchases.

Hi All,

for a while a few years ago when bullion prices had been crushed I was buying silver and gold coins/bars in bulk and then selling in smaller lots on eBay
 (ebay id black-swan-bullion )
http://feedback.ebay.com/ws/eBayISAPI.dll?ViewFeedback2&userid=black-swan-bullion&ftab=AllFeedback&seeallfeedback=See%20All%20Feedback&myworld=true).

I am trying to gauge if there would be any interest in futures contracts that were settled in physical gold or silver bullion traded on GLBSE.  The futures contract would settle in a specific bullion type, ie one 2012 1/10oz Gold American Eagle, and the price would include expedited shipping and insurance costs within the US to the holder of the futures contract on the specified expiration date.

One could hold the futures contract as a way to speculate on the price of gold relative to BTC, selling before expiration if they didn't want to take delivery of the underlying bullion product.  Or by holding until expiration, the owner would take delivery, in effect purchasing bullion with Bitcoins similar to how Coinabul.com sells.  However, looking at Coinabul BTC prices for their products I think that I could beat them by a few percentage points based on the quotes I received from some of the larger bullion dealers I've worked with, in addition to giving people the chance to speculate and actively trade the BTC to gold and BTC to silver rates without having to take delivery of the products if they so chose.

Anyway, I'm interested in hearing opinions.

Thanks!

Turns out my problem is with the network connection.  I have my rigs running in the garage connected to my home network through a WiFi bridge I set up in there.  It looks like the signal strength in the garage isn't that great and there's a lot of network errors.

I am getting the above message on one of my mining rigs, with a lot of disconnects to the mining pool as well (see below).


07/09/2011 06:43:58] Result: bc1528a8 accepted
[07/09/2011 06:44:17] Warning: work queue empty, miner is idle
[07/09/2011 06:44:36] Result: ca84b3a9 accepted
[07/09/2011 06:44:48] Result: 3286dee8 accepted
[07/09/2011 06:45:42] Warning: work queue empty, miner is idle
[07/09/2011 06:45:48] Disconnected from server
[07/09/2011 06:46:02] Connected to server
[07/09/2011 06:46:19] Result: 69a3eb6a accepted
[07/09/2011 06:46:24] Result: f304edb8 accepted
[07/09/2011 06:46:26] Result: 5a14529d accepted
[07/09/2011 06:46:30] Warning: work queue empty, miner is idle
[07/09/2011 06:46:35] Disconnected from server
[07/09/2011 06:46:55] Connected to server

I've read on other posts that this could be an availability issue with the pool's servers so I've tried both BTCGuild and BitClockers pool, with the same results.  The strange thing is that I have another rig pointing at BTCGuild and it seems to be running just fine. 

Any ideas?

What did their tech support say when you contacted them?

Just wondering if any software devs doing bitcoin related work will be down in SFO next month for JavaOne / Oracle OpenWorld?  Would nice to get together and chat with others doing development on bitcoin software projects.

I purchased the last 7 day contract and everything went smoothly.

I'm currently in the process of working on a tool that will be able to track profit & loss on open/closed trade positions as one of its features. 

I'm hoping to have the first iteration out by the beginning of October which will mainly just be charting and streaming quotes, with the next version containing functionality for placing and tracking trades. 

Watching this as well.

Looks great! 

Do you think that the premium over the spot price will come down as production picks up?