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Author Topic: [BTC-TC] Bitcoin Gold Trust -- CLOSED  (Read 9796 times)
JohnGalt
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December 27, 2012, 10:35:46 PM
Last edit: June 29, 2013, 09:29:30 PM by JohnGalt
 #1

Announcing the
Bitcoin Gold Trust
Trading as GOLD on the Bitcoin Trading Corp (BTC-TC) Exchange
https://btct.co/security/GOLD
managed by John Galt Asset Management
john.galt.asset.management@gmail.com

The fund is closed. All remaining shares have been bought back. This thread is for reference only.

This post is a summary. A copy of the prospectus can be found here: https://docs.google.com/document/d/18ZVDjRMGSiEWH6TTHmrLhT-z0clZLVP87w4fZMB1ZdU/edit.

Highlights:
  • Shares each represent 1/100th of a troy oz. of gold (initially).
  • Shares can be redeemed for physical gold bullion (in 1 oz. units).
  • Shares normally trade at the spot price, but can be higher or lower.
  • The fund strives to maintain liquidity and price stability (relative to the spot price).

The Bitcoin Gold Trust is an exchange-traded fund listed on the Bitcoin Trading Corp. Exchange. The trust holds physical gold bullion and issues shares representing its holdings. The purpose of the trust is to provide a way in invest in gold through bitcoin without the inconvenience of holding physical gold bullion.

The objective of the trust is for the value of the shares to reflect the price of gold owned by the trust, less the trust’s expenses and liabilities. The trust receives gold in exchange for shares and delivers gold in exchange for redeemed shares. The ability to exchange of gold for shares is what maintains the nominal value of the shares at the value of the gold that they represent. The trust is not actively managed and does not engage in activities designed to profit from changes in the price of gold.

With the exception of cash held to pay expenses and facilitate operations, the fund invests exclusively in physical gold bullion. The gold is unencumbered, fully allocated, and will never be borrowed, lent, or used as collateral. It is stored in a vault at Wells Fargo and is audited periodically. The initial value of a share is 1/100th of a troy oz. of gold, though fees will reduce that value over time (see below). Regardless of the nominal value, shares can trade at a premium or a discount to that value.

The trust does not intend to pay dividends or cash distributions.

The trust issues and redeems "baskets" of shares on a continuous basis (a basket equals the equivalent of 1 troy ounce of gold in shares). A 5% fee is charged for redeeming a basket of shares. The person redeeming the shares is also responsible for paying shipping and insurance costs. Persons may redeem fractions of a basket at the discretion of the sponsor, but the fee may be substantially higher.

The size of the initial offering will be 100 shares, or 1 troy oz. of gold, but the number of shares can grow as more gold is deposited into the trust.

The only ordinary expenses paid by the trust is a fee of 1% per year paid to the sponsor. The fee is paid issuing an appropriate number of additional shares and assigning them to the sponsor, so the amount of gold that a share represents will slowly decrease from the initial 1/100th ounce. The sponsor currently agrees to waive the fee.

The fund allows a person to invest in gold with the following  benefits over owning physical gold:
  • Increased liquidity. Shares can be traded whenever the exchange is operating.
  • Lower fees and overhead. Typically, buying and selling physical gold incurs steep premiums, especially when dealing in small amounts. The fees for trading shares of the trust are extremely low.
  • A convenient way to accumulate gold bullion. A person can buy small numbers of shares over time, and then later exchange the shares for physical gold bullion.
  • A way to hedge against drops in the value of BTC.

Bid and ask walls will be maintained at approximately +/- 5% of the spot price in order to ensure liquidity. There will always be shares to buy at a reasonable price and shares can always be sold at a reasonable price.

The finances of the trust are listed here and are updated periodically:  https://docs.google.com/spreadsheet/ccc?key=0Am3m7aRNI-JbdHB4RE1fcDktUmdnSDJpZnpVdG0xY2c

A picture of the assets can be found here: https://docs.google.com/file/d/0B23m7aRNI-JbSXNOeGhPUUhhSVk/edit?usp=sharing

The trust is run by John Bolton, Belmont, California, U.S.A. I will read and respond to PMs, emails to john.galt.asset.management@gmail.com, and posts in this thread (and others).
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JohnGalt
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December 30, 2012, 09:59:51 PM
 #2

Weekly Report

Sunday, December 30, 2012

Overview

Assets: 1 oz.
Shares Outstanding: 100
NAV: BTC1.2325
Basket Size: 100 shares

Commentary

Each week, I post current information about the fund as of the previous Friday afternoon. This is the first report. Although this week's report includes the entire week, please note that shares only began actively trading on Thursday.

Last week the NAV remained flat, rising slightly from BTC1.22 to BTC1.23 (+0.8%), with the price of BTC dropping slightly from $13.49 to $13.45 (-0.3%), compared to the small rise in the price of gold from $1652 to $1658 (+0.4%).
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January 06, 2013, 09:24:54 AM
 #3

Weekly Report

Sunday, January 6, 2013

Overview

Assets: 1 oz.
Shares Outstanding: 100
NAV: BTC1.2391
Basket Size: 100 shares

Commentary

Last week the NAV remained mostly flat, rising slightly from BTC1.23 to BTC1.24 (+0.8%), with the price of BTC dropping slightly from $13.45 to $13.30 (-1.1%) and the price of gold also dropping slightly from $1658 to $1648 (-0.6%).
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January 09, 2013, 06:59:17 AM
 #4

This is a significantly bad investment.

The 1% yearly fee... after taking in account currency debasement gold only rise about 1% a year. So you're just letting your coins sit idle.

Saying this is a "significantly bad" investment is an exaggeration, of course. You are entitled to your opinion, but there are plenty of people in the world that would disagree. The SPDR Gold Trust (GLD) is the second largest ETF in the world, and Bitcoin Gold Trust is a bitcoin version of that fund.

As I posted above, the fund allows a person to invest in gold with the following benefits over owning physical gold:
  • Increased liquidity. Shares can be traded whenever the exchange is operating.
  • Lower fees and overhead. Typically, buying and selling physical gold incurs steep premiums, especially when dealing in small amounts. The fees for trading shares of the trust are extremely low.
  • A convenient way to accumulate gold bullion. A person can buy small numbers of shares over time, and then later exchange the shares for physical gold bullion.
  • A way to hedge against drops in the value of BTC.

If you don't like those benefits, then this investment is not for you.
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January 12, 2013, 10:32:29 PM
Last edit: January 12, 2013, 10:42:43 PM by JohnGalt
 #5

Weekly Report

Saturday, January 12, 2013

Overview

Assets: 1 oz.
Shares Outstanding: 100
NAV: BTC1.1643
Basket Size: 100 shares

Commentary

This week, the NAV has continued its decline, falling from BTC1.24 to BTC1.16 (-6.5%). This is primarily due to the sharp rise in the price of BTC from $13.30 to $14.24 (+7.1%). The price of gold rose only slightly over the same period from $1648 to $1658 (+0.6%).

The value of investing in this fund

From time to time, people have questioned the value of investing in this fund, and also indirectly the value of investing in gold.

First, anyone but die-hard gold bugs and Keynesians will acknowledge that there are both pros and cons to investing in gold.

The main values of gold as an investment are as a hedge against the various forms of currency devaluation and as a way to lower risk through diversification.
  • Gold is an asset, and as such, it is not devalued by inflation.
  • Similarly, gold protects against the devaluation of fiat currencies. Because gold is traded globally in many currencies, if the value of a currency is lowered, the value of gold in that currency will rise proportionately.
  • Gold is a currency of last resort. In a economic collapse, gold could retain its value (though it would be naive to think that it would be completely unaffected).
  • Gold is a good diversification tool. The factors affecting the value of other assets are very different from those affecting the value of gold.

The downside to gold as an investment is primarily due its lack of utility beyond being a currency. Furthermore, its utility as a currency has also been diminished. As a result, gold is very speculative.
  • Gold does not produce income.
  • Gold has very little utility beyond being a currency.
  • Over the very long term, the real value of gold has been constant, so its return on investment relative to other investments has been low.
  • Gold is a speculative investment.

As for the value of this fund, first it must be emphasized that the value of this fund is determined primarily by the value of the gold that it holds.

The benefits of owning shares in this fund over owning physical gold have been repeated several times, but here they are again:
  • Increased liquidity. Shares can be traded whenever the exchange is operating.
  • Lower fees and overhead. Typically, buying and selling physical gold incurs steep premiums, especially when dealing in small amounts. The fees for trading shares of the trust are extremely low.
  • A convenient way to accumulate gold bullion. A person can buy small numbers of shares over time, and then later exchange the shares for physical gold bullion.

Now, there are some drawbacks:
  • Counter-party risk. There is a small risk that something might happen to the fund or the gold that the fund owns. This and other risks are fully explained in the prospectus.
  • There is a management fee of 1% (which has been waived for the foreseeable future).

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January 19, 2013, 09:18:43 PM
 #6

Weekly Report

Saturday, January 19, 2013

Overview

Assets: 1 oz.
Shares Outstanding: 100
NAV: BTC1.0615
Basket Size: 100 shares

Commentary

This week, the NAV has continued its decline, falling from from BTC1.16 to BTC1.06 (-8.5%). This is due another sharp rise in the price of BTC from $14.24 to $15.91 (+11.7%). The price of gold also rose a respectable amount over the same period from $1658 to $1689 (+1.9%), though not nearly matching the rise of BTC.
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January 27, 2013, 07:37:09 PM
 #7

Weekly Report

Sunday, January 27, 2013

Overview

Assets: 1 oz.
Shares Outstanding: 100
NAV: BTC0.9651
Basket Size: 100 shares

Commentary

This week, despite the popping of the BTC bubble, the NAV has continued its decline, falling from from BTC1.06 to BTC0.9651 (-9.0%). This is due to an overall rise in the price of BTC (despite the bubble) from $15.91 to $17.20 (+8.1%), accompanied by a small drop in the price of gold to $1660 from $1689 (-1.7%).
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February 03, 2013, 07:57:49 PM
Last edit: February 03, 2013, 08:34:45 PM by JohnGalt
 #8

Weekly Report

Sunday, February 3, 2013

Overview

Assets: 1 oz.
Shares Outstanding: 100
NAV: BTC0.7835
Basket Size: 100 shares

Commentary

Under relentless pressure of a rising BTC, the NAV has continued its decline, falling from from BTC0.9651 to BTC0.7835 (-18.8%). This is primarily due to the spectacular post-bubble rise in the price of BTC from $17.20 to $21.30 (+23.8%), overwhelming a small increase in the price of gold from $1660 from $1669 (+0.5%).

Important Notice: Litecoin Gold Trust, the LTC-GLOBAL gold fund also managed by John Galt Asset Management, is changing its ticker symbol to GOLD. The change has no material effect on this fund. Both  funds continue to be separate entities with their own assets and shares. The purpose of changing the ticker is to improve the brand and prevent any conflict that might be caused if someone else took the ticker.
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February 10, 2013, 04:29:05 AM
 #9

Weekly Report

Saturday, February 9, 2013

Overview

Assets: 1 oz.
Shares Outstanding: 100
NAV: BTC0.7437
Basket Size: 100 shares

Commentary

Despite a sharp drop in the price of BTC at the end of last week, the price quickly recovered and continued to rise. As a result, the NAV has declined, falling from from BTC0.7835 to BTC0.7437 (-5.1%). The price of BTC rose from $21.30 to $22.43 (+5.3%), accompanied by a negligible fall in the price of gold from $1669 from $1668 (<0.1%).

In the past, strong runs in the price of BTC have lead to sharp pull-backs. I can't predict what will happen, but if a pull-back happens again, you don't want to be holding BTC.
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February 10, 2013, 11:53:45 AM
 #10

Weekly Report

Saturday, February 9, 2013

Overview

Assets: 1 oz.
Shares Outstanding: 100
NAV: BTC0.7437
Basket Size: 100 shares

Commentary

Despite a sharp drop in the price of BTC at the end of last week, the price quickly recovered and continued to rise. As a result, the NAV has declined, falling from from BTC0.7835 to BTC0.7437 (-5.1%). The price of BTC rose from $21.30 to $22.43 (+5.3%), accompanied by a negligible fall in the price of gold from $1669 from $1668 (<0.1%).

In the past, strong runs in the price of BTC have lead to sharp pull-backs. I can't predict what will happen, but if a pull-back happens again, you don't want to be holding BTC.


Hi John just saw your sale of the 1oz pamp bar, SN B052203, what's going on here? This is the same bar you're backing GOLD with (from your contract,
"An up-to-date verification of the assets owned by the trust can be found here:
https://docs.google.com/open?id=0B23m7aRNI-JbT0xhcEZFWFdQZVE
").

Your contract states the gold in the fund will remain unencumbered (etc.) and further that it is stored in a vault at Wells Fargo. I might be getting the wrong idea here so can you please explain what is going on with this sale? Thanks.
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February 10, 2013, 12:48:20 PM
 #11

...
Hi John just saw your sale of the 1oz pamp bar, SN B052203, what's going on here? This is the same bar you're backing GOLD with (from your contract,
"An up-to-date verification of the assets owned by the trust can be found here:
https://docs.google.com/open?id=0B23m7aRNI-JbT0xhcEZFWFdQZVE
").

Your contract states the gold in the fund will remain unencumbered (etc.) and further that it is stored in a vault at Wells Fargo. I might be getting the wrong idea here so can you please explain what is going on with this sale? Thanks.

Di you received a W.Fargo postcard like this?

If not, no need to panic...

...it will arrive soon.
Relax, this is just a joke.

While reading what I wrote, use the most friendliest and relaxing voice in your head.
BTW, Things in BTC bubble universes are getting ugly....
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February 10, 2013, 01:06:11 PM
 #12

Sunday, December 30, 2012
NAV: BTC1.2325

Saturday, February 9, 2013
NAV: BTC0.7437

Ouch. Real world assets have serious trouble keeping up with BTC assets.

Hi John just saw your sale of the 1oz pamp bar, SN B052203, what's going on here? This is the same bar you're backing GOLD with.

It is conceivable that two different one ounce gold bars exist. But it's a good point that people purporting to offer precious metals investments should state the serials of the backing where practical - which I don't see here anywhere.

My Credentials  | THE BTC Stock Exchange | I have my very own anthology! | Use bitcointa.lk, it's like this one but better.
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February 10, 2013, 02:01:06 PM
 #13

It is conceivable that two different one ounce gold bars exist.

Yes, in fact, you may be suprised to learn that there are actually more than two one ounce gold bars.

But it's a good point that people purporting to offer precious metals investments should state the serials of the backing where practical - which I don't see here anywhere.

It's in his contract: https://btct.co/security/GOLD

Scroll down and you will see: https://docs.google.com/open?id=0B23m7aRNI-JbT0xhcEZFWFdQZVE

Serial number is the same as the one he's selling in the goods forum.
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February 10, 2013, 02:28:33 PM
 #14

It's in his contract: https://btct.co/security/GOLD

Scroll down and you will see: https://docs.google.com/open?id=0B23m7aRNI-JbT0xhcEZFWFdQZVE

Serial number is the same as the one he's selling in the goods forum.

Now that's a problem. Let's see what the man has to say.

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February 10, 2013, 09:16:37 PM
Last edit: February 10, 2013, 09:33:39 PM by JohnGalt
 #15

It is conceivable that two different one ounce gold bars exist.

Yes, in fact, you may be suprised to learn that there are actually more than two one ounce gold bars.

But it's a good point that people purporting to offer precious metals investments should state the serials of the backing where practical - which I don't see here anywhere.

It's in his contract: https://btct.co/security/GOLD

Scroll down and you will see: https://docs.google.com/open?id=0B23m7aRNI-JbT0xhcEZFWFdQZVE

Serial number is the same as the one he's selling in the goods forum.


Yes. You are correct. I was accidentally trying to sell the bar that is owned by the fund. It was a mistake. I have several bars and they must have been mixed up at some point (long ago). I have cancelled the sale. Tomorrow, I will straighten things out and show that there are indeed two separate bars.

Thanks for catching this, Usagi. Thanks for your acerbic wit, EskimoBob. And thanks for being pleasant, MPOE-PR.

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February 10, 2013, 11:08:36 PM
 #16

And thanks for being pleasant, MPOE-PR.

Carrying on like that! You'll get me fired or something.

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February 11, 2013, 06:32:59 PM
 #17

Important Information

I want everyone to know that I accidentally tried to sell a bar that was part of the assets of the Trust. This was completely unintentional. I bought the bar along with another bar (for myself) several months ago, and the wrong bar was placed in the Trust's storage. At no time was there any risk of loss to the Trust. The situation has been corrected.

I sincerely apologize to everyone for the mix-up. I have now begun recording the serial numbers of the bars in order to help prevent this from happening again.

Below is a picture of both bars. The one on the left (B052203) belongs to the Trust. The one on the right (B041851) is mine.


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February 18, 2013, 02:09:14 AM
 #18

Weekly Report

Sunday, February 17, 2013

Overview

Assets: 1 oz.
Shares Outstanding: 100
NAV: BTC 0.5965
Basket Size: 100 shares

Commentary

The combination of the skyrocketing price of BTC, from $22.43 to $27.03 (+20.5%), and a moderate fall in the price of gold, from $1668 to $1612 (-3.4%), has resulted in a dramatic decline in the NAV this week, falling from from BTC 0.7437 to BTC 0.5965 (-19.8%).
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February 24, 2013, 07:19:41 PM
 #19

Weekly Report

Sunday, February 24, 2013

Overview

Assets: 1 oz.
Shares Outstanding: 100
NAV: BTC 0.5006
Basket Size: 100 shares

Commentary

The continuing rise in the price of BTC, from $27.03 to the nosebleed price of $31.49 (+16.5%), combined with a small drop in the price of gold, from $1612 to $1576 (-2.2%), has resulted in another dramatic decline in the NAV this week, falling from from BTC 0.5965 to BTC 0.5006 (-16.1%). It remains to be seen how long this swiftly rising price of BTC can be sustained. Gold has not performed well for while, now. Perhaps a recovery is due.
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March 04, 2013, 07:52:04 AM
 #20

Weekly Report

Sunday, March 3, 2013

Overview

Assets: 1 oz.
Shares Outstanding: 100
NAV: 0.4605
Basket Size: 100 shares

Commentary

Although the price of BTC seemed to pause at the end of the week, it still went from from $31.49 to $34.36 (+9.1%). The price of gold was a littlle volatile this week also, but ended up rising only slightly from $1576 to $1582 (+0.4%). The result was yet another decline in the NAV this week, falling from 0.5006 BTC to 0.4605 BTC (-8.0%).
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