[BTCT.CO] BTC-GOLD: 100 shares = 1 gram gold bullion - Closing

[creativex]

Congrats! Good luck on the launch! You stated you were waiting for receipt of PM, can an investor be assured then that you won't double sell AU denominated in LTC and BTC?

I too wish you'd define shares around fractions of an Ozt rather than bringing grams into it, as it gets rather messy, but it's a minor concern. You get my vote.

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[Carnth]

Congrats! Good luck on the launch!
[snip]
You get my vote.

Thank you.

can an investor be assured then that you won't double sell AU denominated in LTC and BTC?

Absolutely. This is addressed in the FAQs section (second post). The BTC and LTC assets will maintain separate bullion deposits and will never intermix.

The BTC-GOLD bullion deposit and shares released spreadsheet is maintained here:
https://docs.google.com/spreadsheet/ccc?key=0AqLxDN0JzEUNdE9vNG1zZWlrUTIwbFhrZzVtSUowc3c

I too wish you'd define shares around fractions of an Ozt rather than bringing grams into it, as it gets rather messy, but it's a minor concern.

This was a tough decision to make. One of the goals of this fund is to make owning gold bullion affordable to the masses. I had to find out a way to make share prices that are easy enough for the "average" person to afford, while at the same time maintaining a unit that is easy to figure out exactly how much bullion you own according to the share you have.

Making a share affordable:
With the price of gold so high, dividing one troy ounce even by a factor of 100 makes the individual share price higher than I was planning for.
With each share being .01 grams, each share price is about 31 times less expensive (or 31 times more affordable, if that's how you look at it).

Less confusing:
Troy ounces are the world's standard in precious metals. But like imperial measurements, ounces are just weird to people unfamiliar with it. And troy ounces are different from the avoirdupois ounce (which is used in the USA) just to make things more confusing.

However, I would like to hear more opinions on this issue. If you (yes you! anyone reading this post) find this fund intriguing, but would rather have ounces over grams; please reply and voice your thoughts.
There is still time to change the asset contract.

[Deprived]

On grams/oz.

Isn't there an obvious basis to decide which to use - what the gold you buy is measured in.  If you're buying 5g bars then use grams.  If 1oz bars then use oz.  The gold you buy needs to ideally be an exact multiple of the value of a share - so anyone wanting to trade in knows a round number of shares they need (not 500 shares + an extra payment equivalen to 0.31 of a share or whatever).

Or is that putting the cart before the horse?

[creativex]

Thing is everyone that's serious about buying AU is going to run the numbers and the numbers have to be compared to gold bullion which is of course sold in Ozt. Sucks, but there it is and there's no escape. Couldn't you do a fraction of an Ozt just as easily to keep the cost of a single unit down?

[Carnth]

On grams/oz.

Isn't there an obvious basis to decide which to use - what the gold you buy is measured in.  If you're buying 5g bars then use grams.  If 1oz bars then use oz.  The gold you buy needs to ideally be an exact multiple of the value of a share - so anyone wanting to trade in knows a round number of shares they need (not 500 shares + an extra payment equivalen to 0.31 of a share or whatever).

Or is that putting the cart before the horse?

The nice thing is, I have a 5 gram bar to ready to go, but I can also have troy ounce bullion (or fractional ounce) delivered as well.
I have time to change the contract to ounces or keep using grams all the way up until the first share is sold. I don't mind buying one way or the other.

And yes, each share will always be a fraction of the unit of measure.

Thing is everyone that's serious about buying AU is going to run the numbers and the numbers have to be compared to gold bullion which is of course sold in Ozt. Sucks, but there it is and there's no escape. Couldn't you do a fraction of an Ozt just as easily to keep the cost of a single unit down?

0.01 grams OR perhaps 0.001 troy ounces.
Having each share = to 1/1000 of an ounce still achieves my goal of affordable shares.


Any other opinions out there? Is troy ounces a good idea? Do you not care at all? Feedback is welcome.

[SaltySpitoon]

Grams or fractions of grams are still most likely your best bet, you can keep holdings and shares in increments of 10, and don't have to worry about ounce/troy ounce conversions or those pesky extra weight increments like 31.1 grams/troy oz. Even 1 gram shares would be high, at around $70 per share (cost of a recognized 1 gram bar approximately) so I would recommend keeping it at 1/10th ($5-7 per share) or 1/100th gram ($.50-$.70 per share) (Even more parenthesis (Price variation having to do with additional cost over spot depending on increment size))

I know you have had success in the LTC market here, but now keep in mind, you may be able to do larger share sizes, as Bitcoin holds a higher value. where you may be paying 10 LTC for a 1/100th gram share, you would be paying .05 BTC per share.  

[Carnth]

Grams or fractions of grams are still most likely your best bet, you can keep holdings and shares in increments of 10, and don't have to worry about ounce/troy ounce conversions or those pesky extra weight increments like 31.1 grams/troy oz.

Remember, shares will always be in the unit of measure. Meaning each share will be 1/100 gram with gram bullion or 1/1000 ounce with ounce bullion. I won't mix ounce bullion with gram shares.

I know you have had success in the LTC market here, but now keep in mind, you may be able to do larger share sizes, as Bitcoin holds a higher value. where you may be paying 10 LTC for a 1/100th gram share, you would be paying .05 BTC per share.  

The price per share will always reflect the USD/BTC price per unit of bullion. I expect share prices to be bitcents.

[Carnth]

I would still like more input on the issue of grams versus troy ounces.

And to make it easier, I will put it up to a sudo vote.

Here are the two options:

Grams
Currently, the default would be to release the shares in grams where 100 shares = 1 gram.
At current BTC/USD prices, each share would be about 0.035 - 0.060 BTC (price subject to change based on a number of factors).
The minimum number of shares to withdraw physical bullion would be 500 shares = 5 grams (plus fees, shipping, etc.)

Troy Ounces
If we go with troy ounces, 1000 shares = 1 troy ounce.
At current BTC/USD prices, each share would be about 0.13 - 0.16 BTC (price subject to change based on a number of factors).
The minimum number of shares to withdraw physical bullion would be 250 shares  = .25 ounces (plus fees, shipping, etc.)



As you can see, going with troy ounces would make the share price much higher. Bullion overhead at 1/4 ounce is still pretty high (and already include in the share prices). The bullion overhead drops significantly at 1 ounce bars/rounds AND at 10 gram bars; but this might exclude some (casual) investors from ever being able to take physical delivery. Should the withdraw quota be 1 troy ounce OR 10 grams?

Again, I still have time to revise the asset contract. These changes can be implemented. But I need to know if there will be enough interest to justify making any of the proposed changes. I want to provide an asset that makes affording gold bullion accessible to everyone.

Please make you opinion matter. Increase you post count and let me know what you think.

[DeathAndTaxes]

One option is to price shares in SPOT only.  If someone wants to take delivery then they can pay a coinage fee (you are already going to charge shipping and possibly insurance on large deliveries anyways right)?  Then your gold reserve can be a mix of various coins (1/4 oz, 1/2 oz, 1 oz) and bars (5 oz, 10 oz).  There is one limitation to this though.  Your cost (until delivery occurs) will be higher than the net value of shares.  ETN generally handle this by either a) getting a cut of tx fees and/or b) doing a reverse split to cover fund operating costs (i.e. 100 shares is reverse split to 98 = 2% fund operating cost).  My understanding is that no exchange currently offers the ability to do reverse splits or entitles funds to a % of transaction fees.  You could roll all your fees/cost/profit into the delivery portion but it may mean you are equity "rich" and cash poor if you issue a lot of shares and nobody takes delivery.

Still having the fund be in spot only is the cleanest way to handle things, I would try to think of a way doing that.  Otherwise it is going to get "ugly" if/when you start mixing coins coin sizes (or buying coins in bulk which have a lower premium relative to spot).

If the legal aspect wasn't so risky I was considering opening a bitcoin denominated gold ETF using the method above.  Of course now I have way more than enough projects to occupy my time.

[Carnth]

I have decided to stick with grams.

This would allow for shareholders to transfer shares from LTC-GOLD <-> BTC-GOLD.  This would only work if there are unsold shares of the requested fund. For example, if there are 200 shares left unsold from a bar of gold bullion, up to 200 share are available to be transferred.
The number of unsold share are available at the publicly available Bullion Inventories spreadsheets of each fund (LTC-GOLD  BTC-GOLD).

Since both LTC-GOLD and BTC-GOLD equal 0.01 grams of gold bullion per share, I thought it would be a bonus feature to allow share holders to transfer shares from one to the other. All other contract rules will still apply. There is still a 500 share withdraw minimum in each fund. But by being able to move shares from one fund to another, it will be easier to achieve this goal with out the penalty of buying in both funds.

Note: Bullion inventories will never intermingle.  This will not affect the total number of shares in either fund as only unsold shares are eligible to be transfered. This will also not affect anyone who only wishes to invest in one fund only.

The BTC-GOLD contract has been updated to reflect this change:

Share transfer between LTC-GOLD and BTC-GOLD (on the BTC Trading Corp. exchange) can be requested.
Requests must be made in multiples of 100 shares.
Requests can only be completed if there are enough unsold shares available on the requested fund.
There is a fee of 5 shares per transfer.
Please contact the asset issuer to make your request.

[Carnth]

Bar added to BTC-GOLD inventory:




Sunshine Mint 5 gram

Shares will be released is small batches.

[Ukyo]

Bar added to BTC-GOLD inventory:




Sunshine Mint 5 gram

Shares will be released is small batches.

+1 to an issue who communicates and shows the shareholders and the public that things are real.

I may be buying some myself. I think the market is only going to go up.
Definitely a better way to buy gold than my previous adventure a decade ago with an online gold trading site that has storage fees.
I put $100 when gold was still under $400... I looked the other day, with monthly fees, the account still exists..
I have $2 worth in gold left. So glad I put that money in, and the value went up.

[Carnth]

+1 to an issue who communicates and shows the shareholders and the public that things are real.

Thanks. We also had our first bullion withdraw on the LTC-GOLD asset.

[Carnth]

The increasing price of BTC vs USD is making shares more affordable.

Remember, if you are looking to purchase 100 shares or more, please send a PM or find me on the BTC-E chatbox. I will get you the most up-to-date pricing and will direct transfer shares to avoid fees.

[Carnth]

The price of USD vs BTC has been on a steady increase. This has caused the price per share to drop.

Small walls will be on the exchange until the current bar of bullion is sold.
If you are interested in purchasing 100 or more shares, please contact me. You can send a PM or usually find me on the BTC-E chat box. I will quote you the most up-to-the-minute pricing.

[Carnth]

The Bullion Inventory now has relevant links to the forum topic where photos of the bars can be viewed.

[Carnth]

This may be a stupid question, but why is the spread so high?

I release shares in small batches. After those are sold, the market sets the price. Some people are content with holding shares and set lofty prices.
More will be released until a bar is completely sold. Is there is demand, another bar will be added to the inventory and sold. 

[Snail2]

"TRADING HAS BEEN HALTED ON BTC-GOLD BY THE ISSUER."

Could you share the reasons for this, please?

[Carnth]

"TRADING HAS BEEN HALTED ON BTC-GOLD BY THE ISSUER."

Could you share the reasons for this, please?

Please note the date of that announcement.

"TRADING HAS BEEN HALTED ON BTC-GOLD BY THE ISSUER." is a result of me finalizing the asset contract back in December 2012. This was done before the first share was sold.
The asset has been operating continuously since.


If you want to see another example, take a look at my MiningCo.ETF asset. Again, I changed the asset contract several times while finalizing it--all before the first share was sold. And again, it has been operation continuously since.



But how come other assets don't have "Trading has been halted....?"

btct.co has undergone some changes since these early assets were released. Now, the exchange doesn't post a "Trading Halted" event when you change the asset contract before the first share is sold. (See my newer NASTY-PT asset.)

[Carnth]

A second bar has been added to the bullion inventory.

A Valcambi 5 gram in assay card.

Photo showing both bars:






You can always view the Bullion Inventory on Google Docs:
https://docs.google.com/spreadsheet/ccc?key=0AqLxDN0JzEUNdE9vNG1zZWlrUTIwbFhrZzVtSUowc3c