[BitFunder] TU.SILVER -- Interim Report April 12th, 2013

[usagi]

OP/Thread moved to: https://bitcointalk.org/index.php?topic=177747.0

[1715689088]

1715689088

[usagi]

[BitFunder] TU.SILVER FAQ:

Question 1 (from odolvlobo):
I just took a brief look and found  a problem. Your contract states, "SILVER will act to sell silver on the forums and in auction at a profit, and to sell covered call options against the physical position, to generate revenue and pay for secure storage fees." Are you doing this with the fund's silver? You can't sell shares and sell the silver, too! You can't sell covered calls, what if they get exercised? If this doesn't involve the fund's silver, then why is it in the contract?

A: I've answered this question by changing the Business Description of our security on BTC-TC to the following:

Primary Business: Silver Storage
To start the company we will convert 100 oz. of physical silver into 1,000 units of the fund. We will then sell these units into the market at a premium to face value, representing the need to pay for secure storage and the value from our secondary business model.

Secure storage costs 0.49% per year in Hong Kong (VIA MAT or G4S). Other vaults around the world have similar rates, although Switzerland is notably higher at 0.99% per year. I am planning to start with the vault in the local national bank so that we may inspect the silver at our leisure.

Secondary Business: Selling Covered Calls
We will write covered call contracts against the silver position in order to pay for secure storage fees and generate revenue for shareholders. This will allow
us to pay for secure storage fees on an ongoing, permanent basis, and to expand the fund.

Since storage fees are around 0.5% per year and selling deep, in-the-money covered calls are estimated to generate ~1% per month (long term) in profit,
this implies we only need to write calls against 6% of the position in order to pay for secure storage. As we will be selling each unit for 5% to 10% above face value, I feel there is zero risk of breaking the fund's model of retaining one tenth of an ounce of silver per unit. In short, should we get called on such a
small position, we will have more than enough cash on hand to settle with no risk to the holders. Failing that, please see clause #5 in the contract.



Question 2 (from Monster Tent):
(re: a response to wabashky)
So the promise to wait till all your other companies shut down before you started trading was complete horse shit?

A: In response to wabashky, I laid out a clear sequence of events: "The proposed launch date is anytime, but assuming we get the votes by the end of this month, (...) we will be able to get the silver and start selling shares around the second week of February. Before then I could only sell maybe 100 shares or so against the silver we have right now." (emphasis mine).

I did add an edit on the advice of Deprived; as stated in the post it clarifies the sequence of events by pointing out that we would have begun trading after I shut down BMF and my other securities. I can see how you might have thought this was a promise not to trade until after I'm delisted from BTC-TC, but it wasn't. I was quite clear about selling around 100 shares using silver I already had. I'm sorry for the misunderstanding and I will try to be more clear next time.

[usagi]

FAQ (post #2) updated with a new question from one of the LTC-GLOBAL shareholders.

[wabashky]

I'm into buying physical silver currently...have been since I was a kid. I am interested in this service though, as companies like http://www.goldmoney.com/ have been doing this for years...interesting to see it from a BTC standpoint.

1. Is anyone doing this now? (besides the physical silver market, CoinAbul etc..)?

2. How soon is the proposed launch date?

[usagi]

I'm into buying physical silver currently...have been since I was a kid. I am interested in this service though, as companies like http://www.goldmoney.com/ have been doing this for years...interesting to see it from a BTC standpoint.

1. Is anyone doing this now? (besides the physical silver market, CoinAbul etc..)?

2. How soon is the proposed launch date?

SILVER is a lot like the companies like you mentioned, as well as BTC-TC funds like Carnth's BTC-GOLD and John Galt's GOLD fund. The difference between SILVER, and something like BTC-GOLD (besides the fact we deal in silver) is that we sell deep-in-the-money covered call options to pay for secure storage. As a result, we can sell shares cheaper on a per-ounce basis and there are essentially no other fees. With other funds, I'm not sure how they are storing their silver. Our silver will be guaranteed by the vault we hire. The downside is that if there's a sudden violent upswing in the price of silver, we will lose our cash position. The plus side is, that won't affect investors in the fund who will still be able to exchange their shares for physical silver ounces. So no, no one is really doing what we're doing specifically, although there are plenty of places to buy silver or gold in the community now, CoinAbul being one of the best places. I plan to try and support the communuity by buying from them (if their prices remain fair, of course I haven't looked).

The proposed launch date is anytime, but assuming we get the votes by the end of this month (we still need two votes on BTC-TC), we will be able to get the silver and start selling shares around the second week of February. Before then I could only sell maybe 100 shares or so against the silver we have right now.

EDIT: I have been advised to clarify that we will not begin trading until I've finished closing down my other companies. This is true; I will be closing down my other companies before starting up this one. Even if approved today, SILVER will not begin trading until approximately two weeks after I shut down BMF, CPA and NYAN.

[wabashky]

I'm interested and will more than likely buy some shares.  Thanks!

[usagi]

=Identity Escrow======
An LTC-GLOBAL moderator has voted NO, but offered the remedy of Identity Escrow. I am more than willing to provide this. I was fully ID-verified on the GLBSE. The trick becomes, who can hold my identity in escrow. Secondly, as an escrow service, this entity would hold for me what I want out of the deal, the power to list my security.

Well it seems burnside is the obvious choice here. However, if any LTC-GLOBAL moderator wants to know who I am, as I have said before I haven't gone to any great length to hide who I am, I've published several books and am/was very active in the internet Go community. My identity is no great secret. I also sell things online (gold, silver) so dozens of people have my address. I don't mind talking with anyone over the phone.

So sure, identity escrow. I'll send a note to burnside. But I will ask that whoever is asking for this to contact me privately. If you're going to make an offer like this, I'd like to be able to hold you to your promise of a YES vote.

[burnside]

=Identity Escrow======
An LTC-GLOBAL moderator has voted NO, but offered the remedy of Identity Escrow. I am more than willing to provide this. I was fully ID-verified on the GLBSE. The trick becomes, who can hold my identity in escrow. Secondly, as an escrow service, this entity would hold for me what I want out of the deal, the power to list my security.

Well it seems burnside is the obvious choice here. However, if any LTC-GLOBAL moderator wants to know who I am, as I have said before I haven't gone to any great length to hide who I am, I've published several books and am/was very active in the internet Go community. My identity is no great secret. I also sell things online (gold, silver) so dozens of people have my address. I don't mind talking with anyone over the phone.

So sure, identity escrow. I'll send a note to burnside. But I will ask that whoever is asking for this to contact me privately. If you're going to make an offer like this, I'd like to be able to hold you to your promise of a YES vote.

There are lots of ID Verification services, I am not one of them. 

Perhaps something like this?  http://www.miicard.com/  ... http://www.miicard.com/how-it-works/managing-your-miicard

Once you are verified you just post a link like so:

Code:

<a href="https://my.miicard.com/card/USERNAME" target="_blank">Click To Verify</a>

You'll need to make sure the email address they display matches the email address you have on your asset issuer account.

Hope that helps!

[usagi]

There are lots of ID Verification services, I am not one of them. 

Perhaps something like this?  http://www.miicard.com/  ... http://www.miicard.com/how-it-works/managing-your-miicard

Thanks, I tried to use miicard but they don't support Asia. I have a mobile number just not one in an area they support :/

I'll keep looking.

[odolvlobo]

I have several questions:

If the silver is put at risk, can you really guarantee that 1 share will always be 1/10th oz.?

#3a doesn't make sense. Can you give an example? It seems like you are saying you won't sell an option that can be called. If an option is called the value of the fund will drop, risking the 1 share = 1/10th oz guarantee.

How profits are distributed? You mentioned dividends, but that's all.

You numbers in the Financial Management section don't add up. Also, 100 oz of silver costs about 200 BTC, not 1000 BTC. Also, in order to pay the 80 BTC in expenses, you need to commit 667 (not 100) BTC worth of silver (assuming you can reliably make 12% profit). So, realistically you have to commit all 1000 BTC of silver to make a decent profit. Can you clarify?

How do you plan to benefit from this contract?

You wrote three times that there is zero risk from trading and this cannot be true -- unless you personally guarantee the value of the fund.  In order to make 1% per month you have to write options with a substantial risk of being called. Writing "deep in-the-money" options won't earn you 1% per month. Looking at silver option prices right now ... in order to earn a premium of $0.30 (1%) on a contract expiring next month, you have to set the strike price at only $2 over spot. That's not "deep in-the-money". Can you clarify?

[usagi]

I have several questions:

If the silver is put at risk, can you really guarantee that 1 share will always be 1/10th oz.?

Yes I can. First, if anything goes wrong I am personally liable, as stated in the contract. I have changed the contract to make this more clear. This is not just idle talk -- I have a proven track record here. I have given hundreds of my personal bitcoins to my companies in the past when they were in trouble, and again now that I am closing them. So that's how I justify clause #5 in the contract.

But I think what you are really asking is, how I plan to not get into that position in the first place. The answer is easy, I will only write covered calls if we have the cash on hand to pay for it. This is the meaning of rule 3a. You mention it below:

#3a doesn't make sense. Can you give an example? It seems like you are saying you won't sell an option that can be called. If an option is called the value of the fund will drop, risking the 1 share = 1/10th oz guarantee.

I didn't want to say how we would invest in covered calls at first because I wanted it to be a corporate secret. But how I will do it is to leave the cash position on BTC-TC as collateral for investments in silver covered call funds that have a good track record. This means I never expose the company to the unlimited liability of a price spike. That's the secret. Yes, there is a risk of loss to the cash position (the premium to purchase price of silver which we sell shares at) but in such a case the physical silver will be worth "a ton of money" and the loss of the cash position would become a "welcome loss". Example: If for some reason silver spikes from $30 to $100... a 15% cash position would be worth 4.5% or less on the books. It would then presumably go to zero. Yes, it is true that the company would have lost that 4.5% -- but the value of their shares would skyrocket because the physical silver would be worth 3x more than it was before. An estimate would be, if we sold the shares for 0.22, we would lose the 0.02 premium but the shares would be worth 0.6 (3x more value from the silver). [Edit: this does not mean the shares won't be worth 0.62 or 0.66. They very may well be. But in this example at least 0.6 would be guaranteed from the silver.]

On the flipside, if silver declines in price or remains stable we will be able to pay a reasonable dividend, and still guarantee to be able to exchange each ounce of silver.

It is for this reason I am so excited about running such a fund. But you are right, and thanks for pointing out, that saying "zero risk" is probably not a good idea. To clarify, what I meant was there is zero risk compared to just investing in silver. Good catch. My idea here is not to be greedy and risk the underlying position. There is no need to risk the physical position like that. I am not trying to get 1% a month on the total investment. I am just trying to cover secure storage fees and pay a small dividend.

You numbers in the Financial Management section don't add up. Also, 100 oz of silver costs about 200 BTC, not 1000 BTC. Also, in order to pay the 80 BTC in expenses, you need to commit 667 (not 100) BTC worth of silver (assuming you can reliably make 12% profit). So, realistically you have to commit all 1000 BTC of silver to make a decent profit. Can you clarify?

Oops, that was an error on my part. Thanks for letting me clarify this. For those of you who didn't notice, I believe what odolvlobo is referring to is in "Business Description" I stated we would start with 100 oz of silver (1,000 shares). However, in "Financial Management" I gave a projection for an entire year and I had guesstimated we would sell 5,000 shares. In that, the 1,100 BTC assumed we would sell the shares for 0.22 each and assumed that spot price was 0.20 BTC/share. In actuality, I don't know what we will be able to sell shares at, but I do guarantee I will not sell shares at a loss or at a price that will not allow me execute on the business plan. Essentially the numbers in "Financial Management" were an estimate, or outline of what I wanted to do with the company in an ideal situation. Additionally I had mistakenly underestimated the profits at 120 BTC. I corrected it to 140 BTC.

My mistake above is actually a really good example of why I will be hiring an accountant to provide basic oversight and prepare financial statements ;-) I want to make it clear I have learned a lot from running my previous assets! I don't want to fall into the trap that I did last time where I make a simple mistake that gets taken out of context, or there's something I am inexperienced on and I end up causing unintended damage. Yes, there were flaws in my previous companies. I would like to believe I have learned from that and as a result I will do a much better job than someone who has no experience running an asset like this before.

How profits are distributed? You mentioned dividends, but that's all.

About how profits will be distributed; I'm still thinking about that. All of the company's financial information will be prepared by whoever we hire (deprived? maybe smickles? Someone with skills). The net profit will be displayed on that statement and I will announce what will happen once people can see our financial statements. I'll run a shareholder motion if there is any controversy. But right now I am planning to distribute 1/3rd to shareholders, retain 1/3rd for the company's cash position, and 1/3rd to myself as management fees.

Why retain 1/3rd? More lessons from the past. When I ran BMF I had a policy to pay out 95% of incoming dividends. I realized this was a mistake after a few months because it starved the company of growth and the ability to respond to major market moves. So I will decide how to split profits up later but I am leaning towards the 33% - 33% - 33% model above.

How do you plan to benefit from this contract?

I believe that after a while (6 months? 1 year?) there will be a significant amount of money made by this company. Based on my past experience as an issuer, we might sell 25,000 shares over the course of a year. At that size I am estimating 30 BTC a month in net profit. I'm lucky in that it does not take a lot of time to operate this fund. I'm already a silver stacker. I already have a safety deposit box at the bank with gold and silver in it. My bank offers vault storage and is an authorized Perth Mint dealer so I can also store silver in Australia as well as Asia. I already buy silver on a regular basis. What I gain from this is easy to see, if I can order 100 oz at a time I can save money on the silver. Also, I can split the vault fees with the company, which are cheaper than a safety deposit box for larger amounts of silver. Actually now that I think about it, it would be very convenient for me to hold my personal silver as company shares. That is ideal for me. That way I partake in the benefit of being able to trade the shares just like everyone else. That is very convenient for me!

There's one more benefit.. and not such an insignificant one.... if I am given another chance to run an asset I believe people will see I am in actuality a very trustworthy individual. I'm sure there are people that will eat their hat if I am allowed to list. But the truth is I really feel I deserve another chance. If I can just list this company I am certain I can change people's minds and build more trust here. Yes I was a jerk in the past to some people who I feel attacked me and said some pretty ridiculous things, but that doesn't mean I am a scammer or a fraud. As things turned out it's clear I am not a scammer or a fraud. So I see now it would have been better to just deal with those people nicely and let history prove I was right. That's what I have learned. So I will be honest I want to clear my name. That's probably 50% of it for me right there.

You wrote three times that there is zero risk from trading and this cannot be true -- unless you personally guarantee the value of the fund.

Yes that is precisely what I am doing, I am personally guaranteeing the value. But I want to make it clear that's not why I believe I can maintain the backing. I believe I can maintain the backing because the business plan is sound. Yet, I will remain there in case I am needed to pay out anything that is owed. Ok, I think I've answered most of what else you said above so I'll stop here. I hope you can see I'm very enthusiastic about this and I hope that tells you a lot about where I feel I can take this company. Thanks for the questions. I wish more moderators would give me a chance like you did!

[usagi]

Update:

I need to hire someone to prepare financial reports for SILVER. The responsibilities are simple; I'll give you the order numbers, receipts, trading numbers, photos, etc. that you will need to prepare a financial assessment of the company. Then you can provide a nice looking spreadsheet detailing everything we do. I would want something like this done every month for the first six months then every six months thereafter.

I am estimating it will cost 5 BTC to prepare each report. It would depend on the time and information. 5BTC is a little rich if there's no change except a few shares sold and a few ounces bought. But it would be something like that. 1 or 2 BTC an hour or as agreed.

I've seen a lot of good looking reports done by community members. Deprived, DeadTerra, Namworld, and others do a great job on their spreadsheets and that is something along the lines of what I am looking for.

If you have been able to do anything like that and you are a forum member in good standing, you're hired! Please send PM.

[DeaDTerra]

Update:

I need to hire someone to prepare financial reports for SILVER. The responsibilities are simple; I'll give you the order numbers, receipts, trading numbers, photos, etc. that you will need to prepare a financial assessment of the company. Then you can provide a nice looking spreadsheet detailing everything we do. I would want something like this done every month for the first six months then every six months thereafter.

I am estimating it will cost 5 BTC to prepare each report. It would depend on the time and information. 5BTC is a little rich if there's no change except a few shares sold and a few ounces bought. But it would be something like that. 1 or 2 BTC an hour or as agreed.

I've seen a lot of good looking reports done by community members. Deprived, DeadTerra, Namworld, and others do a great job on their spreadsheets and that is something along the lines of what I am looking for.

If you have been able to do anything like that and you are a forum member in good standing, you're hired! Please send PM.

I would be happy to help out Usagi
As per usual.
Just send over what information you want in the spreadsheet and I will start fixing it.
//DeaDTerra

[usagi]

Silver has been LAUNCHED!

Welcome to the launch party. I will be looking around in the next few days for community websites to advertise on. If you have any suggestions please let me know. I will of course be advertising here on bitcointalk.org, and I will be paying for the first round of ads out of my own pocket.

I have 14 oz. of silver on my desk which I will use as an initial stock for 140 shares (http://kongzi.ca/silver). Our advisor will be given this information shortly.

Initial financial data which I am using is as follows:
S = Spot price is $31.66 from kitco.com
S+P = $33.25 from store.firstmajestic.com
MTGOX weighted average price $17.31682

This implies the cost to order silver bullion is 1.92btc/oz. After a small markup for trading fees, exchange fees, secure storage, etc. I think I can peg the market around 0.21 to 0.22/share at current silver prices. Keep your eye on the silver price! I will be using the following formula to come up with an approximate price and then adjusting slightly to meet demand:

[(S+P) / MtGox Weighted Avg.] + ~7%

Additionally I have launched with 10 shares available at 0.20/share and 10 shares issued at 0.192/share. This is a one time offer. We can't keep selling shares at spot or I won't be able to afford secure storage.

I am open to any comments on this pricing mechanism. I will attempt to analyze the demand and offer shares at a higher or lower price depending on demand (but not so cheap as we lose money).

And something else which I will say precisely once. Thank you to the community for giving me another chance. And now, it's party time! *cuts the red ribbon*

[🏰 TradeFortress 🏰]

Silver has been LAUNCHED!

Welcome to the launch party. I will be looking around in the next few days for community websites to advertise on. If you have any suggestions please let me know. I will of course be advertising here on bitcointalk.org, and I will be paying for the first round of ads out of my own pocket.

I have 14 oz. of silver on my desk which I will use as an initial stock for 140 shares (http://kongzi.ca/silver). Our advisor will be given this information shortly.

Initial financial data which I am using is as follows:
S = Spot price is $31.66 from kitco.com
S+P = $33.25 from store.firstmajestic.com
MTGOX weighted average price $17.31682

This implies the cost to order silver bullion is 1.92btc/oz. After a small markup for trading fees, exchange fees, secure storage, etc. I think I can peg the market around 0.21 to 0.22/share at current silver prices. Keep your eye on the silver price! I will be using the following formula to come up with an approximate price and then adjusting slightly to meet demand:

[(S+P) / MtGox Weighted Avg.] + ~7%

Additionally I have launched with 10 shares available at 0.20/share and 10 shares issued at 0.192/share. This is a one time offer. We can't keep selling shares at spot or I won't be able to afford secure storage.

I am open to any comments on this pricing mechanism. I will attempt to analyze the demand and offer shares at a higher or lower price depending on demand (but not so cheap as we lose money).

And something else which I will say precisely once. Thank you to the community for giving me another chance. And now, it's party time! *cuts the red ribbon*

It's not enabled at the moment? I don't see it in the asset lists.

[creativex]

Hasn't been approved by moderators yet. The celebration seems premature.

[burnside]

Hasn't been approved by moderators yet. The celebration seems premature.

https://bitfunder.com/asset/TU.SILVER

[btharper]

Hasn't been approved by moderators yet. The celebration seems premature.

The asset seems to be rather poorly received so far by votes with public comments.

There are (at time of writing) two votes for the asset, both are anonymous without comment. I would guess that one vote may be Usagi as he has mentioned owning enough shares to qualify as a moderator.

There are currently 4 votes (weighted as -8) against the asset, all of these comments are also anonymous.

Anonymous voted NO with comment: untrustworthy manager
Anonymous voted NO with comment: Want identity escrow.
Anonymous voted NO with comment: Issuer has proven to be unreliable and untrustworthy in the past.
Anonymous voted NO with comment: Don't give usagi any of your money or time

It seems those voting on BTCT.CO are not ready to give Usagi another chance.

Edit:Syntax

[creativex]

Hasn't been approved by moderators yet. The celebration seems premature.

https://bitfunder.com/asset/TU.SILVER

Oh DUH! 

I need sleep! Sorry Usagi...ENJOY THE FESTIVITIES!

[usagi]

Hasn't been approved by moderators yet. The celebration seems premature.

The asset seems to be rather poorly received so far by votes with public comments.

There are (at time of writing) two votes for the asset, both are anonymous without comment. I would guess that one vote may be Usagi as he has mentioned owning enough shares to qualify as a moderator.

There are currently 4 votes (weighted as -8) against the asset, all of these comments are also anonymous.

Anonymous voted NO with comment: untrustworthy manager
Anonymous voted NO with comment: Want identity escrow.
Anonymous voted NO with comment: Issuer has proven to be unreliable and untrustworthy in the past.
Anonymous voted NO with comment: Don't give usagi any of your money or time

It seems those voting on BTCT.CO are not ready to give Usagi another chance.

Edit:Syntax

Yes there are two votes. But I see a price crash in my crystal ball so I sold all my shares. Those aren't my votes

Now that I am on BitFunder, all I need to worry about is doing a good job with SILVER. That is my only concern at this point. In the past, along with my flaws I had many strengths. I set trends with daily dividends, weekly reports, and interviews with asset issuers. In the future, I plan to continue to set trends and do the best job I can with SILVER.

To the anonymous NO votes I can only say, I understand you don't like me, but you voted against your financial best interest. I aim to prove that by doing a good job with SILVER somewhere else. I respectfully consider it your loss. Maybe some other time ;-)

[MPOE-PR]

I set trends with daily dividends, weekly reports, and interviews with asset issuers. I plan to set trends again in the future and do the best job I can with SILVER.

Ahaha priceless.

[Monster Tent]

SILVER has LAUNCHED! Please see Post #14 for the launch party.
-----
Following is the contract I am using for the issue of TU.SILVER on BitFunder. This contract may be changed by shareholder motion.

=Issuer Detail======
usagi
usagi.meijin@gmail.com
Longtime forum member


=Contract======
SILVER is a company which operates a silver fund enabling investors to hold physical silver. We also sell covered call contracts to pay for secure storage, generate revenue for the company, and pay a modest dividend.

1. Each outstanding share in SILVER represents 1/10th (0.1oz) of 0.999 grade (or better) physical silver.

2. SILVER will allow shareholders to exchange shares for PHYSICAL silver bullion at any time:
2a. Shareholders must trade-in their shares in lots of 5, as the minimum denomination we can ship is a 1/2 oz. silver round.
2b. Shipping is 1 share per 10oz (i.e. 1%) airmailed anywhere in the world, with tracking number and insurance. Additional shipping options are available at the customer's expense. SILVER is not liable for customs, duties, taxes, VAT, etc.

3. SILVER will sell covered call options to generate revenue and pay for secure storage fees.
3a. SILVER will not sell covered call options if the call of the contract would reduce the backing of the fund below one tenth ounce of silver per share (unit).

4. SILVER will hire an advisor to prepare and publish acceptable financial reports twice per year.
4a. The current advisor is DeadTerra.

5. The issuer assumes personal liability for the silver and guarantees investors will retain the ability to claim their physical silver by trading in their shares as outlined in clause #2.

6. We have an exclusive arrangement with BitFunder to support BitFunder as a platform. We will not trade on any other exchange until August 2013.
6a. We can not honor the trade-in program for shares of an unlicensed passthrough operation.


=Executive Summary======
I know the silver market very well and I have an excellent OTC rating. I have sold gold and silver on bitcointalk and on ebay for many years and I only have positive feedback from my customers. I have been watching the silver market for about six years now and I have a great business idea which I believe will work: SILVER. I hope you agree that the contract I've come up with is a good deal.

The core business here is not just allowing investors to buy silver in bitcoins like any other fund -- it's to leverage that position to generate dividends. The SILVER advantage is that if we are stopped out on our cash position, our physical SILVER rises in value to cover the loss and provide reasonable returns, while still allowing us to honor the trade-in program. While if the price of silver declines or remains steady, we generate income from our trading strategy.

The ability to generate dividends along with the promise of backing and the ability to claim your physical silver at any time, makes SILVER a unique business model that I feel will work well. I'm very excited to be able to stand by this contract and you may feel free to contact me by telephone or by e-mail if you have any questions.


=Business Description======
Primary Business: Silver Storage
To start the company we will convert existing ounces of physical silver into units of the fund. We will then sell these units into the market at a premium to spot price, representing the existing premium* on 1/2 oz. coins and need to pay for secure storage. From that point physical silver will be bought and converted to shares of SILVER either out of the cash position of the company or immediate-term loan, then converted to units and sold on the market.

Secure storage costs 0.49% per year in Hong Kong (VIA MAT or G4S). Other vaults around the world have similar rates, although Switzerland is notably higher at 0.99% per year. I am planning to start with the vault in a local bank so that we may inspect the silver at our leisure.

Secondary Business: Selling Covered Calls
We will write covered call contracts against the silver position in order to pay for secure storage fees and generate revenue for shareholders. This will allow us to pay for secure storage fees on an ongoing, permanent basis, and to expand the fund.

Since storage fees are around 0.5% per year and we expect to make ~1% per month on the invested value, this implies we only need to write calls against 6% of the position in order to pay for secure storage. As we will be selling each unit for 5% to 10% above face value, the cash position will cover the risk of loss. As a result, I feel there is a very low risk of breaking the fund's model of retaining one tenth of an ounce of silver per unit. In short, should we get called on such a small position, we will have more than enough cash on hand to settle with no risk to the holders. Failing that, please see clause #5 in the contract.


=Definition of the Market======
TL, DR: I have a passion for silver. Silver has, for longer even than gold, been money. Many languages in the world use the word for silver, as the world for money. The world's supply of silver is precariously low in comparison to historical supply. There is a historical ratio of 15 or 16 ounces of silver to one ounce of gold (due to mining supply), however due to industrial use this has fallen to a 1:1 ratio. Therefore I personally feel the silver story is more than just unique. I believe it presents an opportunity that will change the lives.


=Products and Services======
Product: None, however one share (unit) is guaranteed to represent 1/10th of an ounce of silver, redeemable upon demand.

Services: Exchange program
We will allow investors to exchange shares of SILVER for physical silver on a 5 share for 1/2 oz round basis (or for larger denomination bars upon request, should we have them available). There will be a 1 share fee for shipping anywhere in the world per 10 oz.


=Organization and Management======
Organization and Management:
I am the issuer and responsible for the daily operation of the company.

We have also hired an advisor to provide oversight and prepare financial reports.

Shareholder motions require 60% to pass.

Any shareholder with 5% or more can raise a motion.

I will maintain a forum thread and I will listen to and respond to the community's advice.


=Marketing Strategy======
Out of the profits of the fund we will attempt to buy advertising on bitcoin-based websites like bitcointalk, feedzebirds, or any other community-based advertising services.

I am planning to spend ~10% of revenue on advertising. Not too much, basically just that or a little less.


=Financial Management======
Start up costs will be around 10 BTC for initial advertising and to retain our financial advisor.
I plan to retain 1/3rd of net profit into the company's cash position, take 1/3rd as management fee, and pay 1/3rd as distribution to shareholders.

[Monster Tent]

[BitFunder] TU.SILVER FAQ:

Question 1:
I just took a brief look and found  a problem. Your contract states, "SILVER will act to sell silver on the forums and in auction at a profit, and to sell covered call options against the physical position, to generate revenue and pay for secure storage fees." Are you doing this with the fund's silver? You can't sell shares and sell the silver, too! You can't sell covered calls, what if they get exercised? If this doesn't involve the fund's silver, then why is it in the contract?

A: I've answered this question by changing the Business Description of our security on BTC-TC to the following:

Primary Business: Silver Storage
To start the company we will convert 100 oz. of physical silver into 1,000 units of the fund. We will then sell these units into the market at a premium to face value, representing the need to pay for secure storage and the value from our secondary business model.

Secure storage costs 0.49% per year in Hong Kong (VIA MAT or G4S). Other vaults around the world have similar rates, although Switzerland is notably higher at 0.99% per year. I am planning to start with the vault in the local national bank so that we may inspect the silver at our leisure.

Secondary Business: Selling Covered Calls
We will write covered call contracts against the silver position in order to pay for secure storage fees and generate revenue for shareholders. This will allow
us to pay for secure storage fees on an ongoing, permanent basis, and to expand the fund.

Since storage fees are around 0.5% per year and selling deep, in-the-money covered calls are estimated to generate ~1% per month (long term) in profit,
this implies we only need to write calls against 6% of the position in order to pay for secure storage. As we will be selling each unit for 5% to 10% above face value, I feel there is zero risk of breaking the fund's model of retaining one tenth of an ounce of silver per unit. In short, should we get called on such a
small position, we will have more than enough cash on hand to settle with no risk to the holders. Failing that, please see clause #5 in the contract.

[Monster Tent]

I'm into buying physical silver currently...have been since I was a kid. I am interested in this service though, as companies like http://www.goldmoney.com/ have been doing this for years...interesting to see it from a BTC standpoint.

1. Is anyone doing this now? (besides the physical silver market, CoinAbul etc..)?

2. How soon is the proposed launch date?

SILVER is a lot like the companies like you mentioned, as well as BTC-TC funds like Carnth's BTC-GOLD and John Galt's GOLD fund. The difference between SILVER, and something like BTC-GOLD (besides the fact we deal in silver) is that we sell deep-in-the-money covered call options to pay for secure storage. As a result, we can sell shares cheaper on a per-ounce basis and there are essentially no other fees. With other funds, I'm not sure how they are storing their silver. Our silver will be guaranteed by the vault we hire. The downside is that if there's a sudden violent upswing in the price of silver, we will lose our cash position. The plus side is, that won't affect investors in the fund who will still be able to exchange their shares for physical silver ounces. So no, no one is really doing what we're doing specifically, although there are plenty of places to buy silver or gold in the community now, CoinAbul being one of the best places. I plan to try and support the communuity by buying from them (if their prices remain fair, of course I haven't looked).

The proposed launch date is anytime, but assuming we get the votes by the end of this month (we still need two votes on BTC-TC), we will be able to get the silver and start selling shares around the second week of February. Before then I could only sell maybe 100 shares or so against the silver we have right now.

EDIT: I have been advised to clarify that we will not begin trading until I've finished closing down my other companies. This is true; I will be closing down my other companies before starting up this one. Even if approved today, SILVER will not begin trading until approximately two weeks after I shut down BMF, CPA and NYAN.

[Monster Tent]

I have several questions:

If the silver is put at risk, can you really guarantee that 1 share will always be 1/10th oz.?

Yes I can. First, if anything goes wrong I am personally liable, as stated in the contract. I have changed the contract to make this more clear. This is not just idle talk -- I have a proven track record here. I have given hundreds of my personal bitcoins to my companies in the past when they were in trouble, and again now that I am closing them. So that's how I justify clause #5 in the contract.

But I think what you are really asking is, how I plan to not get into that position in the first place. The answer is easy, I will only write covered calls if we have the cash on hand to pay for it. This is the meaning of rule 3a. You mention it below:

#3a doesn't make sense. Can you give an example? It seems like you are saying you won't sell an option that can be called. If an option is called the value of the fund will drop, risking the 1 share = 1/10th oz guarantee.

I didn't want to say how we would invest in covered calls at first because I wanted it to be a corporate secret. But how I will do it is to leave the cash position on BTC-TC as collateral for investments in silver covered call funds that have a good track record. This means I never expose the company to the unlimited liability of a price spike. That's the secret. Yes, there is a risk of loss to the cash position (the premium to purchase price of silver which we sell shares at) but in such a case the physical silver will be worth "a ton of money" and the loss of the cash position would become a "welcome loss". Example: If for some reason silver spikes from $30 to $100... a 15% cash position would be worth 4.5% or less on the books. It would then presumably go to zero. Yes, it is true that the company would have lost that 4.5% -- but the value of their shares would skyrocket because the physical silver would be worth 3x more than it was before. An estimate would be, if we sold the shares for 0.22, we would lose the 0.02 premium but the shares would be worth 0.6 (3x more value from the silver). [Edit: this does not mean the shares won't be worth 0.62 or 0.66. They very may well be. But in this example at least 0.6 would be guaranteed from the silver.]

On the flipside, if silver declines in price or remains stable we will be able to pay a reasonable dividend, and still guarantee to be able to exchange each ounce of silver.

It is for this reason I am so excited about running such a fund. But you are right, and thanks for pointing out, that saying "zero risk" is probably not a good idea. To clarify, what I meant was there is zero risk compared to just investing in silver. Good catch. My idea here is not to be greedy and risk the underlying position. There is no need to risk the physical position like that. I am not trying to get 1% a month on the total investment. I am just trying to cover secure storage fees and pay a small dividend.

You numbers in the Financial Management section don't add up. Also, 100 oz of silver costs about 200 BTC, not 1000 BTC. Also, in order to pay the 80 BTC in expenses, you need to commit 667 (not 100) BTC worth of silver (assuming you can reliably make 12% profit). So, realistically you have to commit all 1000 BTC of silver to make a decent profit. Can you clarify?

Oops, that was an error on my part. Thanks for letting me clarify this. For those of you who didn't notice, I believe what odolvlobo is referring to is in "Business Description" I stated we would start with 100 oz of silver (1,000 shares). However, in "Financial Management" I gave a projection for an entire year and I had guesstimated we would sell 5,000 shares. In that, the 1,100 BTC assumed we would sell the shares for 0.22 each and assumed that spot price was 0.20 BTC/share. In actuality, I don't know what we will be able to sell shares at, but I do guarantee I will not sell shares at a loss or at a price that will not allow me execute on the business plan. Essentially the numbers in "Financial Management" were an estimate, or outline of what I wanted to do with the company in an ideal situation. Additionally I had mistakenly underestimated the profits at 120 BTC. I corrected it to 140 BTC.

My mistake above is actually a really good example of why I will be hiring an accountant to provide basic oversight and prepare financial statements ;-) I want to make it clear I have learned a lot from running my previous assets! I don't want to fall into the trap that I did last time where I make a simple mistake that gets taken out of context, or there's something I am inexperienced on and I end up causing unintended damage. Yes, there were flaws in my previous companies. I would like to believe I have learned from that and as a result I will do a much better job than someone who has no experience running an asset like this before.

How profits are distributed? You mentioned dividends, but that's all.

About how profits will be distributed; I'm still thinking about that. All of the company's financial information will be prepared by whoever we hire (deprived? maybe smickles? Someone with skills). The net profit will be displayed on that statement and I will announce what will happen once people can see our financial statements. I'll run a shareholder motion if there is any controversy. But right now I am planning to distribute 1/3rd to shareholders, retain 1/3rd for the company's cash position, and 1/3rd to myself as management fees.

Why retain 1/3rd? More lessons from the past. When I ran BMF I had a policy to pay out 95% of incoming dividends. I realized this was a mistake after a few months because it starved the company of growth and the ability to respond to major market moves. So I will decide how to split profits up later but I am leaning towards the 33% - 33% - 33% model above.

How do you plan to benefit from this contract?

I believe that after a while (6 months? 1 year?) there will be a significant amount of money made by this company. Based on my past experience as an issuer, we might sell 25,000 shares over the course of a year. At that size I am estimating 30 BTC a month in net profit. I'm lucky in that it does not take a lot of time to operate this fund. I'm already a silver stacker. I already have a safety deposit box at the bank with gold and silver in it. My bank offers vault storage and is an authorized Perth Mint dealer so I can also store silver in Australia as well as Asia. I already buy silver on a regular basis. What I gain from this is easy to see, if I can order 100 oz at a time I can save money on the silver. Also, I can split the vault fees with the company, which are cheaper than a safety deposit box for larger amounts of silver. Actually now that I think about it, it would be very convenient for me to hold my personal silver as company shares. That is ideal for me. That way I partake in the benefit of being able to trade the shares just like everyone else. That is very convenient for me!

There's one more benefit.. and not such an insignificant one.... if I am given another chance to run an asset I believe people will see I am in actuality a very trustworthy individual. I'm sure there are people that will eat their hat if I am allowed to list. But the truth is I really feel I deserve another chance. If I can just list this company I am certain I can change people's minds and build more trust here. Yes I was a jerk in the past to some people who I feel attacked me and said some pretty ridiculous things, but that doesn't mean I am a scammer or a fraud. As things turned out it's clear I am not a scammer or a fraud. So I see now it would have been better to just deal with those people nicely and let history prove I was right. That's what I have learned. So I will be honest I want to clear my name. That's probably 50% of it for me right there.

You wrote three times that there is zero risk from trading and this cannot be true -- unless you personally guarantee the value of the fund.

Yes that is precisely what I am doing, I am personally guaranteeing the value. But I want to make it clear that's not why I believe I can maintain the backing. I believe I can maintain the backing because the business plan is sound. Yet, I will remain there in case I am needed to pay out anything that is owed. Ok, I think I've answered most of what else you said above so I'll stop here. I hope you can see I'm very enthusiastic about this and I hope that tells you a lot about where I feel I can take this company. Thanks for the questions. I wish more moderators would give me a chance like you did!

[Monster Tent]

Silver has been LAUNCHED!

Welcome to the launch party. I will be looking around in the next few days for community websites to advertise on. If you have any suggestions please let me know. I will of course be advertising here on bitcointalk.org, and I will be paying for the first round of ads out of my own pocket.

I have 14 oz. of silver on my desk which I will use as an initial stock for 140 shares (http://kongzi.ca/silver). Our advisor will be given this information shortly.

Initial financial data which I am using is as follows:
S = Spot price is $31.66 from kitco.com
S+P = $33.25 from store.firstmajestic.com
MTGOX weighted average price $17.31682

This implies the cost to order silver bullion is 1.92btc/oz. After a small markup for trading fees, exchange fees, secure storage, etc. I think I can peg the market around 0.21 to 0.22/share at current silver prices. Keep your eye on the silver price! I will be using the following formula to come up with an approximate price and then adjusting slightly to meet demand:

[(S+P) / MtGox Weighted Avg.] + ~7%

Additionally I have launched with 10 shares available at 0.20/share and 10 shares issued at 0.192/share. This is a one time offer. We can't keep selling shares at spot or I won't be able to afford secure storage.

I am open to any comments on this pricing mechanism. I will attempt to analyze the demand and offer shares at a higher or lower price depending on demand (but not so cheap as we lose money).

And something else which I will say precisely once. Thank you to the community for giving me another chance. And now, it's party time! *cuts the red ribbon*

So the promise to wait till all your other companies shut down before you started trading was complete horse shit ?

[Deprived]

Now that I am on BitFunder, all I need to worry about is doing a good job with SILVER. That is my only concern at this point.

I'm disappointed that you've gone ahead with this before closing your other companies down.

At present you have their assets up for auction - yet your comments on a LOT of those securities is just 'will contact asset issuer soon'.  There's assets there that I'd have bid on had I even been confident your claim was acknowledged by the issuer (without them being relisted anywhere yet).  It's unfortunate for investors in your previous companies that you're now going to focus on SILVER rather than giving them your full attention for the last week of your closing down process.

I'm no silver expert but I suspect silver would still exist in a week's time had you chosen to focus on closing down your other assets for the next week before starting this.

[usagi]

So the promise to wait till all your other companies shut down before you started trading was complete horse shit ?

Hi Monster Tent, thank you for allowing me to answer this question today. Although you seem to have forgotten to quote the post you are responding to, I believe you are referring to this:

2. How soon is the proposed launch date?

The proposed launch date is anytime, but assuming we get the votes by the end of this month (we still need two votes on BTC-TC), we will be able to get the silver and start selling shares around the second week of February. Before then I could only sell maybe 100 shares or so against the silver we have right now.

EDIT: I have been advised to clarify that we will not begin trading until I've finished closing down my other companies. This is true; I will be closing down my other companies before starting up this one. Even if approved today, SILVER will not begin trading until approximately two weeks after I shut down BMF, CPA and NYAN.

In the above post I clearly laid out a sequence of events:
1. assuming we get the votes (and list) by the end of the month
2. we will be able to get the silver
3. and begin trading around the second week of February.

This isn't a promise not to list "until after I shut down BMF..." etc. What the EDIT: states is simple; I was advised to clarify my earlier statement to point out we will not begin trading until after my other companies have shut down. Deprived gave me the advice, because he felt pointing that out might make some LTC-GLOBAL moderators vote YES. But it's clearly not a condition I placed anywhere on the application form or in the contract; it's just something that was going to happen because it was going to happen.

So why did we offer shares for sale early? Simple. We have 14 oz. of silver on hand right now. You will notice in my response to w. I stated we would be able to sell around 100 shares at launch based on silver we already had. I have provided photographic evidence of my ownership of this silver on BitFunder.

This actually works out better not just for the company but for people like you. You can see how we operate with a very small amount of silver (14 oz.) before I start buying monster boxes. You can use this time to make an evaluation of how I actually do business and if you see any problem, you can point it out now and we can correct it before it becomes a serious problem.

Thanks again for asking such a great question. Keep 'em coming, and together we can make SILVER the best asset in the community.

Sincerely,

usagi

p.s. A condensed version of this will be put up in the FAQ section. Please make sure to edit your quote of the FAQ post because it's out of date now.

[usagi]

Now that I am on BitFunder, all I need to worry about is doing a good job with SILVER. That is my only concern at this point.

I'm disappointed that you've gone ahead with this before closing your other companies down.

At present you have their assets up for auction - yet your comments on a LOT of those securities is just 'will contact asset issuer soon'.  There's assets there that I'd have bid on had I even been confident your claim was acknowledged by the issuer (without them being relisted anywhere yet).  It's unfortunate for investors in your previous companies that you're now going to focus on SILVER rather than giving them your full attention for the last week of your closing down process.

I'm no silver expert but I suspect silver would still exist in a week's time had you chosen to focus on closing down your other assets for the next week before starting this.

I understand your concern, and others probably share your concern as well. So thank you for allowing me to point out my earlier response to
odolvlobo: "I'm lucky in that it does not take a lot of time to operate this fund. I'm already a silver stacker. I already have a safety deposit box at the bank with gold and silver in it." Please do not remain concerned. You may have noticed I am selling my personal gold and silver to offer a bonus package to my shareholders as I close down my companies. It actually saves me a lot of time to just issue these shares in SILVER (as announced) versus dealing with individual customers then driving all the way into the city to the post office to ship the silver by hand.

Please rest assured this will actually save me time and afford me more options to make my shareholders happy as I close down my other companies. At any rate, if you are concerned about BMF or NYAN's shut down process, please post your questions in the appropriate thread. I've taken the liberty of quoting your message and responding to your other question on the NYAN shutdown thread. Thanks and have a great day!

[MPOE-PR]

"I'm lucky in that it does not take a lot of time to operate this fund. I'm already a silver stacker. I already have a safety deposit box at the bank with gold and silver in it."

Is this no doubt significant pile of bulion acquired from the proceeds of selling your guitar or from the advance against future pay at your place of virtual employment?

[nebulus]

"I'm lucky in that it does not take a lot of time to operate this fund. I'm already a silver stacker. I already have a safety deposit box at the bank with gold and silver in it."

Is this no doubt significant pile of bulion acquired from the proceeds of selling your guitar or from the advance against future pay at your place of virtual employment?

ouch

[usagi]

"I'm lucky in that it does not take a lot of time to operate this fund. I'm already a silver stacker. I already have a safety deposit box at the bank with gold and silver in it."

Is this no doubt significant pile of bulion acquired from the proceeds of selling your guitar or from the advance against future pay at your place of virtual employment?

ouch

Not really an ouch, i'm just ignoring MPOE-PR so I didn't see his question. His question doesn't belong in this thread, so I've taken the liberty of answering this in the correct thread. Thanks for pointing it out.

[nebulus]

The right answer is "Fuck off, none of your business!"

[usagi]

The right answer is "Fuck off, none of your business!"

FFS dude who do you think you are to tell me how to act in public?

[nebulus]

The right answer is "Fuck off, none of your business!"

FFS dude who do you think you are to tell me how to act in public?

The public

[ldrgn]

Not sure if SILVER will have this problem too but if you're preparing financial statement-like things please keep values in fiat and use standard fair value accounting for any silver or BTC.  This company may not keep much BTC around but you did have this problem with the earlier Usagi companies where you did all your reporting in BTC which is useless.

[superbit]

That's my concern with something like this.  If holding and incomes is PM or FIAT and as an investor you are long on BTC then even positive returns can get wiped out easily in exchange, or am I missing something?

[Deprived]

Not sure if SILVER will have this problem too but if you're preparing financial statement-like things please keep values in fiat and use standard fair value accounting for any silver or BTC.  This company may not keep much BTC around but you did have this problem with the earlier Usagi companies where you did all your reporting in BTC which is useless.

Disagree on this - investors are buying shares with BTC so accounting should be in BTC.

[Deprived]

That's my concern with something like this.  If holding and incomes is PM or FIAT and as an investor you are long on BTC then even positive returns can get wiped out easily in exchange, or am I missing something?

You're not missing anything.

Investments in PM are pretty much either a hedge against BTC falling or a short on BTC (and, at the same time, a bet that PM rises vs fiat - otherwise you'd do better just converting to fiat and holding it).  If BTC rises faster than PM then you make a loss.

[superbit]

That's my concern with something like this.  If holding and incomes is PM or FIAT and as an investor you are long on BTC then even positive returns can get wiped out easily in exchange, or am I missing something?

You're not missing anything.

Investments in PM are pretty much either a hedge against BTC falling or a short on BTC (and, at the same time, a bet that PM rises vs fiat - otherwise you'd do better just converting to fiat and holding it).  If BTC rises faster than PM then you make a loss.

That's what I figured.

I could see the value in people with a pile of bitcoins investing in a fund that then paid them out dividends in fiat.  I suppose it wouldn't be anonymous but it would be legit taxable income.

[ldrgn]

Disagree on this - investors are buying shares with BTC so accounting should be in BTC.

I'd like to hear your reasoning here and maybe a bit about how your internal bookkeeping works.  At any rate, I suspect we both agree that fair value accounting should be followed even if it's in BTC and not USD.

[Deprived]

Disagree on this - investors are buying shares with BTC so accounting should be in BTC.

I'd like to hear your reasoning here and maybe a bit about how your internal bookkeeping works.  At any rate, I suspect we both agree that fair value accounting should be followed even if it's in BTC and not USD.

It's possible we're talking at cross-purposes (and also I didn't make myself very clear).

Where transactions are conducted in (say) USD then I'm NOT suggesting every transaction should be converted into BTC for the books - that would be confusing and wrong.  If a ledger of some kind is prepared then it needs to reflect the currency in which transactions occur.

However, when it comes to preparing a balance sheet (and/or a list of assets) then that MUST be converted into BTC -as that's the currency in which units are being traded.  The value/unit needs to be given in BTC basically (it would actually consist of a mix of fiat, BTC and silver) to give a snapshot of the realisable value of a unit (no harm giving a fiat one as well of course).  It's only a snapshot - as the exchange-rates for silver and BTC to fiat will change all the time.

An alternative - maybe worth considering - would be to give the fund valuation in terms of Ag/Unit.  As the bulk of holdings would be in silver a valuation in silver per unit would actually be the one least subject to changes due to exchange-rates.  But that could get confusing for some people if the valuation is .1034 oz Ag/Unit but each unit only has a face-value of .1 oz Ag/unit.  But it's interesting to consider treating silver as a currency for the purposes of valuation (and, as I say, would lead to a more stable valuation than using fiat or BTC).

[usagi]

An alternative - maybe worth considering - would be to give the fund valuation in terms of Ag/Unit.  As the bulk of holdings would be in silver a valuation in silver per unit would actually be the one least subject to changes due to exchange-rates.  But that could get confusing for some people if the valuation is .1034 oz Ag/Unit but each unit only has a face-value of .1 oz Ag/unit.  But it's interesting to consider treating silver as a currency for the purposes of valuation (and, as I say, would lead to a more stable valuation than using fiat or BTC).

I'll be asking our accountant/advisor to present net asset value in terms of AG/unit + cash position.

So if we have 13 oz. of silver and 6.5 bitcoins over 130 issued shares, the fund will be worth 1/10th of an oz. per share plus 0.05 cash per share.

As an interesting aside, to properly value a fund like TU.SILVER you need to know what added value is present besides "silver". For example, I guarantee investors will be able to withdraw a minimum of 5 shares (1/2oz) at a time, as brand-new, sealed 1/2oz rounds. This means we must charge a $2 to $3 premium to the spot price, since that is the coin premium on 1/2 oz. rounds. For more info on that you can check out apmex.com -- I like apmex.com because they list the price as "spot + premium", which is more interesting to me than other stores which just list the compbined price.

Also of note, like BTC-GOLD and similar funds, TU.SILVER charges a small markup to pay for vault storage and company operations. We also need to pay for shipping on any new silver we add to the fund.

For example; today we are looking at silver spot/10th oz of .1759. After a $2 premium that price rises to .1871. Then we add 6% to pay for vault storage fees and to match our existing cash position. Finally, shipping costs tend to push the price another 7%. This gives us a target sale price of about 0.212 today. This may sound expensive but buying shares of TU.SILVER is still cheaper than most online BTC silver stores, and the coin premium is very nice. This makes TU.SILVER and other funds convenient, inexpensive alternatives to holding the metal yourself. In fact, now that I have your attention, I might as well go full tilt here.

The following is my opinion only. ;-)

A comparison of Bitcoin-based Precious Metals Investments
January 27th, 2013

Dear investor; it is our pleasure to present the following free report. Today’s date is Sunday, January 27th, 2013. First let’s run down today’s price action in the markets:
Source   Gold   Silver
kitco.com   $1659.30   $31.18
24hgold.com   $1658.20   $31.13
Mt. Gox Weighted Average   $17.23207   $17.23207
Average Price in Bitcoins   96.2595 BTC/oz   1.8080 BTC/oz

The Crystal Ball says:
Spot price for Silver today is down about 0.03 BTC from last session, as cheap metal continues to flood the markets. Gold continues to hold the mid-90 range as investors recover from the holiday season.
Today’s special is a series on the various Precious Metals vehicles available to cryptocoin investors.
Here’s the list of funds we will discuss today:
Exchange   Symbol   Manager   Redeemable   1Y/5Y/10Y EROI   Advantage
BTC-TC   GOLD   John Galt   S&H +5%   -1% -5% -10%   trust, low fee
BTC-TC   BTC-GOLD   Carnth   S&H +3%   -13% -13% -13%   backed by gold
LTC-TC   LTC-SILVER   SaltySpitoon   S&H +3%   -2.5% -12.5% -25%   trust, backing
BitFunder   TU.SILVER   TU group   S&H +2%   +3% +14% +25%   income, backing

EXECUTIVE SUMMARY
Investing in a Precious Metals fund has many benefits over storing the metals yourself. Besides increased liquidity (since BTC exchanges are open 24 hours), lower fees, and convenience, these funds offer a way to hedge against drops in the value of BTC.
It is important to understand the differences between each fund and choose the fund that meets your investment objectives. Do not blindly throw money into a precious metals fund; you may end up making less money than you expected, and maybe even losing money. In such a case you would only have yourself to blame.
This report exists to compare some of the more important risks and rewards of four gold and silver funds across three popular exchanges: GOLD, BTC-GOLD, LTC-SILVER and TU.SILVER. We hope that you learn something from this report but the most important take-away is that you should investigate any investment before you buy it. Please consult a registered investment advisor before investing. 
Let’s begin with John Galt Asset Management’s GOLD fund (also known as LGT on LTC-TC). John Galt’s funds exist to represent beneficial ownership of the underlying gold, according to the full contract. In return for storing shareholder’s gold, John Galt operates a spread and charges a 1% annual fee. John Galt has also agreed to absorb the first $1,000 (~58 bitcoins) worth of fees and legal expenses generated by the fund. This is exemplary. The main advantage with GOLD vs. BTC-GOLD is probably the fact that gold is added at the spot price. With no premium on gold added, we expect the majority of short-term investors to hold GOLD versus other funds.

BTC-TC
GOLD
John Galt
Our first impression is that GOLD is a rock-stable issue representing the “gold standard”, if you will, of what a gold backed security should be.
•   Redeemable in bullion by unitholders
•   Trust Advantage & easy to contact John personally
•   Adds value (stores gold on behalf of customers)
JUSTIFICATION
John Galt is one trustworthy guy. He put his name behind his fund and that is to be respected. He also seems to know what he is doing, based on his extensive and well-worded contract. The premium on GOLD is very low due to John Galt Asset Management operating a tight spread of +/- 3.75%. This keeps the market liquid -- you will be able to enter or exit at a decent price within a reasonable time. John Galt adds gold to GOLD at spot price. So the fund pays any purchase premium for you. This is ideal for short term and medium term (1 to 10 years) investors. Additionally, we had no problem contacting John with questions about his fund. He responded right away and was very patient and pleasant to deal with. If one were interested in holding a gold position for the short or medium term, GOLD is an excellent choice.
CONCERNS
There are no outstanding issues we can see. When we asked John about the safety of his gold, he told us that it was kept in the vault of a bank. Although it is not insured against theft, we feel it is secure enough for our purpose.
CONCLUSION
We like GOLD for short-term trading or as a vehicle for buying gold bullion using cryptocoins. We would look for a less-expensive long-term position if we wanted to invest in precious metals for say 7 years or longer.
Pro Tip: GOLD is ideal for short term investors. It has a 3.75% spread and adds gold at spot price!
-----
Our next stop on the list is Carnth’s BTC-GOLD fund (and it’s version on LTC-TC, LTC-GOLD). There are important differences between GOLD and BTC-GOLD, but the most visible difference is that each share in BTC-GOLD is backed by 1/100th gram of physical gold. The small denomination may surprise, but at $1700 gold conveniently works out to just under 0.001 BTC per share.

BTC-TC
BTC-GOLD
Carnth
Our first impression is that BTC-GOLD is a low-cost alternative to GOLD with strong competitive advantages.
•   Redeemable in bullion by unitholders.
•   Backed by gold (1/100th of a gram per share).
JUSTIFICATION
With 0% annual fees, BTC-GOLD is structured for the long-term investor, yet contains some very attractive features for short term traders. In contrast to John Galt’s GOLD fund, BTC-GOLD is backed by gold on a per-share basis, which aids in establishing a value. We also feel the small denomination per-share will tend to increase liquidity which is also more attractive in the short term.
CONCERNS; COMPARISON WITH “BTC-TC.GOLD”
From the contract we see that the gold is likely to be held in Carnth’s possession . If the gold is not in secure storage there is a risk of loss due to theft or damage. Secondly, while Carnth is a trusted community member, in comparison to John Galt his personal contact information is not provided. Finally, short term traders beware; while the 0% annual fees are attractive in the long term, the fund sells new shares at a small premium to the spot price. Anyone holding for the short term should be aware of this when buying shares of LTC-GOLD.

CONCLUSION
We like BTC-GOLD for medium and long-term exposure to the gold price and we love it’s small denomination shares because it promotes liquidity without being obtuse. We are slightly concerned about the safety of the gold, however we grant trust to Carnth because he is a respected forum member.

Pro Tip: BTC-GOLD has the lowest fees for long-term storage!
-----
We now come to LTC-SILVER. The major initial concern was the contractual similarity to BTC-GOLD, and assets like LTC-PLATINUM and LTCCOPPER. Why are there so many similar contracts run by anonymous forum unknowns? Is it a scam?
SaltySpitoon helped us get to the bottom of this issue quickly. SaltySpitoon is the original author of the contract, and has authorized Carnth to use it as well. That makes us feel a lot safer about investing in LTC-SILVER.

Litecoinglobal.com
LTC-SILVER
SaltySpitoon
The advantages of LTC-SILVER are:
•   Trust (issued by a Staff member at bitcointalk.org)
•   You can redeem your shares for physical for about 3% plus shipping and handling.
•   Backed by 1 gram per share of physical silver.
JUSTIFICATION
At the time LTC-SILVER was founded, there were no Silver funds in the community. SaltySpitoon is a trusted community member. He is a Staff member at bitcointalk.org. We also feel LTC-SILVER’s long history has proven its ability to redeem physical silver. We were able to get in touch with SaltySpitoon easily to ask questions about the fund, so it has excellent customer service. Finally, it has low fees, and SaltySpitoon offers free UPS tracking numbers when you redeem your silver. All in all, it is one of the oldest and most trustworthy precious metals funds available.
CONCERNS; COMPARISON WITH “BTC-TC.BTC-GOLD” AND OTHER LTC-TC FUNDS
There are no outstanding concerns with LTC-SILVER. The initial concern was the large number of similar-looking funds. This turned out to be a non-issue. The second issue was security. When we asked SaltySpitoon how the silver was stored, he told us the silver was kept in a military-grade walk-in safe. We think this is novel, and that thieves will not be getting away with this silver any time soon.
CONCLUSION
We like LTC-SILVER because it offers a novel storage solution compared to GOLD and BTC-GOLD. SaltySpitoon’s contract is very well-written and oft-copied. Finally, each share is backed by one gram of silver in secure storage. We like LTC-SILVER for both long term and short term trading, and can only recommend the fund.
Pro Tip: SaltySpitoon said demand is up and he will be adding more silver. Look for a deal on new shares soon! 
-----
TU.SILVER is the newest Precious Metals fund in the community. How does it stack up against the others? Like all the funds reviewed so far, its job is to store metal for its unit holders. Like most funds it guarantees the metal backing its shares – in this case, 1/10th of an ounce of silver (versus 1 gram of silver for LTC-SILVER). Where TU.SILVER really shines however is in its positive EROI (expected return on investment). Where other funds can only guarantee a long-term loss when indexed to the price of the metal, TU.SILVER expects a long-term gain.

BitFunder
TU.SILVER
TU group
The advantages of TU.SILVER are threefold: Income, Security, and Silver backing each share.
JUSTIFICATION
No other precious metal issue can expect a positive EROI. For many investors, the choice between a fund which is guaranteed to lose money and one which can expect a positive return is easy. Secondly, with TU.SILVER, your Silver is guaranteed against loss by theft or damage by storing it in a vault. Vault services such as VIA MAT and G4S will store the bulk of the silver. Additionally, the fund operates in Asia. We feel that this is an attractive option to investors seeking geographic diversity.
CONCERNS
If there is a sudden and dramatic increase in the price of silver, the fund would lose its risked capital. This means that TU.SILVER must never issue calls against its position which would cap the majority of gains in the price of silver. A rule of thumb is that the fund aims to retain up to 80% of the gain in any end-game of the silver market. Estimates show that by risking 20% of the silver position, the fund can expect to earn approximately 3.8% per year. This is expected to be realized by shareholders as a distribution of approximately 0.25% per month. In this case, were silver to experience a sudden gain of 1,000% (for example, a violent short squeeze over a holiday weekend) the fund would only be able to cover an 800% return. Although this presents a risk compared to other funds, we feel that it is a risk which investors will find acceptable.
CONCLUSION
TU.SILVER is decidedly a medium-term prospect. It aims to pay a stable dividend in the short term, while in the long term it is guaranteed to get stopped out of any eventual moon-shot in the price of silver. We feel that investors will judge this risk to be acceptable due to the ability to pay dividends and the security offered by vault storage. At the very least, investors have been given the information to decide for themselves whether or not this is a risk worth taking.
Pro Tip: TU.SILVER is the only silver fund available today which expects a positive EROI!
-----
WRAP UP
Regardless of which precious metals fund you choose, one thing to keep in mind is diversification. All of the funds above (and even those we may have missed) represent an investment into physical metal. But there’s a big difference between gold held in New York and gold held in Switzerland; A big difference between silver held in Australia or silver held in Japan. Diversification in precious metals does not just mean a little gold and a little silver, some in long-term vehicles and some in short-term vehicles. It also means making sure that if Gold is confiscated, like it was in the USA in 1933, or declared illegal for trade, like it was in Vietnam in 2010, that your money is safe and you don’t get sent to the poorhouse. A cursory analysis shows that all the funds we’ve looked at operate in the USA, except for TU.SILVER which operates in Asia. Depending where you live, geographic diversity may be even more important to you than fee structure.
Furthermore, the relative anonymity of the fund operator must be considered. While no one is truly anonymous, it is to be respected that John Galt Asset Management has put his name and reputation on the line with GOLD and LGI. Others who do the same can expect greater degrees of trust as well. Consider carefully the track record of each fund manager and ask yourself; Is this someone you trust to hold your money? Have they done the right thing in the past?
We also advise investors to consider carefully the implications of low-denomination funds like Carnth’s BTC-GOLD fund or SaltySpitoon’s LTC-SILVER. These funds are often more liquid because it is easier to trade small value amounts and operate a spread.
Finally, you will want to decide what your opinion is on the precious metals markets themselves. If you believe gold and silver will experience a sudden and violent price increase within the next few years, funds like TU.SILVER will not be able to capture the full return of any giant leap up by the precious metals. In a currency collapse event like in Argentina in the 1990s or in modern-day Zimbabwe, TU.SILVER would be the worst performing asset of the four we looked at today.
In conclusion there are many precious metals vehicles to choose from, but the safest and easiest is probably just buying the physical metal yourself. Gold and silver have alloidial title; it’s owned by whoever is holding it in their hand. Keep this in mind when investing in any silver fund; if they cannot secure the value of your silver as you yourself can by holding it in your hand, then perhaps the risk is greater than the reward. Please consult a registered investment advisor before investing.

[Deprived]

Furthermore, the relative anonymity of the fund operator must be considered. While no one is truly anonymous, it is to be respected that John Galt Asset Management has put his name and reputation on the line with GOLD and LGI.

I have to respond to this as it's a pet peeve of mine.

If someone just SAYS their name is X then it adds zero security at all.  If they're genuine then it's likely their real name - if dishonest then it's not their real name.  As just stating a name is something both honest and dishonest asset-issuers can do it gives no indication at all of whether they're more or less trust-worthy than someone who doesn't claim to reveal their name.

That's in no way an attack on the guy behind those funds - or a claim that I have any reason to believe he's lieing.  I'm simply pointing out that it's entirely illogical to think that an unsupported claim to an identity is any indication at all of trustworthiness.  It's similar to another fallacy that many make - that paying dividends for a few months is somehow proof of not being a scam.

I'd agree with your other comments about his funds - unlike many he actually does maintain bids as well as asks (and keeps them updated in a timely fashion).  For those who don't know if they plan to invest short/medium/long term that's a massive advantage.

[Deprived]

I'll be asking our accountant/advisor to present net asset value in terms of AG/unit + cash position.

So if we have 13 oz. of silver and 6.5 bitcoins over 130 issued shares, the fund will be worth 1/10th of an oz. per share plus 0.05 cash per share.

As an interesting aside, to properly value a fund like TU.SILVER you need to know what added value is present besides "silver". For example, I guarantee investors will be able to withdraw a minimum of 5 shares (1/2oz) at a time, as brand-new, sealed 1/2oz rounds. This means we must charge a $2 to $3 premium to the spot price, since that is the coin premium on 1/2 oz. rounds. For more info on that you can check out apmex.com -- I like apmex.com because they list the price as "spot + premium", which is more interesting to me than other stores which just list the compbined price.

If you're selling covered calls then your valuation should include a liability in respect of them (there's pretty standard ways to value holding an option - as issuer you'd have a liability equal to that value).  The cash doesn't all become yours unencumbered when you sell the option - it's not all finally the fund's until the option expires unexercised.

It would be reckless to dividend out fees for contracts that hadn't expired - and misleading to include those fees in their entirety into accounts without also having the liability in respect of them noted.  You should be able to do this in a spreadsheet easily enough - and I'm sure the parameters for valuing silver options (or the liability of ones you isseued) are available easily enough.

[usagi]

If you're selling covered calls then your valuation should include a liability in respect of them (there's pretty standard ways to value holding an option - as issuer you'd have a liability equal to that value).  The cash doesn't all become yours unencumbered when you sell the option - it's not all finally the fund's until the option expires unexercised.

Thankfully doing the books is not something I really need to worry about, as I've hired someone else to worry about the books. I just need to worry about making sure there's documentation (disclosure) for everything I do. But I will make sure our advisor gets this information and does a reasonable job. I think the worst that will happen is that we will publish all the important information, but it will be in a nonstandard format. Then we'll take advice and criticism and do it better the next time around. All that really needs to be reported is what the total value is that we hold and the amount and nature of the risks. I'd like to keep it as simple and easy to understand as possible. Your other advice was valuable too, thanks.

[MPOE-PR]

I have to respond to this as it's a pet peeve of mine.

If someone just SAYS their name is X then it adds zero security at all.  If they're genuine then it's likely their real name - if dishonest then it's not their real name.  As just stating a name is something both honest and dishonest asset-issuers can do it gives no indication at all of whether they're more or less trust-worthy than someone who doesn't claim to reveal their name.

That's in no way an attack on the guy behind those funds - or a claim that I have any reason to believe he's lieing.  I'm simply pointing out that it's entirely illogical to think that an unsupported claim to an identity is any indication at all of trustworthiness.  It's similar to another fallacy that many make - that paying dividends for a few months is somehow proof of not being a scam.

I'd agree with your other comments about his funds - unlike many he actually does maintain bids as well as asks (and keeps them updated in a timely fashion).  For those who don't know if they plan to invest short/medium/long term that's a massive advantage.

Aren't you guilty of the same thing as your pet peeve?

Stating a name adds no security, because anyone could state a name, honest or dishonest. Paying dividends a few months adds no security, because anyone could pay dividends, honest or dishonest.

Yet putting bid/ask walls up adds security. Why? Anyone could do it, whether honest or dishonest. The fact that they're here now doesn't mean they'll be there when you actually need them.

To be sure, my argument isn't that someone putting bid walls up is therefore equal to someone not putting them. My argument is that your pet peeve is nonsense: someone making a claim to an identity is above someone not making such a claim for the obvious reason that a claim made can be verified or falsified. A claim not made can't be anything.

Obviously no single signal can quickly and fully resolve the thorny issue of BTC credibility, but certainly any signal whatever may in principle be useful towards such an evaluation. Right?

[usagi]

...putting bid/ask walls up adds security. Why? Anyone could do it, whether honest or dishonest. The fact that they're here now doesn't mean they'll be there when you actually need them.

Note: spot price + coin premium for silver in BTC is currently 1.860/BTC/oz, so this bid wall represents a cash premium of between 3.4% and 7.3% for anyone who is selling shares. Of course, investors are still welcome to redeem shares for metal. In fact, I just mailed 1oz to a shareholder this afternoon.

[🏰 TradeFortress 🏰]

Just want to say thanks for the initial IPO shares - you're not losing money if I redeem them for silver right?

[usagi]

Just want to say thanks for the initial IPO shares - you're not losing money if I redeem them for silver right?

You're welcome, and you can feel free to redeem whenever you want I'm still looking at how we are shipping and the costs, but for now shipping is 1 share per 5oz, or about 2%. That is, I believe, the cheapest shipping option of any precious metals fund right now. You can also pay shipping in bitcoins if you want. For example someone just redeemed 1oz and I quoted him 0.1BTC (the actual price was .146). So 1 share per 5oz (i.e. 2%) works out okay for me.

This is actually a cheap way to buy silver, since our price is a little less than most online coin shops. I have no idea how I managed that especially since all we buy are 1/2oz rounds. But there it is. The competition just stepped up a notch.

Actually about that, once we get a little bigger I can start buying poured bars and industrial silver ingots (cut from long bars and such) and it's super cheap. Nearly spot. But you won't be getting nice 1/2oz rounds like that, just chunks of silver or maybe silver shot. I'd probably run a motion to see how much of that people want us to buy, but it could lower the price of shares by 5% to 10%. Nice huh. Well, let's see how big the fund gets first. I just locked in a price for 25oz (fifty 1/2oz rounds). They'll probably be here on friday

[Deprived]

I have to respond to this as it's a pet peeve of mine.

If someone just SAYS their name is X then it adds zero security at all.  If they're genuine then it's likely their real name - if dishonest then it's not their real name.  As just stating a name is something both honest and dishonest asset-issuers can do it gives no indication at all of whether they're more or less trust-worthy than someone who doesn't claim to reveal their name.

That's in no way an attack on the guy behind those funds - or a claim that I have any reason to believe he's lieing.  I'm simply pointing out that it's entirely illogical to think that an unsupported claim to an identity is any indication at all of trustworthiness.  It's similar to another fallacy that many make - that paying dividends for a few months is somehow proof of not being a scam.

I'd agree with your other comments about his funds - unlike many he actually does maintain bids as well as asks (and keeps them updated in a timely fashion).  For those who don't know if they plan to invest short/medium/long term that's a massive advantage.

Aren't you guilty of the same thing as your pet peeve?

Stating a name adds no security, because anyone could state a name, honest or dishonest. Paying dividends a few months adds no security, because anyone could pay dividends, honest or dishonest.

Yet putting bid/ask walls up adds security. Why? Anyone could do it, whether honest or dishonest. The fact that they're here now doesn't mean they'll be there when you actually need them.

To be sure, my argument isn't that someone putting bid walls up is therefore equal to someone not putting them. My argument is that your pet peeve is nonsense: someone making a claim to an identity is above someone not making such a claim for the obvious reason that a claim made can be verified or falsified. A claim not made can't be anything.

Obviously no single signal can quickly and fully resolve the thorny issue of BTC credibility, but certainly any signal whatever may in principle be useful towards such an evaluation. Right?

Adding bid-walls doesn't add security (in the sense of establishing trustworthiness) and I've not claimed that it does.

But it 100% DOES add liquidity - that's the advantage I was referring to it offering to short-term investors: some other metals funds there's no way to sell out at anywhere near purchase price.

Not sure how a claim to a name can be verified.  In the example of the security we're talking about, the name claimed is a fairly common one.  Without an address to go with it I don't see any way that can be verified.  Someone giving a name, address and land-line telephone number (not pay-as-you-go mobile or skype) is different - as then it can be verified.

But if I say "My name is John Smith" (it's not) please explain how you'd verify that or what security it gives you?

[MPOE-PR]

But if I say "My name is John Smith" (it's not) please explain how you'd verify that or what security it gives you?

To take a very silly example: you claim your name is John Smith and later you sign things as "Serena". Well....

There's that bit of Clemens', "the less one is apt to make definitive statements the less likely he is to look foolish in retrospect". It applies here: any definitive statement, such as "my name is Joe", is an opportunity to be later on proven the liar.

Bid walls do provide momentary liquidity, no argument. But I don't see how investing into something because it currently has a wall is different from investing into something because it's owned by a guy named Joe (not that I'm claiming you're doing either).

[usagi]

But if I say "My name is John Smith" (it's not) please explain how you'd verify that or what security it gives you?

To take a very silly example: you claim your name is John Smith and later you sign things as "Serena". Well....

There's that bit of Clemens', "the less one is apt to make definitive statements the less likely he is to look foolish in retrospect". It applies here: any definitive statement, such as "my name is Joe", is an opportunity to be later on proven the liar.

Actually this is an interesting point you're making. How do you write 月野うさぎ in English? The problem is, people who don't speak Japanese can't pronounce Japanese. Romaji is only useful to people who are learning Japanese. A classic example is "Doraemon". In English, you want to say "Do-ray-mon" (3 syllables). But in Japanese it is "Do-ra-e-mo-n" (5 syllables). This is why as a general rule Japanese names are rewritten. It's for your convenience.

[ldrgn]

However, when it comes to preparing a balance sheet (and/or a list of assets) then that MUST be converted into BTC -as that's the currency in which units are being traded.  The value/unit needs to be given in BTC basically (it would actually consist of a mix of fiat, BTC and silver) to give a snapshot of the realisable value of a unit (no harm giving a fiat one as well of course).  It's only a snapshot - as the exchange-rates for silver and BTC to fiat will change all the time.

I've had balance sheets in mind this whole time as well.  I'm saying that USD is a much better way of showing "a snapshot of the realisable[sic][] value of a unit" because Bitcoin's extreme volatility makes it completely unsuited for use as a unit for accounting.

edit: and because it's silly to have a balance sheet that becomes more painful to use after a week of currency fluctuations.  Sure, it's weird to have unrealized gains and losses from Mt. Gox show up on a random balance sheet but Bitcoin just isn't stable enough right now.

[usagi]

However, when it comes to preparing a balance sheet (and/or a list of assets) then that MUST be converted into BTC -as that's the currency in which units are being traded.  The value/unit needs to be given in BTC basically (it would actually consist of a mix of fiat, BTC and silver) to give a snapshot of the realisable value of a unit (no harm giving a fiat one as well of course).  It's only a snapshot - as the exchange-rates for silver and BTC to fiat will change all the time.

I've had balance sheets in mind this whole time as well.  I'm saying that USD is a much better way of showing "a snapshot of the realisable[sic][] value of a unit" because Bitcoin's extreme volatility makes it completely unsuited for use as a unit for accounting.

edit: and because it's silly to have a balance sheet that becomes more painful to use after a week of currency fluctuations.  Sure, it's weird to have unrealized gains and losses from Mt. Gox show up on a random balance sheet but Bitcoin just isn't stable enough right now.

In the words of Wayne Gretzky, you have to skate to where the puck is going, not to where it's been. For now, the volatility you would normally price into these assets has been canceled out. How I've done this is a trade secret, and involves a special technical analysis indicator I've invented which I call the triangle trending chart.

So accounting has to be done in bitcoins because bitcoins are the unit of account on the exchange. But we're not really dealing with bitcoins, we're dealing with silver denominated in bitcoins. Both of which can be denominated in a third currency. Both bitcoins and silver are hard assets in that they cannot be created by fiat. So they both follow the laws of supply and demand. That means that priced against each other they will create a much more stable figure. The third factor is currency. The triangle trending indicator links three independent figures together -- like points on a triangle. The center of this triangle is the relation between each figure. This center moves towards one or the other figures more or less quickly (with more or less force) over a certain time period. This tells me what the market is looking at, and reveals to me much information.

Right now I have been watching the trend using my special trending triangle indicator and the market action looks like a straight line. This is telling me where the market is going to be. That's how I price my silver. Like Wayne Gretzky, my hero.

[Deprived]

But if I say "My name is John Smith" (it's not) please explain how you'd verify that or what security it gives you?

To take a very silly example: you claim your name is John Smith and later you sign things as "Serena". Well....

There's that bit of Clemens', "the less one is apt to make definitive statements the less likely he is to look foolish in retrospect". It applies here: any definitive statement, such as "my name is Joe", is an opportunity to be later on proven the liar.

Bid walls do provide momentary liquidity, no argument. But I don't see how investing into something because it currently has a wall is different from investing into something because it's owned by a guy named Joe (not that I'm claiming you're doing either).

Both your examples about names refer to "later" actions.

I agree someone giving a name potentially lets them slip up later if a scammer (or just a compulsive liar) but that still doesn't explain how the act of them giving the name in the first place adds any security.

There's really only a few things I look for when determining the likelihood of something being legitimate (there's a whole raft of things that make it likely to be a scam):

1.  Is there strong evidence that they actually do what they claim to be doing and will be using funds raised for that purpose.
2.  Is it obvious how they personally make a profit from running their business.

If someone is definitely running their business AND making profit for themselves for it then a lot of the incentive to scam vanishes.  If they aren't obviously making a profit themselves then there's risk of either them giving up on it due to lack of incentive or that they're making the profit by skimming of funds or intent on blatant theft.  Obviously being legitimate (i.e. not a scam) doesn't make something a good investment -

Knowing their real identity IS useful as a security measure (to what extent depends on the individual) - but knowing their identity is an entirely different thing to simply taking their word for it.  If you'll take their word for what their identity is then you may as well go the whole mile and just take their word that they're honest and skip the whole identity thing entirely as you've already convinced yourself to take their word for stuff without any supporting evidence.

As for whether I invest in things owned by a guy named Joe (should really be "owned by a guy who claims to be named Joe") or in things with bidwalls the answer on both counts is no (if you're talking about my fund) we do very little investing - just trading.

But I'll happily trade things of either type - and even things I suspect (or on occasion am certain) are scams.  I don't massively care whether things I trade are genuine or scams, profitable or certain to make a loss - just whether I'm confident I can sell them to someone else for more than I paid for them (though my belief in the legitimacy/profitability of the asset DOES have an effect on the price at which I'm willing to buy).

On balance I'd prefer trading the shares issued by the guy who claimed his name was Joe - as ones with bid-walls are a pain for trading as you don't get to pick them up cheap much.  But if I were investing I'd go for the one with bid-walls - as I can determine whether they're real or not, they give liquidity and they also demonstrate the existence of SOME assets on the exchange.  But that would be a fair way down my list of things leading me to invest.

[usagi]

TU.SILVER represents the cheapest silver you can buy in Bitcoins -- anywhere!

With competitors offering prices at 2.1 BTC/oz and up, TU.SILVER's .1975 ask price per 1/10oz is simply unbeatable!

Our current spread is 1.911 bid and 1.975 ask. Redeemable upon demand as 1/2 oz rounds.

Have you seen the coin premium on 1/2oz rounds recently? Wow, why are we selling this silver so low? It's CRAZY! I must be CRAZY!

We are the only listing on BitFunder who has hired an accountant to do our books and make sure everything is transparent and aboveboard.

If you haven't heard the silver story let me help you out with that:

The Silver Bullet and the Silver Shield: The Greatest Truth Never Told

Check it out, it might just change your life!

[usagi]

Price Alert: New all time now! We are now selling silver for just 1.869 BTC/oz. See BitFunder for details!


I am pleased to announce our very first "Sell your Signature" campaign. If you'd like to sell your signature on bitcointalk, you can get up to 10 bitcoins. Please see:

https://bitcointalk.org/index.php?topic=140454.0

Happy stacking!

[usagi]

TU.SILVER on BitFunder
-----

We had our first confirmed redemption today! Quote from a customer:

Hi usagi,

recieved the 2 half ounce silver rounds, they look pretty  


Thanks

Total time from request to delivery was six days (Asia-->Europe). Most of that time was messing about on airplanes, so I suspect US. delivery times would be about the same.

Current spot price for TU.SILVER is less than 2btc/oz for 1/2oz coins! This insane deal will last as long as I have supplies to fill orders, so bid now before they're all gone!

Edit: 1 hour later, yet another customer has received their rounds. Good!

-----
TU.SILVER on BitFunder

[usagi]

The TU.SILVER Report
A comparison of Bitcoin-based Precious Metals Investments
Part 2 of 2
February 4th, 2013

Dear investor; it is our pleasure to present the following free report. Today’s date is Monday, February 4th, 2013. First let’s run down today’s price action in the markets:

Source   Gold   Silver
kitco.com   $1668.00   $31.60
Mt. Gox Weighted Average   $20.58078   $20.58078
Average Price in Bitcoins   81.0465 BTC/oz   1.5354 BTC/oz

The Crystal Ball says:
Metals were flat last week or marginally higher. The real story is the rise of Bitcoin, creating all-time lows in gold and silver and signaling a buying opportunity for those long bitcoins.

Today’s special is the finale of last week’s comparison of the various Precious Metals vehicles available to cryptocoin investors.
Here’s the list of funds we will discuss today:

Symbol   Market Cap   7 day volume   Spread   Depth   Proof of Ownership
GOLD   167 BTC   2.13 BTC   7.6%   7.8 + 16.8   Yes
BTC-GOLD   21.33 BTC   0.11 BTC   400%   2 + 0.7    Yes
LTC-SILVER   10.80 BTC   0.07 BTC   16.7%   0.0035 + 0.01   Yes
TU.SILVER   83.6 BTC   32.71 BTC   4.9%   9.5 + 9.7   Yes

EXECUTIVE SUMMARY
Investing in a Precious Metals fund has benefits over storing the metals yourself. However, not all precious metals funds were created equal. In this report we go over what you need to know to make an informed choice in the cryptocoin precious metals market.




Market Cap
1.   GOLD (187 BTC)
John Galt

2.   TU.SILVER (83.6 BTC)
TU Group

3.   BTC-GOLD & LTC-GOLD (21.33 BTC)
Carnth

4.   LTC-SILVER (10.8 BTC)
SaltySpitoon

Market Cap is an important way to judge the relative staying power of a precious metals fund.
Larger funds:
•   Pass savings to investors by placing bulk orders
•   Can afford to place the metal in secure storage cost-effectively
•   Are by their very nature run by more experienced fund managers
•   Keyword: Professionalism

GOLD and TU.SILVER
GOLD by John Galt Asset Management owns two ounces of gold. It is the largest and most notable precious metals fund in the bitcoin community. TU.SILVER has half the market cap of GOLD and is the largest silver fund by almost 400%. It has only been in operation for two weeks.

Smaller funds:
While smaller funds cannot compete with larger funds in terms of price, they can often provide a level of friendliness and customer service that the major players cannot. For example, since LTC-SILVER is so small, SaltySpitoon has much more time to chat with customers and make them feel at home. So, being small can be seen as an advantage by some.
 
7-day Volume
1.   TU.SILVER (32.71 BTC)
TU Group

2.   GOLD (2.13 BTC)
John Galt

3.   BTC-GOLD & LTC-GOLD (0.11 BTC)
Carnth

4.   LTC-SILVER (0.07 BTC)
SaltySpitoon

Consideration of the average volume in a stock is extremely important factor when choosing a precious metals fund. If your investment is illiquid, you may not be able to get in and out of your position at a fair price. And God forbid you need to sell to raise funds in an emergency. If you are not in a liquid fund, you will regret the day you were born.
Highly Liquid funds:
•   Are always cheaper to buy
•   You can sell your shares quickly for a higher price because there’s more interest in the fund.
•   By definition there is a high social bonus to owning a liquid stock because you can talk about it with other investors.

TU.SILVER and GOLD
TU.SILVER is by far the volume leader. At over fifteen times the liquidity of GOLD, entering and exiting TU.SLIVER is extremely easy and you are very much more likely to get your money’s worth. Management has stated that they will fortify the bid upon demand, so if the standing market order for over 100 shares at and above spot price is not enough for you, additional volume will be added for you at your request. GOLD is also a relatively liquid fund, compared to the remaining funds.
Illiquid funds:
Illiquid funds are dangerous to invest in because you may not be able to get a fair price when entering the fund and may not be able to get a fair price when entering the fund. Caution and patience must be exercised. The careful use of limit orders can prevent the great majority of mistakes with an illiquid fund – that is, if your orders ever execute. 




Spread
1.   TU.SILVER (0.9% to 4.9%)
TU Group

2.   GOLD (5% to 7.6%)
John Galt

3.   LTC-SILVER (16.7%)
SaltySpitoon

4.   BTC-GOLD (400%)
Carnth

The spread offered by a security is simply by what percetage is the ask higher than the bid. Spread is an important concern when determining how fairly an asset is priced. Securities with a low spread are fairly priced assuming an efficient market. On the other hand, investing in an issue with a high spread implies that at least one side (the buyer or the seller) is getting ripped off. Either one side is paying too much to buy, or one side is selling too cheaply.
Low Spreads mean:
•   You are getting your money’s worth whether you buy or sell.
•   The asset is fairly priced.
•   There is a high degree of interest in the issue.

TU.SILVER and GOLD
TU.SILVER is again the winner having a spread lower than GOLD’s while retaining a greater bid depth. This can be taken as hard evidence that investors in TU.SILVER can exit their position at a fair price any time they wish. Additionally, the tight spread implies investors are not paying any extra fees for their silver.
GOLD is also a winner here. GOLD’s contract states a spread of +/- 5%. The actual spread as seen here is around +/- 3.75%.  To put this in perspective, a “somewhat reasonable” spread in a coin shop could be considered +/- 6%. At 7% most experienced investors would walk out.
Approach funds with a high (10% or greater) spread with extreme caution. When approaching a fund with an unreasonable spread, always consider what would happen if you needed to sell, but couldn’t sell at a fair price. 



Depth
1.   GOLD (7.8 BTC + 16.8 BTC)
John Galt

2.   TU.SILVER (9.5 BTC + 9.7 BTC)
TU Group

3.   BTC-GOLD (2 BTC + 0.7 BTC)
Carnth

4.   LTC-SILVER (0.0035 BTC + 0.01 BTC)
SaltySpitoon


Depth is an important consideration when you are seriously considering going long a stock. It’s related to the spread. Consider the above information carefully. If you wanted to invest 10 BTC, where could you put it? Investing into BTC-GOLD or LTC-SLIVER would cause the price to skyrocket. To make a long story short, you can’t move into a low-depth issue at a fair price. The sell side story is the same. What is the depth of the bid? If you need to sell and want a fair price, can the market handle your order? If you try to sell more than one share against LTC-SILVER, the price will collapse by over 70% to 0.01 BTC. This is not what you want to see in an investment.
Depth implies:
•   The stock can handle your investment…
•   …at a fair price

GOLD and TU.SILVER
While TU.SILVER offers a greater depth of bid than GOLD, it is GOLD which wins first place here. Clearly, an investor of size will be looking to buy GOLD if he is in a hurry. Simply put, if you had 15 BTC to invest right now, and could only choose one fund, then only GOLD can accommodate your purchase at a fair price.
Both securities offer peace of mind to investors by maintaining a very high bid depth; this implies investors can exit their position at a fair price any time they want.

Finally, don't hesitate to contact Carnth about liquidity issues in BTC-GOLD. He has stated he is on standby to provide liquidity as required. Just send him a message letting him know you'd like to place an order and he will step in and fill it (for more information please see: https://bitcointalk.org/index.php?topic=110418.msg1458702#msg1458702). It's reasonable to assume SaltySpitoon will do the same. These are friendly people, don't hesitate to enjoy their fantastic customer service.



Proof of Ownership
1.   TU.SILVER (Photos, Receipts, Independent Auditing)
TU Group

2.   GOLD (Photos, Serial Numbers)
John Galt

3.   LTC-SILVER (Photos)
SaltySpitoon

3.   BTC-GOLD (Limited Photos)
Carnth

“Do you have any proof?” is a very fair and common question in today’s world of banks charging customers for storage of non-existent gold, paper contracts trading at 100 to 1 leverage, 90% (sterling and coin melt) being used to replace good delivery bars, and a flurry of recent reports regarding tungsten-filled bars.
An investor should never feel bad about asking for proof, and a proper fund manager must provide that proof on short or no notice. Failure to do this is a very serious red flag.
To their credit, all funds have taken the initiative by posting photos of their holdings online. However, only TU.SILVER’s receipts and serial numbers are regularly reviewed by an arm’s length (independent) auditor. TU.SILVER doesn’t just prove they have the metal, they prove they have the metal and that they haven’t dumped it since taking the pictures.

Proof of ownership implies:
•   Peace of mind.

GOLD: https://docs.google.com/open?id=0B23m7aRNI-JbT0xhcEZFWFdQZVE
GOLD: https://docs.google.com/file/d/0B23m7aRNI-JbcC1RRXZhaEFvLUE/edit
TU.SILVER: https://bitfunder.com/asset/TU.SILVER#pane_profile
(click “profile” then choose “images”)
BTC-GOLD: https://bitcointalk.org/index.php?topic=110418.msg1400254#msg1400254
LTC-SILVER: https://i.imgur.com/l6iOO.jpg
 


CONCLUSION
The clear winners here are TU.SILVER and GOLD. As these funds operate in different sectors (silver and gold respectively) it does not make sense to recommend one over the other. Investors will make that decision based on which metal they choose to invest in.

Secondly, don’t blindly throw money at the big two. Just because other funds do not score highly on this comparison does not mean they are bad investments. You just have to be careful and place limit orders when entering and exiting a position.

When investing in a small fund, send a comment to the fund operator and talk to him about the fund first. They will be happy to help you. Both Carnth and SaltySpitoon are very approachable. If you contact them with a concern about the spread or order depth they are very much more likely to be in a position to help you than a larger “Corporate Behemoth” fund like GOLD ;-)

In conclusion, there are many precious metals vehicles to choose from, but the safest and easiest is probably just buying the physical metal yourself. Gold and silver have alloidial title; it’s owned by whoever is holding it in their hand. Keep this in mind when investing in any silver fund; if they cannot secure the value of your silver as you yourself can by holding it in your hand, then perhaps the risk is greater than the reward. Please consult a registered investment advisor before investing.

[usagi]

Dear Cryptocoin Investor.

My goal with TU.SILVER is to change people's lives.

Since I started TU.SILVER on BitFunder approximately two weeks ago, I've almost completely sold out the 38oz. of silver I had ordered to start the fund. I was not at all prepared for the incredible demand TU.SILVER faced -- we currently have twenty-five times the liquidity of BTC-TC's GOLD fund. I am now faced with a decision. I need to order more silver. But what kind of silver, and how much? I'd like to get some opinions not just of shareholders but also of people who would like to remain critical of me and my business. My goal here is not to upset anyone by doing something someone sees as dishonest. So I am asking for opinions.

1. The question of "what kind?"
If I order more 1/2oz rounds, I have to pay a coin premium of more than $1.50 per 1/2oz coin. Shipping is also about 2x as much as with good delivery silver. But if I buy something like a dole bar, there may come a time I cannot honor redemptions in silver for "5 shares" unless I cut up the dole bar. And I would hate to do that. What should I do? One idea I had was similar to how "fractional reserve" operates. Most investors probably will not want to redeem for physical. So maybe keeping half the fund in 1/2oz rounds and half in dole bars or other forms of good delivery silver is a good idea? It also makes sense for vault storage. Since that is what we are aiming for it is much cheaper to store silver in bars vs. coin sheets. Opinions please. Should our next order be a dole bar, 10oz or 5oz bars, 1oz rounds, or stick with the 1/2oz?

2. The question of "how much"?
The second issue is how much silver to order. I can order another 20 ounces just with cash on hand from previous sales. Any more than that and I would need to raise capital by selling unbacked shares. But the more I order the cheaper the price is, and also the cheaper shipping becomes. If I buy a dole bar vs. 1/2 oz coins for example, I can lock down a price of around 1.8BTC/oz vs. 2BTC/oz. It would take the silver 1-2 weeks to get here.

Were I to pre-order shares like that I would like to see commitments on the new silver from any interested investor. You would be buying in at the absolute rock-bottom low price of around 1.8 BTC/OZ (compare to 2BTC/oz and up at online coin shops). If I could get some commitments and lock down a price like that then everybody wins.

In any other case I need to wait for another 30 days to buy more silver. And i'm worried that it will kill our IPO momentum during a once in a lifetime silver buying opportunity.

[usagi]

I am pleased to announce we've just purchased an additional 20 oz. of silver from Amagi metals! We support the community.

Due to the bitcoin price increase, I can already offer this silver to you for less than I paid for it! The current ask price on TU.SILVER is just 1.844 BTC/oz, and falling! This is creating a huge buying opportunity. I can't believe silver is so cheap now.

The new silver is in the form of twenty 2013 1oz Canadian Maples. They're very beautiful coins. Very thick. I've included a promo picture below and will be posting actual photos of the coins when they arrive. Please see the gallery under "Profile --> Images" on the TU.SILVER asset page for more great photos of our coins!

[usagi]

I am pleased to announce we've just purchased an additional 20 oz. of silver from Coinabul.com! We support the community.

Due to the bitcoin price increase, I can already offer this silver to you for less than I paid for it! The current ask price on TU.SILVER is just 1.415 BTC/oz, and falling! This is creating a huge buying opportunity. I am in shock at the current price. This is going to put in a bottom like we have never seen. I'm buying silver at these prices. Are you?

And the spread on TU.SILVER is in your favor! We buy back for just 1.414 BTC/oz. That's a spread of less than 0.1%. So you know we are committed to honest weights and measures. There's no 5% gouge-spread here! Just place a limit order at the bid or ask if you don't see the depth you want and we will do our very best to fill your order.

This new silver is in the form of twenty Sunshine Minting 1oz bars. These beautiful bars are produced by the legendary Sunshine Minting company, the very same as the manufacturer of the private Liberty Dollar coins.

I've included a promo picture below and will be posting actual photos of the bars when they arrive. Please see the gallery under "Profile --> Images" on the TU.SILVER asset page for more great photos of our bars and coins!

[usagi]

The fourth TU.SILVER market report has now been released.

There is some very interesting price action in the markets this morning and it would behoove anyone invested in Silver, Bitcoins, or TU.SILVER to read this report and check the facts for themselves. I truly believe this morning's price action is unique on the 60 day chart.

You can view it online at: http://kongzi.ca/silver/20130218TSR.pdf

Please share your questions and comments regarding this report. It's our best one yet!

[Deprived]

The fourth TU.SILVER market report has now been released.

There is some very interesting price action in the markets this morning and it would behoove anyone invested in Silver, Bitcoins, or TU.SILVER to read this report and check the facts for themselves. I truly believe this morning's price action is unique on the 60 day chart.

You can view it online at: http://kongzi.ca/silver/20120218TSR.pdf

Please share your questions and comments regarding this report. It's our best one yet!

Not Found

The requested URL /silver/20120218TSR.pdf was not found on this server.
Apache/2.2.22 (Ubuntu) Server at kongzi.ca Port 80

Incidentally if you bought your latest silver from Coinabul then surely, unless you're selling at a loss, your thread title is incorrect - as THEY must be cheaper than you

[usagi]

The fourth TU.SILVER market report has now been released.

There is some very interesting price action in the markets this morning and it would behoove anyone invested in Silver, Bitcoins, or TU.SILVER to read this report and check the facts for themselves. I truly believe this morning's price action is unique on the 60 day chart.

You can view it online at: http://kongzi.ca/silver/20130218TSR.pdf

Please share your questions and comments regarding this report. It's our best one yet!

Not Found

The requested URL /silver/20130218TSR.pdf was not found on this server.
Apache/2.2.22 (Ubuntu) Server at kongzi.ca Port 80

Incidentally if you bought your latest silver from Coinabul then surely, unless you're selling at a loss, your thread title is incorrect - as THEY must be cheaper than you

No, coinabul charges  ~2.56 BTC/oz for a 1/2oz round while we only charge ~1.6 BTC/oz at current prices. We buy our 1/2oz rounds from a different supplier. I can also buy industrial supply (cross section cuts off of dole bars for example) which is very cheap. I'm going to have a look at that for our next big purchase.

But you are correct in the assumption we are loss leading during the IPO phase. That window will begin to close when we release our first financial report in a couple of days. As soon as DeaDTerra gives me that financial report for review At that moment I am confident investors will be as happy about TU.SILVER as I am.

Anyway sorry about the report, the date got mangled. Try the link again? http://kongzi.ca/silver/20130218TSR.pdf
Thanks for the comments

[usagi]

Hello all! Quick announcement.

I'm waiting for DeaDTerra to put the finishing touches on our first financial report at which point I will pay dividends! First dividends are slated to be approx. 0.00192260 per share for February, paid this sunday, subject to his approval and/or release of the report to me.

Based on the prices people have bought in over the last week or two, I feel confident investors will be very happy with the report. I've therefore gone ahead and adjusted the ask price to what I've calculated the book value to be. Do you feel TU.SILVER should trade at a multiple of 1 to book value? Well then.

At any rate I stand by to answer any investor's questions. Good luck and happy investing.

[kakobrekla]

At any rate I stand by to answer any investor's questions. Good luck and happy investing.

My question is simple, exactly how much coins did you sell at what price and what were the silver holdings you got for it at that point. (3 numbers really, n BTC, n USD, n Silver)

[usagi]

At any rate I stand by to answer any investor's questions. Good luck and happy investing.

My question is simple, exactly how much coins did you sell at what price and what were the silver holdings you got for it at that point.

Good questions. We buy all silver before we sell it. So our silver holdings are always greater than what's needed to back outstanding shares. As for how much we've sold, there are 800 issued shares and you can tell that there are 524 outstanding shares from the information BitFunder publishes. However that is not a complete picture because we've also sold sliver to customers who have redeemed it for physical metal, and some customers have registered shares held off-market on their behalf by the company.

I tend to avoid discussing specific prices and amounts, because that's our advisor's job. Our current financial oversight advisor is DeaDTerra who is responsible for preparing our monthly financial reports. I can tell you that DeaDTerra has said he will have our financial report for February done any day now. At that time you will be able to see how many ounces we've sold and our book value and probably how it was calculated. I hope that information answers your questions!

[usagi]

I'm pleased to present the TU.SILVER February Financial Report, and to announce our first dividend of 0.00128 per share.

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

Our internal valuation of TU.SILVER: 0.1309 book value.

Dividend paid: 1.024 over 800 shares *(0.00128 per share or 0.98%).

Please see our report (linked above) for more information. Thanks and good luck.

P.S. to whoever just bought 9 shares at 0.1851, you beat my order cancel by about 5 seconds. Please PM me and we can arrange a partial refund so your purchase price is our listed 0.1309 per share.

[🏰 TradeFortress 🏰]

I sold 9 shares at 0.18505 - I really wonder who purchased that without looking at the spot price of silver

More profit for BTCINVEST through!

[usagi]

I sold 9 shares at 0.18505 - I really wonder who purchased that without looking at the spot price of silver

More profit for BTCINVEST through!

Wow, those trades happened 1 second apart, and about 2 or 3 seconds before I canceled the sale order and placed the new price (0.1309).

I guess I'll let the trades stand then. Too much trouble now to unwind it. For future reference, although we only publish financials once a month, I'm always available to answer questions here or via PM. Now that we have published our first audited financial report, I can discuss valuation in PM with any interested investor.

[usagi]

Hello. As part of our aggressive, multi-pronged expansion plan, I have initiated the following loan request on BTCJAM:

https://btcjam.com/listings/2172

TU.SILVER Business Development Loan

Amount @ Rate
    ฿50.00000 @ 1.0%
    MtGoxUSD
    105% Secured

Payment
    ฿17.00111
    every 5th of the month

User
    usagi

User Loan Activity
    0 Active, 1 Repaid

Expires
    2013-03-15 00:00
    (in 13 days)

Term
    90 days


Description

TU.SILVER business development loan.

TU.SILVER is the largest precious metals fund in the community, with more than 20 times the liquidity of all precious metals funds combined. TU.SILVER's volume is around 60oz per month.

I usually order 20oz. of silver at a time as coins. However, I can save more than 50% on shipping if I order 50oz. of silver at a time. Additionally we can get a bulk order discount of up to .50 cents per ounce of silver this way. This is very significant when you're trying to attract customers by beating your competitors in price as well as service.

Basically the plan is to buy silver in one form or another in bulk and then sell it for a profit. I suspect my volume would be even higher than 60oz. a month if I could move silver a bitcent lower than I do now.

Please see TU.SILVER's profile page here:
https://bitfunder.com/asset/TU.SILVER

Please see TU.SILVER's audited monthly financial reports here:
http://kongzi.ca/silver/20130224TSR.pdf

Note: This is a 100% secured loan. As it should be.
Note: Loan will be paid back ahead of schedule if we move the silver before then.

[Deprived]

Isn't taking a BTC-denominated loan to buy something (silver) valued in USD rather risky when BTC is rising fast?

You have to pay the loan back in BTC not USD - so if (this is an extreme example just to show the point) BTC were to double between you taking the loan and selling the silver then either:

a)  The funds raised from selling the silver would only pay half the loan back

or

b) You'd have to sell the silver at a 100% markup.

I'd be wary of gambling heavily on BTC not rising - given that you've twice so far made assertions BTC will fall and been totally wrong (the first time you were so convinced you made a new thread about how BTC was going to fall and silver rise - and of course both went in the opposite direction).  Why are you so confident you're right this time that BTC won't rise further?

Obviously if BTC falls then the loan works out very nicely.  But this makes the loan much more a bet on BTC falling than anything to do with silver - the fund could either make a nice profit or lose more than it has available in spare cash depending entirely on how BTC moves vs USD.

(I've ignored here changes in the price of silver - if it falls then it makes the situation worse, if it rises then it improves the situation).

I thought the fund was meant to gamble on selling silver options (was never clear WHERE you could sell covered calls that were covered by silver you personally held) not on the exchange-rate.

[usagi]

I'd be wary of gambling heavily on BTC not rising - given that you've twice so far made assertions BTC will fall and been totally wrong (the first time you were so convinced you made a new thread about how BTC was going to fall and silver rise - and of course both went in the opposite direction).  Why are you so confident you're right this time that BTC won't rise further?

I think the real problem here is you have misunderstood both what I said about BTC and the loan on BTCjam. I won't quote our recent, audited financial statements, but I will point out that the loan is tied to mtgoxUSD. You must have missed that

I thought the fund was meant to gamble on selling silver options (was never clear WHERE you could sell covered calls that were covered by silver you personally held) not on the exchange-rate.

Don't think too hard about it. Basically we're a "silver store". We sell silver. Beyond that, if you have any questions I'd be pleased to answer them.

[Deprived]

I'd be wary of gambling heavily on BTC not rising - given that you've twice so far made assertions BTC will fall and been totally wrong (the first time you were so convinced you made a new thread about how BTC was going to fall and silver rise - and of course both went in the opposite direction).  Why are you so confident you're right this time that BTC won't rise further?

I think the real problem here is you have misunderstood both what I said about BTC and the loan on BTCjam. I won't quote our recent, audited financial statements, but I will point out that the loan is tied to mtgoxUSD. You must have missed that

I thought the fund was meant to gamble on selling silver options (was never clear WHERE you could sell covered calls that were covered by silver you personally held) not on the exchange-rate.

Don't think too hard about it. Basically we're a "silver store". We sell silver. Beyond that, if you have any questions I'd be pleased to answer them.

Yeah - I totally missed that the repayment is based on USD.  That removes the exchange-rate risk from you (and dumps it on the lenders).

Do wonder how many lenders miss it as well - it's rather deceptive of BTCJam to list it as a BTC loan when it's actually a USD loan that's being transacted in BTC.  The amount requested and monthly payments should be listed in USD really (criticism is of the site, not you) as that's what's being lent and repaid.

So yeah - my criticism was unfounded.  Though I DO think it's just very slightly dodgy not to mention anywhere in your loan description that lenders are taking on significant exchange-rate risk.

[miTgiB]

I'd be wary of gambling heavily on BTC not rising - given that you've twice so far made assertions BTC will fall and been totally wrong (the first time you were so convinced you made a new thread about how BTC was going to fall and silver rise - and of course both went in the opposite direction).  Why are you so confident you're right this time that BTC won't rise further?

I think the real problem here is you have misunderstood both what I said about BTC and the loan on BTCjam. I won't quote our recent, audited financial statements, but I will point out that the loan is tied to mtgoxUSD. You must have missed that

I thought the fund was meant to gamble on selling silver options (was never clear WHERE you could sell covered calls that were covered by silver you personally held) not on the exchange-rate.

Don't think too hard about it. Basically we're a "silver store". We sell silver. Beyond that, if you have any questions I'd be pleased to answer them.

The loan is only displayed in dollars, it is not tied,  you borrow 50btc you repay 50btc + interest

[burnside]

I'd be wary of gambling heavily on BTC not rising - given that you've twice so far made assertions BTC will fall and been totally wrong (the first time you were so convinced you made a new thread about how BTC was going to fall and silver rise - and of course both went in the opposite direction).  Why are you so confident you're right this time that BTC won't rise further?

I think the real problem here is you have misunderstood both what I said about BTC and the loan on BTCjam. I won't quote our recent, audited financial statements, but I will point out that the loan is tied to mtgoxUSD. You must have missed that

I thought the fund was meant to gamble on selling silver options (was never clear WHERE you could sell covered calls that were covered by silver you personally held) not on the exchange-rate.

Don't think too hard about it. Basically we're a "silver store". We sell silver. Beyond that, if you have any questions I'd be pleased to answer them.

The loan is only displayed in dollars, it is not tied,  you borrow 50btc you repay 50btc + interest

Hover over the MtGOX USD icon:

This listing has its amount linked to the bitcoin exchange rate for MtGoxUSD. The payment size in bitcoin will fluctuate over time following the exchange rate for MtGoxUSD.

[miTgiB]

Hover over the MtGOX USD icon:

This listing has its amount linked to the bitcoin exchange rate for MtGoxUSD. The payment size in bitcoin will fluctuate over time following the exchange rate for MtGoxUSD.

Well it wasn't explain like that in https://bitcointalk.org/index.php?topic=145158.0 but I do see what you say when hovering over it.  I will just avoid that loan or any other linked loans.

[usagi]

Hover over the MtGOX USD icon:

This listing has its amount linked to the bitcoin exchange rate for MtGoxUSD. The payment size in bitcoin will fluctuate over time following the exchange rate for MtGoxUSD.

Well it wasn't explain like that in https://bitcointalk.org/index.php?topic=145158.0 but I do see what you say when hovering over it.  I will just avoid that loan or any other linked loans.

So if BTC holds or drops, would you have been right to avoid linked loans?

It's just a loan, not intended as a play on currency.

Second point, this is a 100% secured loan with a real payment plan attached to it and it is something which will increase the strength of bitcoin.

It is not a rep loan. It is not a loan to invest in other loans. It's a real loan with a real purpose. You will not find many of these denominated in pure BTC. Any large loan like this take out in BTC is almost certainly a scam, since the interest rate is meaningless due to the volatility in BTC. Essentially EVERY loan becomes a currency play if you think like this.

That's why I like silver. Regardless of how many pieces of paper it takes to buy one, it's always the same amount of silver.

[🏰 TradeFortress 🏰]

Any large loan like this take out in BTC is almost certainly a scam, since the interest rate is meaningless due to the volatility in BTC.

Well, except loans that are for activities directly involving btc - btcQuick, selling bitcoins (except a lot of them are suspicious), and of course a short on BTC.

[usagi]

Any large loan like this take out in BTC is almost certainly a scam, since the interest rate is meaningless due to the volatility in BTC.

Well, except loans that are for activities directly involving btc - btcQuick, selling bitcoins (except a lot of them are suspicious), and of course a short on BTC.

Right. My main worry is that if the loan is for investment, how will the person pay it back? I am very suspicious of direct investment loans. I've already seen one person take out a "rep loan" for the purpose of investing in other loans. When one person defaulted on him he couldn't make his payments and defaulted in-turn. That's essentially a scam because the person asking for money is taking a loan but pretending it's investment in a business. I wouldn't go so far as to say they have the full intent to default if their investment goes awry, but it's an unfortunate consequence that many will have to face soon. BTC has been going up recently and people who took out 30, 60 and 90 day rep loans will almost certainly not be able to pay them back.

The other issue is that people who take out BTC denominated loans for the purpose of investment invariably end up investing in something actually denominated in US dollars -- like a mining company, for example. There just aren't that many places you can invest in a pure BTC enterprise. I wonder what the market will be like once we hit the top. People will probably have to start issuing linked loans just to get funded :/

[Deprived]

Second point, this is a 100% secured loan with a real payment plan attached to it and it is something which will increase the strength of bitcoin.

Actually it's NOT a 100% secured loan (it's 100% backed right now - but not necessarily for the loan duration) - as the majority of the backing is BTC denominated (BTC-BOND).  If BTC falls vs USD then so does the value of BTC-BOND in USD and the security is no longer 100% covered.  To be genuinely 100% secured it would need to be backed by something that had a USD value not a BTC one.  The ESECURITY bonds, on the other hand, ARE valued in USD (though sold in BTC) so should retain the same level of backing regardless of any exchange-rate moves.

To be clear I have no doubt that you'll repay the loan - but your statement is, nonetheless, inaccurate.

[usagi]

Second point, this is a 100% secured loan with a real payment plan attached to it and it is something which will increase the strength of bitcoin.

Actually it's NOT a 100% secured loan (it's 100% backed right now - but not necessarily for the loan duration) - as the majority of the backing is BTC denominated (BTC-BOND).  If BTC falls vs USD then so does the value of BTC-BOND in USD and the security is no longer 100% covered.  To be genuinely 100% secured it would need to be backed by something that had a USD value not a BTC one.  The ESECURITY bonds, on the other hand, ARE valued in USD (though sold in BTC) so should retain the same level of backing regardless of any exchange-rate moves.

To be clear I have no doubt that you'll repay the loan - but your statement is, nonetheless, inaccurate.

Thanks for the vote of confidence.

Continuing on from your line of reasoning, there is no such thing as a secured loan because the value of the securities used to back a BTC loan can decline WRT the price of BTC.

Interesting.

Well for what it's worth I've been speculating a little on the mtgoxUSD price, you may enjoy this little gem I came up with recently: https://bitcointalk.org/index.php?topic=148358.0

I think we're in a speculative bubble. I may just redo the loan in BTC anyways. Could be to my advantage :>

[Deprived]

Second point, this is a 100% secured loan with a real payment plan attached to it and it is something which will increase the strength of bitcoin.

Actually it's NOT a 100% secured loan (it's 100% backed right now - but not necessarily for the loan duration) - as the majority of the backing is BTC denominated (BTC-BOND).  If BTC falls vs USD then so does the value of BTC-BOND in USD and the security is no longer 100% covered.  To be genuinely 100% secured it would need to be backed by something that had a USD value not a BTC one.  The ESECURITY bonds, on the other hand, ARE valued in USD (though sold in BTC) so should retain the same level of backing regardless of any exchange-rate moves.

To be clear I have no doubt that you'll repay the loan - but your statement is, nonetheless, inaccurate.

Thanks for the vote of confidence.

Continuing on from your line of reasoning, there is no such thing as a secured loan because the value of the securities used to back a BTC loan can decline WRT the price of BTC.

Interesting.

Well for what it's worth I've been speculating a little on the mtgoxUSD price, you may enjoy this little gem I came up with recently: https://bitcointalk.org/index.php?topic=148358.0

I think we're in a speculative bubble. I may just redo the loan in BTC anyways. Could be to my advantage :>

Well I'd not go so far as to say there's no such thing as a secured loan - but for something to be 100% secured then whatever's backing it needs to hold a value higher than the loan throughout the entire loan duration.  That rules out pretty much any BTC security.  It can have 100% backing at the start - but can't really guarantee keeping that level of backing given the rate of default around here.

Although BTCJam's claims of 100% backing are inaccurate it definitely IS a step in the right direction.

I actually tend to agree that we're in a speculative bubble - but I don't think we're at (or even particulary close to) the top yet.  Definitly a classic Meow though

[miTgiB]

Hover over the MtGOX USD icon:

This listing has its amount linked to the bitcoin exchange rate for MtGoxUSD. The payment size in bitcoin will fluctuate over time following the exchange rate for MtGoxUSD.

Well it wasn't explain like that in https://bitcointalk.org/index.php?topic=145158.0 but I do see what you say when hovering over it.  I will just avoid that loan or any other linked loans.

So if BTC holds or drops, would you have been right to avoid linked loans?

It's just a loan, not intended as a play on currency.

Second point, this is a 100% secured loan with a real payment plan attached to it and it is something which will increase the strength of bitcoin.

It is not a rep loan. It is not a loan to invest in other loans. It's a real loan with a real purpose. You will not find many of these denominated in pure BTC. Any large loan like this take out in BTC is almost certainly a scam, since the interest rate is meaningless due to the volatility in BTC. Essentially EVERY loan becomes a currency play if you think like this.

That's why I like silver. Regardless of how many pieces of paper it takes to buy one, it's always the same amount of silver.

I do not disagree with your intended purpose of the loan, and if it was not linked to the dollar, I would add funding to it.   But with it linked to the dollar, I benefit from a falling BTC/USD and you benefit from a rising BTC/USD.  Security aside, I'll lend dollars for dollars, but when I lend BTC I expect BTC in return, so personally. I'll avoid loans linked to the dollar, or any national fiat. 

[odolvlobo]

Isn't taking a BTC-denominated loan to buy something (silver) valued in USD rather risky when BTC is rising fast?

I want to point out this popular misconception.

The price of silver is denominated in dollars in the U.S., but it is denominated in euros in the Europe, and pounds sterling in the U.K. In other words, it is denominated in the local currency, not just dollars.

More importantly, it doesn't matter what currency is used to buy the silver, because it can easily be converted from bitcoins. In other words, the denomination of the price is irrelevant when the conversion is trivial (and free).

While agree it would be risky to borrow BTC to buy silver, it has nothing to do with the value of the dollar.

[Deprived]

Isn't taking a BTC-denominated loan to buy something (silver) valued in USD rather risky when BTC is rising fast?

I want to point out this popular misconception.

The price of silver is denominated in dollars in the U.S., but it is denominated in euros in the Europe, and pounds sterling in the U.K. In other words, it is denominated in the local currency, not just dollars.

More importantly, it doesn't matter what currency is used to buy the silver, because it can easily be converted from bitcoins. In other words, the denomination of the price is irrelevant when the conversion is trivial (and free).

While agree it would be risky to borrow BTC to buy silver, it has nothing to do with the value of the dollar.

The "value of the dollar" (whatever you mean by that) isn't the issue - it's changes in the BTC/Fiat (whichever fiat you like - I identified USD as that's what usagi's comments suggested was being used) exchange-rate that give the risk.  As it's highly likely changes in that exchange-rate will impact the BTC price/value of silver far more than any other factor.

Which of course, is all irrelevant, given that the loan is denominated in USD.

EDIT: It seems you're arguing that something can't be valued in USD if you can buy it with a different currency elsewhere.  That's ludicrous.  Usagi identified the savings to be made in USD - pretty clearly indicating that the silver being bought was priced in USD.

[usagi]

Isn't taking a BTC-denominated loan to buy something (silver) valued in USD rather risky when BTC is rising fast?

I want to point out this popular misconception.

The price of silver is denominated in dollars in the U.S., but it is denominated in euros in the Europe, and pounds sterling in the U.K. In other words, it is denominated in the local currency, not just dollars.

More importantly, it doesn't matter what currency is used to buy the silver, because it can easily be converted from bitcoins. In other words, the denomination of the price is irrelevant when the conversion is trivial (and free).

While agree it would be risky to borrow BTC to buy silver, it has nothing to do with the value of the dollar.

The "value of the dollar" (whatever you mean by that) isn't the issue - it's changes in the BTC/Fiat (whichever fiat you like - I identified USD as that's what usagi's comments suggested was being used) exchange-rate that give the risk.  As it's highly likely changes in that exchange-rate will impact the BTC price/value of silver far more than any other factor.

Which of course, is all irrelevant, given that the loan is denominated in USD.

EDIT: It seems you're arguing that something can't be valued in USD if you can buy it with a different currency elsewhere.  That's ludicrous.  Usagi identified the savings to be made in USD - pretty clearly indicating that the silver being bought was priced in USD.

Odolvlobo is a pretty smart cookie, and he has a point here, as does Deprived -- we do in fact seed our charts with the US dollar price of silver. So it is both true and not true. It is true so long as the US Dollar is the most liquid and stable currency in the world. When it is not true (someday) we will provide continuity by pricing silver in Euros or Yuan or some other currency. Actually one of my goals is to provide open market pricing in BTC, essentially backing BTC with silver. But that won't happen until we get another 100,000 ounces, right?

[odolvlobo]

Isn't taking a BTC-denominated loan to buy something (silver) valued in USD rather risky when BTC is rising fast?

I want to point out this popular misconception.

The price of silver is denominated in dollars in the U.S., but it is denominated in euros in the Europe, and pounds sterling in the U.K. In other words, it is denominated in the local currency, not just dollars.

More importantly, it doesn't matter what currency is used to buy the silver, because it can easily be converted from bitcoins. In other words, the denomination of the price is irrelevant when the conversion is trivial (and free).

While agree it would be risky to borrow BTC to buy silver, it has nothing to do with the value of the dollar.

The "value of the dollar" (whatever you mean by that) isn't the issue - it's changes in the BTC/Fiat (whichever fiat you like - I identified USD as that's what usagi's comments suggested was being used) exchange-rate that give the risk.  As it's highly likely changes in that exchange-rate will impact the BTC price/value of silver far more than any other factor.

Which of course, is all irrelevant, given that the loan is denominated in USD.

EDIT: It seems you're arguing that something can't be valued in USD if you can buy it with a different currency elsewhere.  That's ludicrous.  Usagi identified the savings to be made in USD - pretty clearly indicating that the silver being bought was priced in USD.

I'm saying that you can value something in any currency, regardless of the denomination of the price. If usagi were borrowing BTC (which turns out to be not the case) to buy silver priced in dollars, the important relationship is the price of silver in BTC. Dollars are irrelevant, except that they were used temporarily for the trade.

Think about someone with euros buying silver priced in dollars. They don't need to follow the value of silver in dollars. They just follow the price in euros. The issue of EUR/USD fluctuations is a completely separate story.

It appears that you are saying that (for example) if the silver had a price in euros instead of dollars, then it's subsequent value in BTC would be affected by BTC/EUR instead of BTC/USD. That is the misconception that I am referring to. The fact is that you end up with the same answer no matter which one you use (ignoring discrepancies in exchange rates).

EDIT: The fact that there is very little trade denominated in BTC means that we have to convert to established currencies as an extra step in order to obtain the most accurate information in practice, but in theory it is not necessary.

[usagi]

I'm saying that you can value something in any currency, regardless of the denomination of the price. If usagi were borrowing BTC (which turns out to be not the case) to buy silver priced in dollars, the important relationship is the price of silver in BTC. Dollars are irrelevant, except that they were used temporarily for the trade.

Yes, as I said, that is true -- however Deprived is actually more correct here because we fix the price of silver in BTC by looking at the price of silver in dollars. I mean, I know you're talking about "silver", and I and he are talking about "TU.SILVER", so I don't disagree. Just commenting on how we do things.

It appears that you are saying that (for example) if the silver had a price in euros instead of dollars, then it's subsequent value in BTC would be affected by BTC/EUR instead of BTC/USD. That is the misconception that I am referring to. I try to illustrate the misconception by pointing out that the price can be in any currency simply by converting.

It would be both a misconception and a truth. The markets are not perfectly efficient. So if most of our customers are using euros, that would be a better way to sell silver. Not just more efficient but more in line with public perception. The goal here is to move silver, odolvlobo, so we have to sell to our customers. Dollars, euros, BTC, is all just a red herring. If you traded in colored beads I would quote you a price in colored beads and find an exchange which allowed me to trade in colored beads.

What you are really looking at there is my supply chain. If I source silver in US dollars, I cut a price in US dollars to ensure I make a profit such that I can buy more silver with what I make. If I buy it in Euros, same. The real risk to me and my customers actually has nothing to do with currency of any kind including BTC, because silver is money. Once my customers get their hands on shares of TU.SILVER the price in BTC or fiat of any kind is irrelevant.

They have a guaranteed amount of silver.

That is what TU.SILVER is all about.

[usagi]

I am pleased to announce the March week 1 TU.SILVER report.

http://kongzi.ca/silver/TSR/20130303TSR.pdf

Comments are welcome, I stand by to answer any shareholder's questions about the company.

[usagi]

I am pleased to announce our Amagi Metals order has arrived. We now have twenty 2013 Canadian Maples IN STOCK!

Wow, are they ever good looking coins! They look good!



Please see our profile page on BitFunder for more images of the maples and our other silver inventory.

Oh, and don't forget to redeem your shares for your maples -- first come first served!

[usagi]

I am pleased to present this week's Tu.SILVER report.

http://kongzi.ca/silver/TSR/20130310TSR.pdf

Relevant quote:

During the preparation of February’s report, our financial advisor commented on how difficult our books were to understand. I responded by selling all our investments and moving entirely into JAH on BitFunder. This was at a price for JAH between 6.5 and 9 bitcents. Right after I did this, ASICMINER started paying dividends and JAH exploded to over 30 bitcents a share. I could not believe our luck!

As a result of this, TU.SILVER has about 30 bitcoins available to be invested somewhere. Thus I put it to you, the investors. What should TU.SILVER do with the money we've earned? We could advertise. Maybe we should invest in something (ASICMINER?) or maybe we should pay a special dividend. I'm not sure at this point. Sales have dried up due to the extreme volatility in the price of BTC. So perhaps we should throw it in something stable and tied to BTC like BTC-BOND or LTC-ATF.B1?

Please share your ideas on what TU.SILVER can do with the money. Should we buy S.DICE? What would you do if you had an extra 30 bitcoins?

[burnside]

I am pleased to present this week's Tu.SILVER report.

http://kongzi.ca/silver/TSR/20130310TSR.pdf

Relevant quote:

During the preparation of February’s report, our financial advisor commented on how difficult our books were to understand. I responded by selling all our investments and moving entirely into JAH on BitFunder. This was at a price for JAH between 6.5 and 9 bitcents. Right after I did this, ASICMINER started paying dividends and JAH exploded to over 30 bitcents a share. I could not believe our luck!

As a result of this, TU.SILVER has about 30 bitcoins available to be invested somewhere. Thus I put it to you, the investors. What should TU.SILVER do with the money we've earned? We could advertise. Maybe we should invest in something (ASICMINER?) or maybe we should pay a special dividend. I'm not sure at this point. Sales have dried up due to the extreme volatility in the price of BTC. So perhaps we should throw it in something stable and tied to BTC like BTC-BOND or LTC-ATF.B1?

Please share your ideas on what TU.SILVER can do with the money. Should we buy S.DICE? What would you do if you had an extra 30 bitcoins?

Buy more silver?   

[usagi]

I am pleased to present this week's Tu.SILVER report.

http://kongzi.ca/silver/TSR/20130310TSR.pdf

Relevant quote:

During the preparation of February’s report, our financial advisor commented on how difficult our books were to understand. I responded by selling all our investments and moving entirely into JAH on BitFunder. This was at a price for JAH between 6.5 and 9 bitcents. Right after I did this, ASICMINER started paying dividends and JAH exploded to over 30 bitcents a share. I could not believe our luck!

As a result of this, TU.SILVER has about 30 bitcoins available to be invested somewhere. Thus I put it to you, the investors. What should TU.SILVER do with the money we've earned? We could advertise. Maybe we should invest in something (ASICMINER?) or maybe we should pay a special dividend. I'm not sure at this point. Sales have dried up due to the extreme volatility in the price of BTC. So perhaps we should throw it in something stable and tied to BTC like BTC-BOND or LTC-ATF.B1?

Please share your ideas on what TU.SILVER can do with the money. Should we buy S.DICE? What would you do if you had an extra 30 bitcoins?

Buy more silver?   

The danger in buying more silver is that sales have dried up right now, probably due to the extreme volatility in the BTC price. So it would be tying up the money without meaningfully expanding the fund. I'm not sure that's the wisest thing to do right now.

I'm thinking, if I want to attract investors to the fund in a down market I am going to want to provide sustainability and dividend. Or I could provide added security. I could make the move to the vault now, or I could advertise. I'm leaning towards advertising right now but will make a final decision later. I'm basically looking for input. I'm pretty close to just dumping it in LTC-GLOBAL  or maybe, BTC-BOND, ATF.B1, etc.

[Monster Tent]

 Given your shitty investment history you probably should be avoiding securities. It cant hurt to simply hold BTC till you actually need it since you might be able to buy a lot more silver if the price shoots up much more.

[usagi]

Given your shitty investment history you probably should be avoiding securities. It cant hurt to simply hold BTC till you actually need it since you might be able to buy a lot more silver if the price shoots up much more.

Not sure what you are talking about but yes, throwing the money in the cash kitty is one of the ideas I was discussing with our financial advisor. i was looking for something a little more "active" though. Do you have any idea what a good investment might be?

[usagi]

I'm thinking of running a poll.

1. Reinvest the money into the business (essentially, advertise)

2. Search for acquisitions (i.e. takeover a copmany like LTC-SILVER)

3. Buy stock back (ongoing -- we just bought back 23 shares)

4. Invest in some other venture (i.e. ASICMINER, BTC-BOND, to be discussed)

5. Pay out a larger dividend

Thoughts welcome.

[Monster Tent]

Given your shitty investment history you probably should be avoiding securities. It cant hurt to simply hold BTC till you actually need it since you might be able to buy a lot more silver if the price shoots up much more.

Not sure what you are talking about but yes, throwing the money in the cash kitty is one of the ideas I was discussing with our financial advisor. i was looking for something a little more "active" though. Do you have any idea what a good investment might be?

The best option is investing in your own company. For instance buying back cheap shares. Or a bulk silver buy.

[odolvlobo]

I'm thinking of running a poll.

1. Reinvest the money into the business (essentially, advertise)
2. Search for acquisitions (i.e. takeover a copmany like LTC-SILVER)
3. Buy stock back (ongoing -- we just bought back 23 shares)
4. Invest in some other venture (i.e. ASICMINER, BTC-BOND, to be discussed)
5. Pay out a larger dividend
Thoughts welcome.

It seems straightforward to me.  If the money belongs to shareholders, the best thing to do is pay a dividend and let the shareholders that want to invest it do so. There is no good reason to withhold money from shareholders or to invest it for them.  If the money is yours, then do as you please. If it is not clear who the money belongs to, then you have a big problem.

[usagi]

It seems straightforward to me.  If the money belongs to shareholders, the best thing to do is pay a dividend and let the shareholders that want to invest it do so. There is no good reason to withhold money from shareholders or to invest it for them.  If the money is yours, then do as you please. If it is not clear who the money belongs to, then you have a big problem.

If you haven't read the contract you probably think this should operate as a mining bond. That's not quite correct. Keeping it simple, management of the company (like other companies in the real world) will periodically decide how much to pay out to investors in the fund, how much to pay management (themselves), and how much to keep for the company. In this case, company money is separate from the investment position. This is represented by funds held in the TU.SILVER Kitty at [1Kitty8g4AMrU8QaLCntESmrvJNmz1QUGk]. This money will be used by the company to pay for secure storage fees and probably other expenses such as shipping once it gets large enough. Go ahead, click on the link. The money is all there. The other money (on bitfuinder, or other places, as marked in our books) is used to execute on our trading strategy and generate positive cashflow. Right now we have a lot more money than I thought we would make because of JAH. We're in the black now, and stand to leverage the price of silver should it rise.

But in a more general sense, running a motion has absolutely nothing to do with the situation being straightforward or not. Asking investors which way the fund should go means that any large financial interest which wants to buy in can be assured their financial interest will be represented. If it is not, they are free to advise me or direct the fund themselves. I can even be replaced. I'm one of the only companies around who makes that blatant. You try doing that with any other fund, no names no names, and you will see how fast your vote gets shot down one way or another. I don't even own any units of TU.SILVER. My fee is simple; 1/3rd of trading profits. The investors are even free to raise a motion to vote me out of my 1/3rd and pay it out to as a distribution if that's what they want to do. I'm sure they will if they feel I am mismanaging the company, so I am certain the investors like me and agree with how I am running the fund.

[fourd00rgtz]

I think the fund should keep x% for future investments, but pay out a significant portion right now as dividends. Soften the blow for those of us who bought in before the explosion in the btc price and who hold shares worth significantly less because btc/silver has gone in the opposite way we desire.

Take some money off the table (trading table) and cash in some profits (for the shareholders)

[odolvlobo]

I have read the contract. It states very clearly,

Each outstanding share in SILVER represents 1/10th (0.1oz) of 0.999 grade (or better) physical silver.

There is no mention of who gets the income from your trading activity. Shareholders do not own the company --they own the silver. As far as I can tell, the money that you make from trades backed by the fund's silver is supposed to go to you (after paying fund expenses).

I think the fund should keep x% for future investments

Since a share represents a fixed amount of silver, keeping x% for future investments doesn't benefit shareholders because shareholders gain nothing from the additional investments.

[Deprived]

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?

[usagi]

I have read the contract. It states very clearly,

Each outstanding share in SILVER represents 1/10th (0.1oz) of 0.999 grade (or better) physical silver.

There is no mention of who gets the income from your trading activity. Shareholders do not own the company --they own the silver. As far as I can tell, the money that you make from trades backed by the fund's silver is supposed to go to you (after paying fund expenses).

Thank you for allowing me this opportunity to correct your misunderstanding. I quote the contract:

"3. SILVER will sell covered call options and invest the cash position to generate revenue and pay for secure storage fees."
(https://btct.co/security/SILVER)

The contract clearly states that the income will be used to a) generate revenue and b) pay for the expenses of the fund. As with most companies, there is no set amount to be paid as distributions. That is one of the reasons why I am asking for shareholder's opinion. I don't need to state anything about it in the contract. The rest of the description clearly states what our objectives are in this regard. I'll quickly touch on those points as you are unfamiliar with them.

The "Executive Summary" section exists to explain "what you do and why". In "Executive Summary" under "Returns" we state:
"While most metals funds guarantee a long term loss due to storage fees and management fees, TU.SILVER expects a positive return due to our trading strategy. We expect to generate distributions of 3 to 6% per year." (https://btct.co/security/SILVER)
This satisfies what we do (our trading strategy) and why (to be the only fund with a positive EROI).

The "Business Description" section exists to inform investors with regards to our "Mission statement (business purpose), Company vision (statement about company growth), Business goals and objectives." among other things. In "Business Description" we clearly state:

"a) We sell covered calls to generate income for unit-holders.
b) We keep approximately 1/3rd of net profit for company operations, 1/3rd towards management fees, and 1/3rd for distributions.
c) Dividends will be issued at least monthly, along with a financial report prepared by an independent auditor." (https://btct.co/security/SILVER)

Finally, the "Financial Management" section exists so that investors can know, among other things, "Projected balance sheet (1 year forward), Projected income statement (1 year forward), Projected cash flow statement (12 months forward)."

In this section I clearly explain that our goal is to "...retain 1/3rd of net profit into the company's cash position, take 1/3rd as management fee, and pay 1/3rd as distribution to shareholders." (https://btct.co/security/SILVER)

The contract is clear. The Executive Summary is clear. The Business Description is clear, and the Financial Management section is clear. Therefore, your "as far as I can tell" strikes me as contentious. I'm sorry you don't agree with how I run my company, I really am. But it is not (and cannot) be the job of an LTC-GLOBAL moderator to decide whether or not it is "too risky" to run a company like this. That is the investor's decision. The fact is, I've clearly stated my business plan, I am executing on that business plan, and I am making money for the people who are invested in Tu.SILVER.

Since a share represents a fixed amount of silver, keeping x% for future investments doesn't benefit shareholders because shareholders gain nothing from the additional investments.

I hope your concern that investors won't benefit from reinvested income has now been alleviated! If you have any further questions please don't hesitate to ask.

[usagi]

...the second the fund has some idle funds you want to try to find ANY alternative to silver to keep them in!

I'm not sure you actually understand what is going on here, so I'll post two quotes which should clear up your confusion.

But in a more general sense, running a motion has absolutely nothing to do with the situation being straightforward or not. Asking investors which way the fund should go means that any large financial interest which wants to buy in can be assured their financial interest will be represented. If it is not, they are free to advise me or direct the fund themselves. I can even be replaced. I'm one of the only companies around who makes that blatant. You try doing that with any other fund, no names no names, and you will see how fast your vote gets shot down one way or another. I don't even own any units of TU.SILVER. My fee is simple; 1/3rd of trading profits. The investors are even free to raise a motion to vote me out of my 1/3rd and pay it out to as a distribution if that's what they want to do. I'm sure they will if they feel I am mismanaging the company, so I am certain the investors like me and agree with how I am running the fund.

A great example of proper management representing investor's financial best interest is Berkshire-Hathaway, which started as an insurance company. What's an insurance company doing buying a media company? A soft-drink company? An underwear company? It's doing it's job.

The danger in buying more silver is that sales have dried up right now, probably due to the extreme volatility in the BTC price. So it would be tying up the money without meaningfully expanding the fund. I'm not sure that's the wisest thing to do right now.

I'm thinking, if I want to attract investors to the fund in a down market I am going to want to provide sustainability and dividend.

The point of not investing into silver while we have unsold stock is to provide the ability to continually purchase silver even if we can't sell it, not blow our load and then get stuck with an inventory no-one wants. As a fellow fund manager yourself I am surprised at your lack of vision regarding the money entrusted to us by our investors. Imagine what would have happened to investors of AT&T during the great depression if all they did was buy telephones and stock them, hoping to sell them? Or if all Coca-Cola did was buy glass bottles and keep them around waiting to be filled? These great American companies stood the test of time and proved themselves to be such great investments because their management increased the sustainability of their dividend.

If you want an example of what I am talking about please see the link "List of assets owned by Disney". Here we learn Disney owns what amounts to a cellphone company, a bank, several cruise boats, and a string of apartment buildings. Disney has been known to create independent film studios to do non-"Disney" films as well, because that's where the money is. For example "Kids". Great movie. Disney movie.

In 1992, Warren Buffet said, "Leaving question of price aside, the best business to own is one that over an extended period can employ large amounts of capital at very high rates of return. The worst company to own is one that must, or will, do the opposite – that is, consistently employ ever-greater amounts of capital at very low rates of return." Well, i'm sorry if you disagree with my management style, Deprived, but I've made my decision. I'm throwing in with Warren Buffet. You're free to run your own fund on litecoinglobal.com however you wish. Good luck!

[Deprived]

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.

[usagi]

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

No, I defined the whole purpose of the silver fund in it's contract. I know exactly what it is

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

Ahh, I see what you're saying now;

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.

This is probably the root of your misunderstanding. It is quite clearly explained in our 'prospectus' (for lack of a better word) that we actually sell silver at above market price. We justify this on three grounds. One, we guarantee that you will never lose the value of the silver backing the share. In contract other funds guarantee that the amount of silver backing each share will decline to zero over time. Two, we guarantee the safety of your silver in a vault. No other fund has their silver insured in a professional vault like VIA MAT or G4S. Third, we guarantee the fastest shipping times possible by actually stocking the silver. No other coin shop in the community actually has a stock; they all drop ship. We don't do that. There is a price to be paid for this, and that price is worked into the price people buy shares at. Obviously, quite a number of people agree that it is a fair price despite your analysis.

Essentially, investors are paying a small and reasonable premium for storage fees. This is perfectly acceptable. So while I understand your contention based on the idea we're trying to be competitive on price alone, that isn't true at all. We are competitive where it counts -- on actually having your silver on-hand. The recent horror stories with "that other coin shop" not having the gold on hand then losing it/etc. or not delivering coins for 6 months can never happen with us. We also offer geographic diversity for Americans and Europeans. These are all valuable qualities our investors are clearly willing to pay for.

This confusion extends to this idea of what to do with funds.  If the funds are for operating expenses then you 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.

Nope this is just wrong, as mentioned our operating expenses for things like our financial advisor or vault storage are being held in a special address separate from the investment position or other operating.

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

Thanks for the advice but like I said, you can go manage your fund however you want. I've written my contract to combine the revenue/profit from the ownership of the silver, and my investors are there because of it. You're welcome to open a competing fund if you want. All I can say is that in our first month of operation we became the largest precious metals fund in the community, and as of last report we have more than twenty times the volume of all other precious metals funds in the community combined. People like what I am doing or they wouldn't invest.

[odolvlobo]

As a moderator, I do not evaluate a security based on its risk as long as the risk is clearly disclosed. I also do not evaluate the business plan as long as it is clearly defined and is rational and workable.

I think the latter is the problem. For example, who owns the proceeds from your trading activity? That is ambiguous. If you used the proceeds to buy assets, who would own the assets? The contract is ambiguous, at best.

[usagi]

As a moderator, I do not evaluate a security based on its risk as long as the risk is clearly disclosed. I also do not evaluate the business plan as long as it is clearly defined and is rational and workable.

I think the latter is the problem. For example, who owns the proceeds from your trading activity? That is ambiguous. If you used the proceeds to buy assets, who would own the assets? The contract is ambiguous, at best.

I took this to Private Message, because it made me really upset. To make a long story short, I think odolvlobo and I will be on good terms going forward. Once again to make it clear, we're a company operating a silver fund on BitFunder. Investors are assured two things: 1. Each share is guaranteed to represent 1/10th of an ounce of physical silver, redeemable on demand; and 2. we are the only silver fund which expects a positive EROI. Every other precious metals fund in the community will see your long term investment value go to zero. I guarantee it.

That is the point of TU.SILVER and I'm happy to have shared this with you all today.

[usagi]

Getting back to business, I'm pleased to present the TU.SILVER report for March 16th, 2013.

"The Rally is Over, Part 1: Turning the Corner" (click to view or download).


This week we're also experimenting with a forum edition at https://bitcointalk.org/index.php?topic=153621.msg1630353#msg1630353.

Happy stacking!

[usagi]

Hello!

I am pleased to announce we may now begin options trading against the unsold quantity of silver we stock, thanks to Ukyo and his latest development on BitFunder: options trading.

Our options trading strategy, which allows us to ensure 100% backing per share, at zero risk to investors, will be fully explained in the next Tu.SILVER report (to be released March 23rd or 24th, 2013).

A very BIG thank you to Ukyo, and to all my investors. Thanks!

[poly]

Getting back to business, I'm pleased to present the TU.SILVER report for March 16th, 2013.

"The Rally is Over, Part 1: Turning the Corner" (click to view or download).


This week we're also experimenting with a forum edition at https://bitcointalk.org/index.php?topic=153621.msg1630353#msg1630353.

Happy stacking!

Hmm? Isn't this the second report where your first one caused anyone who followed it to lose money?

[usagi]

Hmm? Isn't this the second report where your first one caused anyone who followed it to lose money?

"A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves.
But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period?
Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the “hamburgers” they will soon be buying.
This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.”
-Warren Buffet in the Berkshire Hathaway Chairman’s Letter 1997

The point of TU.SILVER in particular is that we deal in silver. Once our investors buy the silver, they do not care about the future price of silver; only that they have a certain guaranteed quantity. Kind of like hamburgers.

Yes, you are absolutely right that the price of TU.SILVER has declined! This is a good thing. If TU.SILVER did not decrease in price given the recent Silver/BTC exchange rate, it would imply there was a disconnect between TU.SILVER and the price of silver. We merely performed as expected, and the decline in price now makes us look more attractive in the eyes of silver investors. It really is like Warren Buffet's hamburger analogy. "To refer to a personal taste of mine, I'm going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the 'Hallelujah Chorus' in the Buffett household. When hamburgers go up in price, we weep. For most people, it's the same with everything in life they will be buying -- except stocks. When stocks go down and you can get more for your money, people don't like them anymore."

Anyway, I appreciate your comments. We do have an investment position and I'd be interested in your thoughts on what we could invest in. Obviously I don't want to lose any money and if you have any advice on where we could invest I'd be grateful. Oddly enough the comments so far seem to be that we should invest in silver. I tend to agree. Further, doing so now falls in line with our options trading strategy on BitFunder. Thanks again for your comments Poly. Chat soon~

[usagi]

A peer voted NO on your security: SILVER

Their public comments:

Claims to be a silver fund but is apparently trading securities (e.g. JAH)
without any mandate to do so.

Just a quick response to whoever voted this; The BTC-TC contract specifically states:

3. SILVER will sell covered call options and invest the cash position to generate revenue and pay for secure storage fees.

I'm thinking your 'NO' vote was probably a mistake, but there's no other way to respond to it than write a comment here. Hope you see this!

I'll also point out quickly that we've hired a financial advisor. We are the only listing in the community which has hired a third party to check our books.

Good luck and thanks for being careful with your vote. It's no good when moderators vote YES without thinking, and poor quality assets run by untrustworthy people slip in un-noticed. There's a few like this already (no names no names). With that in mind, some advice. Before you decide to vote YES or NO, take some actual time and contact the asset issuer. And ask some questions. In my case specifically I have requested that people contact me to resolve any outstanding issues they may have, because there are a handful of malicious voters who are voting NO out of spite. Contacting the asset issuer and resolving concerns is a great way to exercise your financial interest as a shareholder of LTC-GLOBAL and make sure it becomes a strong and financially healthy company. I'm a shareholder too!

Together let's avoid a mistakes such as yours and finally give the asset moderation process the reputation for success that it deserves.

[MPOE-PR]

A peer voted NO on your security: SILVER

Their public comments:

Claims to be a silver fund but is apparently trading securities (e.g. JAH)
without any mandate to do so.

Just a quick response to whoever voted this; The BTC-TC contract specifically states:

3. SILVER will sell covered call options and invest the cash position to generate revenue and pay for secure storage fees.

I'm thinking your 'NO' vote was probably a mistake, but there's no other way to respond to it than write a comment here. Hope you see this!

I'll also point out quickly that we've hired a financial advisor. We are the only listing in the community which has hired a third party to check our books.

Good luck and thanks for being careful with your vote. It's no good when moderators vote YES without thinking, and poor quality assets run by untrustworthy people slip in un-noticed. There's a few like this already (no names no names). With that in mind, some advice. Before you decide to vote YES or NO, take some actual time and contact the asset issuer. And ask some questions. In my case specifically I have requested that people contact me to resolve any outstanding issues they may have, because there are a handful of malicious voters who are voting NO out of spite. Contacting the asset issuer and resolving concerns is a great way to exercise your financial interest as a shareholder of LTC-GLOBAL and make sure it becomes a strong and financially healthy company. I'm a shareholder too!

Together let's avoid a mistakes such as yours and finally give the asset moderation process the reputation for success that it deserves.

Has to be quoted for posteriority.

[Deprived]

Hello!

I am pleased to announce we may now begin options trading against the unsold quantity of silver we stock, thanks to Ukyo and his latest development on BitFunder: options trading.

Our options trading strategy, which allows us to ensure 100% backing per share, at zero risk to investors, will be fully explained in the next Tu.SILVER report (to be released March 23rd or 24th, 2013).

A very BIG thank you to Ukyo, and to all my investors. Thanks!

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).

[MPOE-PR]

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.

This sort of ambiguity has by now emerged as a signature of a certain sort of "business model", let's call it the GLBSE business model. Aptly displayed by people like SensoDyne in the early versions, it's pretty much been universally deployed by the shady since then.

Anyway, usagi's usual preoccupation is a sort of quest against his own limitations: he keeps trying to make things more and more complex until it exceeds his ability to represent what the fuck is going on (and granted that ability is about on par with the average junior high student). I suppose his intention is to make things too complex for other people to follow, but then trolls such as Deprived keep depriving him of the benefits of his entirely imagined intellectual superiority.

A sad story throughout.

[usagi]

Who owns that unsold silver?  The current investors?

The company owns it. Essentially, since I am liable for it, I own it.

I still don't think you grasp the point I was making earlier.

The problem with your 'point' is that it rests on a series of very big "ifs". You keep saying "if". You said "if" ten times when hypothesizing how my business operates. So on a very basic level you don't understand how we operate, and that is why basic questions like "who owns the silver" appear unclear to you. Maybe you should be approaching this a different way. You should ask questions. In this case, I've answered your question above (I own the silver) so there's no need to go into detail on the great number of "ifs" which follow.

Anyway, let me know if you have any questions I can answer. Your points are interesting in and of themselves and I'm sure once you get on track with how we operate you will understand it. Until then, rest assured that everything is okay here.

Oh, by the way, I think there's a clause in the BitFunder contract that states any customer can get access to our books for a fee of one unit of the fund. Let me know if you're interested in that offer. Chat soon!

[Deprived]

Who owns that unsold silver?  The current investors?

The company owns it. Essentially, since I am liable for it, I own it.

I still don't think you grasp the point I was making earlier.

The problem with your 'point' is that it rests on a series of very big "ifs". You keep saying "if". You said "if" ten times when hypothesizing how my business operates. So on a very basic level you don't understand how we operate, and that is why basic questions like "who owns the silver" appear unclear to you. Maybe you should be approaching this a different way. You should ask questions. In this case, I've answered your question above (I own the silver) so there's no need to go into detail on the great number of "ifs" which follow.

Anyway, let me know if you have any questions I can answer. Your points are interesting in and of themselves and I'm sure once you get on track with how we operate you will understand it. Until then, rest assured that everything is okay here.

Oh, by the way, I think there's a clause in the BitFunder contract that states any customer can get access to our books for a fee of one unit of the fund. Let me know if you're interested in that offer. Chat soon!

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.

I'm pleased to present the TU.SILVER February Financial Report, and to announce our first dividend of 0.00128 per share.

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

Our internal valuation of TU.SILVER: 0.1309 book value.

Dividend paid: 1.024 over 800 shares *(0.00128 per share or 0.98%).

Please see our report (linked above) for more information. Thanks and good luck.

P.S. to whoever just bought 9 shares at 0.1851, you beat my order cancel by about 5 seconds. Please PM me and we can arrange a partial refund so your purchase price is our listed 0.1309 per share.

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.

[usagi]

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.

It is entirely a misinterpretation by you. "According to my report", A is the total quantity of silver in the fund (80oz), not the unsold silver. This is in fact proof that each share represents 1/10th of an oz. of silver and has nothing to do with sold or unsold shares.

I am a little busy working on kongzi right now. I'll do my best to answer anything reasonable, but I've already answered this line of questioning and you need to move on from it now.

[Deprived]

It is entirely a misinterpretation by you. "According to my report", A is the total quantity of silver in the fund (80oz), not the unsold silver. This is in fact proof that each share represents 1/10th of an oz. of silver and has nothing to do with sold or unsold shares.

I am a little busy working on kongzi right now. I'll do my best to answer anything reasonable, but I've already answered this line of questioning and you need to move on from it now.

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?).

[usagi]

You apparently can't even read your own report.
"A. Silver Backing: 80oz

Well according to your report A is the unsold silver.

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?

Yeah, in C. So?

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.

You are a very confused individual.

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?).

This is getting embarrassing Deprived... Tell you what, I agree with you, you're right. I'm going to bow out of this one now

[Deprived]

You apparently can't even read your own report.
"A. Silver Backing: 80oz

Well according to your report A is the unsold silver.

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?

Yeah, in C. So?

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).

[Deprived]

The point of not investing into silver while we have unsold stock is to provide the ability to continually purchase silver even if we can't sell it, not blow our load and then get stuck with an inventory no-one wants.

AS I'm handing out free advice, here's another bit.

The reason you can't sell stock COULD just possibly be this:

Asks
Quantity    Price    
50    ฿0.14010

Now I know some silver bugs have various problems but I'm sure most of them have a decent idea of what the spot price of silver is and can use a calculator.  And that's OVER DOUBLE it even at yesterday's BTC price of $45 - let alone the current much higher rate.

Now either:

A.  That IS your ASK - in which case you may want to get within 50% of the price everyone else charges for silver: you may claim to have good prices but 50% over what even expensive competitors charge is NOT competitive.

OR

B.  That's NOT your ASK - in which case of course you won't sell it if you don't put up any Asks.

[usagi]

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?

Yeah, in C. So?

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.

What, you think DeaDTerra didn't look at our books or something? Wow Deprived, this is getting truly pathetic. Please, just take the out I'm giving you. You're right. You can stop now

AS I'm handing out free advice, here's another bit.

The reason you can't sell stock COULD just possibly be this:

Asks
Quantity    Price    
50    ฿0.14010

Lol, this guy! I'm in tears! THANK YOU, Deprived! I'm going to have to put this guy on ignore just to get some work done, I'm laughing so hard!

[Bugpowder]

Lol, this guy! I'm in tears! THANK YOU, Deprived! I'm going to have to put this guy on ignore just to get some work done, I'm laughing so hard!

Deprived is within the top 5 of most insightful posters on this message board.  You should probably put him on ignore though, responding to him just gives him motivation, and what TU.SILVER needs is pure, unadulterated stream of your consciousness.  Frankly I don't see why he bothers with your microstakes pseudo fund.  Waste of his time.

[rpietila]

Yeah, I also find it pathetic. It is OK to start small, but making too big a noise relative to your actual position in the market just, makes your appear childish and scares away the actual investors.

Take this as a kind word from president of the depository, whose holdings are 100,000+ ounces of silver.

(Yes, I know there are guys with 1000 times more than I have, and I would be grateful if they ever talked to me (which they don't ))

[MPOE-PR]

Lol, this guy! I'm in tears! THANK YOU, Deprived! I'm going to have to put this guy on ignore just to get some work done, I'm laughing so hard!

Deprived is within the top 5 of most insightful posters on this message board.  You should probably put him on ignore though, responding to him just gives him motivation, and what TU.SILVER needs is pure, unadulterated stream of your consciousness.  Frankly I don't see why he bothers with your microstakes pseudo fund.  Waste of his time.

Personally I keep tabs on this thing because usagi's insanity is usually amusing. To wit:

"TU.SILVER is the largest precious metals fund in the community, and has more than 20 times the liquidity of all other precious metals funds combined.
[...]
We have been in operation on BitFunder since January 2013. We have over 50oz. in sales and have redeemed more than 10oz of silver directly to customers.

Go figure, I seem to recall one guy who had not one but two one-ounce gold mints running some sort of microfund.

[🏰 TradeFortress 🏰]

Lol, this guy! I'm in tears! THANK YOU, Deprived! I'm going to have to put this guy on ignore just to get some work done, I'm laughing so hard!

Deprived is within the top 5 of most insightful posters on this message board.  You should probably put him on ignore though, responding to him just gives him motivation, and what TU.SILVER needs is pure, unadulterated stream of your consciousness.  Frankly I don't see why he bothers with your microstakes pseudo fund.  Waste of his time.

+1. Don't disregard advice even if it's critical.

[repentance]

Yeah, I also find it pathetic. It is OK to start small, but making too big a noise relative to your actual position in the market just, makes your appear childish and scares away the actual investors.

Take this as a kind word from president of the depository, whose holdings are 100,000+ ounces of silver.

(Yes, I know there are guys with 1000 times more than I have, and I would be grateful if they ever talked to me (which they don't ))

Perhaps usagi should diversify into sex parties and chocolate. 

[Deprived]

AS I'm handing out free advice, here's another bit.

The reason you can't sell stock COULD just possibly be this:

Asks
Quantity    Price    
50    ฿0.14010

Lol, this guy! I'm in tears! THANK YOU, Deprived! I'm going to have to put this guy on ignore just to get some work done, I'm laughing so hard!

Hmm, maybe I did miscalculate the price - or perhaps I didn't factor in things like shipping, the markup on coins etc properly.

Shame there's not some spreadsheet that could work all of that out.

But wait - what's this?  Seems to be usagi's books - complete with a tab to calculate the bids/asks at which TU.SILVER should trade taking into account markups/fees etc.



Seems like your OWN books say you're charging more that double the correct rate (the boxed cell is what usagi's spreadsheet indicate would be the correct sell price).  Why the over 100% markup?

Do note that the fonts may differ slightly as I imported into Excel - but the content is 100% from a pretty recent copy of your own books.

Still laughing?

[MPOE-PR]

A better question is perhaps "Why does he bid over spot?".

[Deprived]

A better question is perhaps "Why does he bid over spot?".

There's not actually anything wrong with that - provided the bid is at less than the cost of buying silver elsewhere.  Coins DO trade at a significant markup to spot.

Problem is, of course, that the tiny spread he intended to run just doesn't work if actually left up as orders.  As the BTC/USD rate can easily move far more than that spread during a few hours - making it very easily for a trader to exploit by buying from out-dated Asks then selling into Bids when they get updated.  That's why it just can't run how it started out - when it actually DID have a tight spread and good prices.  For about a week.  That week is, of course, the only time I've traded the shares

My guess is he that the stupidly high prices right now are mainly to try to trick people into buying and exercising options - there are/were options up which could be bought and then exercised at just UNDER the current Ask.  Only need one idiot to fall for that to make up for the profit on selling a load of silver at genuine competitive prices.  But regardless of the motive, the current Ask price makes a total mockery of any delusional claims to be in any way competitive with other silver sellers on price.

[usagi]

But wait - what's this?  Seems to be usagi's books - complete with a tab to calculate the bids/asks at which TU.SILVER should trade taking into account markups/fees etc.

[snip]

Seems like your OWN books say you're charging more that double the correct rate (the boxed cell is what usagi's spreadsheet indicate would be the correct sell price).  Why the over 100% markup?

Do note that the fonts may differ slightly as I imported into Excel - but the content is 100% from a pretty recent copy of your own books.

Still laughing?

Let me say this once and be perfectly clear.

dan.r.miller@gmail.com

share transferred. I won't share publicly.

You, MPOE-PR, and DannyM/pigeons, are being jerks.

First, pigeons lied to me, that he wasn't going to share the report. I'm going to remove his access now (no, you can't have your share back). Second, you were lied to by pigeons because you were given an edited version of the spreadsheet which did not explain what the ask figure represents. It is the end-calculation of the first spreadsheet. There are THREE further calculation sheets that number goes through before I get a book value.

You have been told over and over that you do not understand what you are talking about. You have been told to talk to DeaDTerra who does our books. But instead of honestly approaching DeaDTerra with questions you have chosen to engage me with dishonest debating tactics and flat-out lies.

From now on, if you or anyone has a question regarding the company's finances you MUST speak to me or DeaDTerra about it privately. I am not interested in enabling a troll.

[Deprived]

In the actual spreadsheet, which you have to pay to get access to, the figure is explained as a internal cost-of-silver figure before any other operational costs are applied. It is the end-calculation of the first spreadsheet. There are THREE further calculation sheets that number goes through; the Cash Position calculator, the Position calculator, and the Book Value calculator. Get it straight Deprived: What you have published and stated regarding Tu.SILVER is an outright a lie.

You have been told over and over that you do not understand what you are talking about. You have been told to talk to DeaDTerra who does our books. But instead of honestly approaching DeaDTerra with questions you have chosen to engage me with dishonest debating tactics and flat-out lies.

MPOE-PR also doesn't know what she is talking about. In our report dated February 4th, 2013, we show that our volume and value is as we stated. Considerign that GOLD and LGF are two separate funds we are indeed the largest single fund in the community. This is a fact, not an insanity and it pains me to see you falling all over yourselves trying to put me down. Leave me alone.

My goal with Tu.SILVER is not to make a lot of money. It is just to provide a service and to participate in the bitcoin economy. It is a VERY small company. Yes, that's right. It's not worth your time. So please just leave me alone. I don't like jerks.

So these extra calculations somehow add over 100% to the price you charge the public?

You seem to have a problem understanding DeadTerra's role in this.  All he does is verify that your accounting is accurate.  He's not vouching for other things - like that you charge a reasonable price for silver you sell.

Do you seriously think he COULD explain why you add well over 100% markup to a price that already includes shipping, coin markup, Bitfunder fees etc when determining the price you sell at?  An auditor does NOT determine whether a company sells goods at a 'fair' price - they determine whether what you've recorded as being your financical transactions is actually accurate.

You've slipped back into your old ways - of answering criticism by repeatedly saying "You're wrong" and "I've explained this before".  Without once having explained why you need a 100%+ markup on silver you sell - or how that is, in any way, competitive or a good price for silver.  Or, for that matter, what (if anything) ownership of a share of TU.SILVER represents above 1/10th of an oz of silver (easiest to explain this by defining what they get back in addition to 1/10th oz of silver when they redeem a share).

DeadTerra can't explain WHY you do things the way you do (at best he could relate a hear-say version of what you've told him).  So when my questions are 'Why' then there's no point me asking him.  If I spot a simle arithmetic error then obviously I'll PM him - but I'm not actually interested in that anyway.  As all your shares apparently represent is 1/10 oz of silver + an undefined donated dividend (raised from funds investors neither own or have any future guarantee of the existence/scale of) then the only thing investors actually need to know is that you have enough silver to back the shares.  All the rest of it is pretty irrelevant - what you do with unsold silver that YOU own and investment funds that YOU own is of no relevance: other than when you try to pretend that it's somehow owned by investors (to justify a steep hike in price) whilst at the same time categorically stating that YOU personally own it.

[MPOE-PR]

But wait - what's this?  Seems to be usagi's books - complete with a tab to calculate the bids/asks at which TU.SILVER should trade taking into account markups/fees etc.

[snip]

Seems like your OWN books say you're charging more that double the correct rate (the boxed cell is what usagi's spreadsheet indicate would be the correct sell price).  Why the over 100% markup?

Do note that the fonts may differ slightly as I imported into Excel - but the content is 100% from a pretty recent copy of your own books.

Still laughing?

Let me say this once and be perfectly clear.

dan.r.miller@gmail.com

share transferred. I won't share publicly.

You, MPOE-PR, and DannyM/pigeons, are being jerks.

First, pigeons lied to me, that he wasn't going to share the report. I'm going to remove his access now (no, you can't have your share back). Second, you were lied to by pigeons because you were given an edited version of the spreadsheet which did not explain what the ask figure represents. It is the end-calculation of the first spreadsheet. There are THREE further calculation sheets that number goes through before I get a book value.

You have been told over and over that you do not understand what you are talking about. You have been told to talk to DeaDTerra who does our books. But instead of honestly approaching DeaDTerra with questions you have chosen to engage me with dishonest debating tactics and flat-out lies.

From now on, if you or anyone has a question regarding the company's finances you MUST speak to DeaDTerra about it privately. I am not interested in enabling a troll.

Hey, what do I have to do with anything!

[Deprived]

There are THREE further calculation sheets that number goes through before I get a book value.

I have those sheets too.  And would you believe it - the final book value is STILL below the price you charge.

Not that it SHOULD have any relevance - but you still can't make up your mind what you're selling.

Is it silver?  Well in your (now locked) thread about FinCen compliance you state in the final post that you're a silver store - which would tend to suggest you just sell silver.  And when someone redeems shares all they get is silver.

Or is it ownership to some extent of other assets as well?  Well your pricing seems to suggest so - as does your repeated refence to some book value that contains elements that far exceed just 1/10th oz of silver plus associated costs.

When you make your mind up WHAT you're actually selling then it's likely we can make some sense of your pricing policy.

Or should I PM DeadTerra and ask "What do shares of TU.SILVER actualy represent ownership of - and how are all elements of that paid out when a share is redeemed?  How is the answer to that consistent with claims that TU/SILVER sells silver at a competitive price?".  Do you think he could actually answer that?  If so, wouldn't it make more sense to post the answer here?

[usagi]

Yeah, I also find it pathetic. It is OK to start small, but making too big a noise relative to your actual position in the market just, makes your appear childish and scares away the actual investors.

Take this as a kind word from president of the depository, whose holdings are 100,000+ ounces of silver.

(Yes, I know there are guys with 1000 times more than I have, and I would be grateful if they ever talked to me (which they don't ))

Thanks for the kind words. I am interested in supporting the community and your own efforts as well. I'll PM you with a few questions about silvervault if I may, as it looks like a valuable and needed service in the community. My main question is, if I could somehow store all of TU.SILVER's silver in silvervault. I'd prefer a community option even if it was a little more expensive.

[DannyM]

I didn't edit anything. At all. What the heck are you talking about.

I did agree not to share the data in public. I shared it privately with Deprived.

Not that hiding this is very ethical.

Usagi said, "The only thing I ask is that, since this is a paid service, you not share the data in public (i.e. in a forum post) or something like that."

[Deprived]

I've now looked at the Book Value calculation page of the spread-sheet.  All I can say is what a mess.  Guess DT was having a bad day when he decided it was fine.

Here's SOME of the pretty basic errors in it:

1.  Unsold silver is double-counted.  The valuation of each share starts off as being the Ask price for silver (shown in the excerpt I posted above).  To that is then added a portion of the value of the unsold silver.  So right away, before anything else is done, shares have been valued at more silver than is actually possessed.  In theory it's possible some other value then negates that - but having looked at the other pages there's no apparent deduction that would correspond (and absolutely no reason to be doing it this way even if there were).

2.  The calculated Book Value is for ALL issued shares - whether sold or not.  That's just horrible - as it means the simple act of selling a share so as to receive exactly book value would change the book value.

3.  Unsold silver is valued at the Ask price in the excerpt I posted earlier.  That includes BitFunder fees and a markup.  Neither of those should be in the valuation of unsold silver because:

a)  Bitfunder fees will NEVER go to the fund even if the shares are sold (should be obvious why).  So at no point ever will they be realisable.
b)  Intended markup when sold should NOT be in a valuation of unsold silver.  You don't mark BTC you hold up by the profit you expect to make investing them - and you shouldn't mark silver up by the profit you hope to make selling them.

It's trivially easy to prove that the calculation is wrong in two ways:

1.  Add up the book value of all current holdings (silver, cash, invetsment position, kitty).  Now divide it by number of shares.  Do you get Book Value?  No you don't - whether you divide it by all issued shares OR sold shares you don't get the same number.  How can the total book value be different to number of shares * book value/share?  It can't.  That it IS different is because one or the other (actually both) are totally fucking wrong.

2.  Modify the data to represent selling a single share and receiving EXACTLY book value for it.  Does book value change?  Yes it does (and I tried both ways - selling a newly issued/backed share AND selling an already issued one).  So it's wrong.  Note that if selling an issued share at BV reduces BV/share then there's a pretty serious problem anyway.

The BV usagi calculates does NOT represent the value of one issued share OR one sold share.  I've no idea what DT thought it represented when he approved the books - but it would seem whatever checking he did failed to include the two simple tests I just listed (in fact #2 isn't ALL that simple as you have to adjust a fair few data items).

Even if it DID represent the BV of a share then the system is still screwed - as anyone wanting to buy silver through the fund (its supposed main purpose) has to buy the silver at a price that includes all the investment junk then sacrfice all those other elements when redeeming for silver.  That makes it impossible for the fund to sell silver at a good price without losing BV.  That at present those wanting to get silver through the fund have to pay an additional premium for pretty simple errors in the calculation of BV just adds insult to injury.

On a side note I received a PM request from usagi to delete my previous excerpt from his spreadsheet.  I am declining that - as there's nothing particularly confidential about silver spot prices, MTgox rates or a very simple calculation using those.  There ARE some parts of the spreadsheet I won't publish - such as the identities of people who bought silver (why this was left in a spreadsheet given out to ANYONE other than usagi beats me).

[Atruk]

There are THREE further calculation sheets that number goes through before I get a book value.

I have those sheets too.  And would you believe it - the final book value is STILL below the price you charge.

Not that it SHOULD have any relevance - but you still can't make up your mind what you're selling.

Is it silver?  Well in your (now locked) thread about FinCen compliance you state in the final post that you're a silver store - which would tend to suggest you just sell silver.  And when someone redeems shares all they get is silver.

Or is it ownership to some extent of other assets as well?  Well your pricing seems to suggest so - as does your repeated refence to some book value that contains elements that far exceed just 1/10th oz of silver plus associated costs.

When you make your mind up WHAT you're actually selling then it's likely we can make some sense of your pricing policy.

It doesn't make too much sense to me either, but I find the number 0.09818688 (a number that apparently includes the "cash kitty") interesting as it is less that half the initial book value of one of the fund's shares.

[repentance]

From now on, if you or anyone has a question regarding the company's finances you MUST speak to me or DeaDTerra about it privately.

Same shit, different day.

[Zeeks]

Not sure why anyone played along with another Usagi scheme. Look at all the info people figured out about him last time when the craziness in his GLBSE based things came out, he does this with every internet community he comes across. He'll read up a bit about whatever the main topics are then storm in acting like he knows everything and tries to run/do something big and important. Eventually it comes out that he is incompetent and he retreats with his tail between his legs, making lots of impassioned posts about how everyone is out to get him. It's a clear pattern.

Usagi, you need to recognize your own destructive pattern and try to fix it. Stop biting off more than you can chew by trying to jump ahead when you are not ready for it.

[greyhawk]

Hullow!  


I've heard this thread has turned to popcorn central?

Someone bring me up to speed or....wait... I'll just guess: People shoved billions into the usagi's greedy little hands again and the usagi fucked it all up again. Is that close enough?

[ldrgn]

Problem is, of course, that the tiny spread he intended to run just doesn't work if actually left up as orders.  As the BTC/USD rate can easily move far more than that spread during a few hours - making it very easily for a trader to exploit by buying from out-dated Asks then selling into Bids when they get updated.  That's why it just can't run how it started out - when it actually DID have a tight spread and good prices.  For about a week.  That week is, of course, the only time I've traded the shares

Boy, if only these exchanges listed prices in a stable monetary unit of accounting instead of bitcoins...

Anyway, my advice to Serena is to open the books.  Maybe it's my inner accountant crying but I think real financial statements (instead of this A+B crap) and a publicly available general ledger will clear up the scammer accusations that have plagued all of her businesses.  I know "a public general ledger" is insanity, but I feel it's appropriate in this situation for a few reasons:

1. This is Bitcoin, it's all about keeping account balances in public and having them publicly verifiable.
2. Usagi's had lots of problems in the past and present with interactions between entities under her control, a ledger will clear this up.
3. Accounting is fun
4. pro forma spreadsheets will be easier for Usagi to write and everyone else to verify if account balances can be known

[Deprived]

Problem is, of course, that the tiny spread he intended to run just doesn't work if actually left up as orders.  As the BTC/USD rate can easily move far more than that spread during a few hours - making it very easily for a trader to exploit by buying from out-dated Asks then selling into Bids when they get updated.  That's why it just can't run how it started out - when it actually DID have a tight spread and good prices.  For about a week.  That week is, of course, the only time I've traded the shares

Boy, if only these exchanges listed prices in a stable monetary unit of accounting instead of bitcoins...

Anyway, my advice to Serena is to open the books.  Maybe it's my inner accountant crying but I think real financial statements (instead of this A+B crap) and a publicly available general ledger will clear up the scammer accusations that have plagued all of her businesses.  I know "a public general ledger" is insanity, but I feel it's appropriate in this situation for a few reasons:

1. This is Bitcoin, it's all about keeping account balances in public and having them publicly verifiable.
2. Usagi's had lots of problems in the past and present with interactions between entities under her control, a ledger will clear this up.
3. Accounting is fun
4. pro forma spreadsheets will be easier for Usagi to write and everyone else to verify if account balances can be known

The spreadsheet DOES contain all trading information - I think every transaction related to the fund is in there.  And nothing I've seen leads me to believe any of those transactions are fake.

Where the problem arises is in the interpretation of the data to arrive at a value.

Usagi sees no contradiction between:

1.  Claiming TU.SILVER is just a silver shop and that buying its shares as a means to get silver is somehow cost-effective.
2.  Valuing (and charging for) that silver as though the shares represented ownership of a bunch of other assets as well.

Add in some elementary errors in the valuation and it becomes even more comical - as even if you accept the (contradictory) assertions about what the shares represent ownership of, it still isn't internally consistent (Total value of assets does NOT equal number of shares * supposed value/share).

[Deprived]

There are THREE further calculation sheets that number goes through before I get a book value.

I have those sheets too.  And would you believe it - the final book value is STILL below the price you charge.

Not that it SHOULD have any relevance - but you still can't make up your mind what you're selling.

Is it silver?  Well in your (now locked) thread about FinCen compliance you state in the final post that you're a silver store - which would tend to suggest you just sell silver.  And when someone redeems shares all they get is silver.

Or is it ownership to some extent of other assets as well?  Well your pricing seems to suggest so - as does your repeated refence to some book value that contains elements that far exceed just 1/10th oz of silver plus associated costs.

When you make your mind up WHAT you're actually selling then it's likely we can make some sense of your pricing policy.

It doesn't make too much sense to me either, but I find the number 0.09818688 (a number that apparently includes the "cash kitty") interesting as it is less that half the initial book value of one of the fund's shares.

Well their value has dropped because silver has fallen in price and BTC has risen vs USD.

Which may be where this idea of selling at a price inflated by imaginary/unrelated/double-counted elements came from.

After all - if you're going to sell something which falls in value AND hold it in stock then only way to make a profit is to massively mark up your price compared to competitors who either drop-ship OR value things in USD rather than BTC.  Then you just have to make up a story why somehow your massively over-priced stuff is worth more than the same stuff for much cheaper elsewhere.  Hence the pretend shares of non-contractual investments (contract does NOT specify any obligation to maintain non-silver assets at any level relative to shares or book value) and the fairy-tale valuation method in the spreadsheet.

I'm assuming you actually have the spreadsheet as you know the .098 number.  If so, you just have to look at what price (in BTC) was paid for silver and then the price it was sold at to see why the original system was going to cost usagi a ton.  Under the new system usagi does OK - provided, of course, he can find enough victims investors willing to pay over double spot for silver coins.

[repentance]

Anyway, my advice to Serena is to open the books.  Maybe it's my inner accountant crying but I think real financial statements (instead of this A+B crap) and a publicly available general ledger will clear up the scammer accusations that have plagued all of her businesses.  I know "a public general ledger" is insanity, but I feel it's appropriate in this situation for a few reasons:

1. This is Bitcoin, it's all about keeping account balances in public and having them publicly verifiable.
2. Usagi's had lots of problems in the past and present with interactions between entities under her control, a ledger will clear this up.
3. Accounting is fun
4. pro forma spreadsheets will be easier for Usagi to write and everyone else to verify if account balances can be known

It's not necessarily insanity, but I think it could create confusion.

While usagi has recently said that TU.SILVER is a "coin shop", realistically it's more like an investment fund which operates a coin shop.  Transparency is great and all, but most businesses couldn't function if shareholders were giving their input on a daily or weekly basis - there's a good reason why shareholder meetings only happen occasionally absent a crisis.

Obviously, usagi needs to be accountable both as the fund manager and as the operator of the coin shop, but a balance needs to be found between between shareholder involvement and micromanagement by shareholders (which will absolutely not work).

Separate from any past actions of usagi's which were controversial is the issue of whether his style of communicating with his shareholders is beneficial or whether it inevitably ends up with every decision being questioned and debated endlessly.  usagi's communiques sometimes come cross more as a means of saying "look how clever I am" than as being primarily a means of keeping shareholders informed and that is usually where the trouble starts.  Quoting Buffet as an appeal to authority will not overcome this problem (it may even exacerbate it).

[Deprived]

While usagi has recently said that TU.SILVER is a "coin shop", realistically it's more like an investment fund which operates a coin shop.  Transparency is great and all, but most businesses couldn't function if shareholders were giving their input on a daily or weekly basis - there's a good reason why shareholder meetings only happen occasionally absent a crisis.

The real problem is that usagi is trying to use the share BOTH to represent silver being sold AND to represent shares in the investment fund.  That inevitably leads to either over-priced silver or devaluation of investments - as there's no way to sell the shares representing silver cheap (relative to other silver sellers) whilst keep those representing invesment high (there only being one set of shares).  Everything else stems from attempts to reconcile two completely opposing objectives into one (plus maybe some from the impossibility of trying to sell something that is devaluing fast at a profit whilst competing with those who don't actually hold it in stock).

That's why my very first criticism was basically that the silver selling MUST be seperated from ownership of the investment.  Of course usagi's reply was then along the lines of 'you don't understand' - his typical refrain whenever the inconsistencies in his statements are pointed out.

[repentance]

The real problem is that usagi is trying to use the share BOTH to represent silver being sold AND to represent shares in the investment fund.  That inevitably leads to either over-priced silver or devaluation of investments - as there's no way to sell the shares representing silver cheap (relative to other silver sellers) whilst keep those representing invesment high (there only being one set of shares).  Everything else stems from attempts to reconcile two completely opposing objectives into one (plus maybe some from the impossibility of trying to sell something that is devaluing fast at a profit whilst competing with those who don't actually hold it in stock).

That's why my very first criticism was basically that the silver selling MUST be seperated from ownership of the investment.  Of course usagi's reply was then along the lines of 'you don't understand' - his typical refrain whenever the inconsistencies in his statements are pointed out.

Could this have been overcome by issuing two classes of shares to each shareholder - one representing the silver and one representing shares in the investment fund?

It's generally not a good idea to make anything more complex than it needs to be.  Perhaps there are some simple options which could be applied now (even if TU.SILVER needs to buy back shares to implement them) to prevent later dramas.

[Deprived]

The real problem is that usagi is trying to use the share BOTH to represent silver being sold AND to represent shares in the investment fund.  That inevitably leads to either over-priced silver or devaluation of investments - as there's no way to sell the shares representing silver cheap (relative to other silver sellers) whilst keep those representing invesment high (there only being one set of shares).  Everything else stems from attempts to reconcile two completely opposing objectives into one (plus maybe some from the impossibility of trying to sell something that is devaluing fast at a profit whilst competing with those who don't actually hold it in stock).

That's why my very first criticism was basically that the silver selling MUST be seperated from ownership of the investment.  Of course usagi's reply was then along the lines of 'you don't understand' - his typical refrain whenever the inconsistencies in his statements are pointed out.

Could this have been overcome by issuing two classes of shares to each shareholder - one representing the silver and one representing shares in the investment fund?

It's generally not a good idea to make anything more complex than it needs to be.  Perhaps there are some simple options which could be applied now (even if TU.SILVER needs to buy back shares to implement them) to prevent later dramas.

Well the sensible approach from the start would have been to have had 2 securities.  One representing the investment part which then issued a second security representing silver.  Then the silver asset could be priced at silver spot + storage/shipping/markup etc and the investment one grow or contract based on how profitable the silver trading was plus the results of whatever other investment activites usagi got involved in.

It could still be done now of course.  Way would be to create a 2nd security and issue all current investors a share in each.  Then the silver one would be priced on silver and the other on the remaining assets - with no need thereafter to keep same number of each obviously.  That would leave people who bought shares just to get silver with a share of other assets they didn't want - but at least they could then sell them rather than now where they kind of, sort of own other assets but have to surrender all claim on them if they ever want to redeem shares for (very expensive, as a result) silver.

Of course there IS a problem if accounting/seperation of the two elements were done seperately.  The losses made from buying silver and having to repeatedly mark it down in value and price until it sells wouldn't be able to hidden.  But anyone who repeatedly invests with usagi should be used by now to the value of their investments vanishing - so it wouldn't be that much of surprise to them.  And they can always just value in USD and claim a profit that way if they want (or value the silver in silver - meaning they can't possibly make a loss).  And at some point BTC will fall anyway - I assume usagi is going to keep predicting it every week until it happens : even a stopped clock is right twice a day after all.

[usagi]

Boy, if only these exchanges listed prices in a stable monetary unit of accounting instead of bitcoins...

Anyway, my advice to Serena is to open the books.  Maybe it's my inner accountant crying but I think real financial statements (instead of this A+B crap) and a publicly available general ledger will clear up the scammer accusations that have plagued all of her businesses.  I know "a public general ledger" is insanity, but I feel it's appropriate in this situation for a few reasons:

1. This is Bitcoin, it's all about keeping account balances in public and having them publicly verifiable.
2. Usagi's had lots of problems in the past and present with interactions between entities under her control, a ledger will clear this up.
3. Accounting is fun
4. pro forma spreadsheets will be easier for Usagi to write and everyone else to verify if account balances can be known

Thanks for your excellent advice, but we cannot open the books due to people like Deprived who shoot first and ask questions later. This is why we hired a 3rd party financial advisor to look over the books. When we do release financial statements, it is done once, and the numbers have been checked by multiple people who have experience dealing with 'large' funds (5,000 BTC+).

You can see how we calculate value for yourself by simply reading our most recent report.

I like how you demonstrate keeping things light and lively. You are being nice and put me in a good mood, so I will quickly explain to you what everyone else is intentionally missing. Starting from a balance of zero, we bought silver, which sent our cash balance negative (E. Cash Balance: -46.0237 BTC[7]). This figure also contains the value of the sold silver. To balance this, we add the value of the unsold silver, which we estimate using "ask" from "Price Guide" as a minimum value (C). This gives us a very simple net profit per share from coin sales minus what we paid for the silver.

To this is added the cash kitty and profits from selling options and other investments -- any values which are held on separate balance sheets to keep things readable.

Finally, to turn the value from a net value to a value we can sell units at in order not to lose money, we simply add our cost price for silver ("A", the "ask" from the price guide) on a per-share basis.

Simple stuff.

[usagi]

Hello!

Taking a cue from GMP, we have initiated a shareholder protection plan. Enjoy!

[Deprived]

Hello!

Taking a cue from GMP, we have initiated a shareholder protection plan. Enjoy!

For those not aware, GMP (listed on Crypto) have Avalon orders in.  With Avalon set to massively increase prices for batch 3, GMP decided to raise massively the price at which they sell new shares.  That's not a bad move at all - as pre-ordered/early-batch Avalons ARE now trading at well above what they cost, even allowing for the change in BTC/USD rate.  It acts to ensure that existing investors get to reap the increased market value of the assets bought with their invested funds.

Not sure what relevance this has to TU.SILVER though.  Your bonds have a face value defined as 1/10th oz of silver - that hasn't changed and can't change.  There's nothing else that investors have any contractual right to which CAN be protected.  Putting your fingers in your ears won't change the price of silver anywhere else - it'll just make your claims of being a coin shop and/or a cheap way to buy silver look progressively more ludicrous.

You may also want to update your summary etc on Bitfunder.  At present it says:

"How it works
We calculate the price of silver in bitcoins and add a small markup for shipping and vault storage."

No mention that you then treble it for other reasons unrelated to silver.  This IS mentioned in the details - though no indication is made that the majority of the price you charge is for the other stuff with silver only a minority of what is paid for.

It also says:

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

Not sure it's fair to say MOST online coin shops are more expensive than you.  There may be some that went out of business a few years back but left their website up that ARE more expensive.

And it also says:

"TU.SILVER is a low risk bond that is callable as 1/10th of an oz. of .999 fine silver."

Not only is that inconsistent with your claims of not being a security (if YOU explicitly refer to it as a bond, how is NOT a security) but how is it low risk?

The face value of it is 1/10th of an oz of silver.  The price that you sell at is OVER DOUBLE that (around treble now).  How is the rest of the value (other than the silver) "low risk"?  What's the mechanism for redeeming the rest?  The only way in which it's a low risk is that there's NO risk of them ever getting any of that value back if they redeem the share for silver.

There's nothing inherently wrong with running an investment fund that holds a lot of silver.  But there's definitely something VERY wrong with actively misrepresenting it as a way to obtain silver at a reasonable price.  If you've decided no longer to sell silver (other than to the occasional idiot willing to pay 3 times spot) then openly state that and stop pretending to be a silver shop.  Silver now represents (using YOUR formula for calculating the silver element) a MINORITY of what people buying your shares pay.  It's NOT your primary business any more.

[usagi]

The face value of it is 1/10th of an oz of silver.  The price that you sell at is OVER DOUBLE that (around treble now) ... Silver now represents (using YOUR formula for calculating the silver element) a MINORITY of what people buying your shares pay.  It's NOT your primary business any more.

As with everything the price of TU.SILVER is driven by market demand. I am not the one selling at the ASK price right now. So you're not arguing with me -- I don't even need to say anything -- you're arguing with Mr. Market, and you're losing.

Most of your mistakes are addressed in our recent reports. You're free to disagree; and I am free not to care. I've put up bids at .1 and above, and I've written PUTs for an additional 150 shares at .1. Go ahead and put your money where your mouth is.

[Deprived]

The face value of it is 1/10th of an oz of silver.  The price that you sell at is OVER DOUBLE that (around treble now) ... Silver now represents (using YOUR formula for calculating the silver element) a MINORITY of what people buying your shares pay.  It's NOT your primary business any more.

As with everything the price of TU.SILVER is driven by market demand. I am not the one selling at the ASK price right now. So you're not arguing with me -- I don't even need to say anything -- you're arguing with Mr. Market, and you're losing.

Most of your mistakes are addressed in our recent reports. You're free to disagree; and I am free not to care. I've put up bids at .1 and above, and I've written PUTs for an additional 150 shares at .1. Go ahead and put your money where your mouth is.

If you're no longer selling silver then why were you, a few days back, saying that you were unable to sell silver (that was your stated reason why you wouldn't use your cash to buy more)?  As I said back then - if you don't put up Asks you WON'T sell silver.  We BOTH know the reason you won't buy more is because, right now, Silver is a bad investment.  And it HAS been for a while - but you can't really admit that when you've been pumping it as a great investment - to the extent of making an extra thread called (from memory) something like "Why you should buy TU.SILVER now".

At least you DO now have one thing to seperate yourself from other online Silver shops.  You'll only sell silver when it's expensive - whereas the rest sully themselves by selling even when it's cheap - how shabby of them!

[Deprived]

I've put up bids at .1 and above, and I've written PUTs for an additional 150 shares at .1. Go ahead and put your money where your mouth is.

I assume you're writing PUTs rather than CALLs your contract says you'd write because you've finally worked out the 2 glaring flaws with your original plan.

As for putting my money where my mouth is, well let's look at what your PUTs actually are.

The price you sell your shares at bears no real relationship to the price of silver - other than always being somewhere above it.  So even if I could exactly predict the price of silver I'd have to guess what price springs out of your imagination.

Plus when the price of silver falls such that executing those PUTs would make sense - what happens?  Oh yes - you stop selling shares totally as you've pretty much abandoned all pretence of being a silver shop.

So I couldn't execute the PUTs by buying from your Asks as a) They'd stay high,  and b) They wouldn't even exist.

That leaves buying from your investors.  But your investors (the ones who actually wanted silver) have already shown they massively over-value you and/or silver and fail at basic math so are unlikely to suddenly start selling at realistic prices.  The investors who believe msot of teh share value is in the non-silver element have no reason to change their mind on the share valuation - as they either know silver is only a small part of it or are entirely oblivious to what they've bought.  And if, by some misfortune, someone with any sense has one of your shares then they aren't gonna sell below your PUT price when they could buy a PUT and execute it themselves.

I'll happily buy and trade options on Silver.  But that's not what you offer (despite your contract saying you write options on Silver you don't)- you offer options on your shares which have very little to do with silver any more (it's a minor part of their price).  So nope - I'll decline betting on what random prices you assign to your shares as you'll just set them to whatever means noone profits from your options - regardless of whether or not those prices have any relevance to reality.  But thanks for the offer.

Options offer a range of ways for the less than honest to make a profit - especially if they're an issuer.  One is to price-fix so noone can execute.  Another is to artificially raise the price whilst selling CALLs - so they look better value than they are.  But the jackpot one is to sell more PUTs than there are available shares which can/will be sold on the market - you can then sell PUTs knowing it'll be impossible for anyone to execute them.  I do hope you aren't doing any underhand things like that - and that the unfortunate coincidence of stopping selling and issuing PUTs at the same time is JUST an unfortunate coincidence.

EDIT:  Just to be clear what buying a PUT option from you is.  It's playing a game of "guess the number I'm thinking of" - with you not having to think of a number until I've told you what my guess is.  And if you still can't win then, you have the choice of not thinking of a number at all in which case I automatically lose.

[usagi]

I assume... So even if... I'd have to guess... ...so are unlikely to... And if, by some misfortune... ...especially if... I do hope... And if...

I've been busy reorganizing TU.SILVER to weather the silver/BTC crash. Which, I now believe, will be sustained. The #1 reason why I believe this is that an associate of mtgox has posted that there is a backlog of over 4,000 unverified accounts. There are other reasons, chief among them the sell-off of industrial metals in Cyprus as their economy continues to collapse. I still believe the long term picture is bullish for silver/BTC, but for the next week at least I have decided to move in the other direction.

We have redone the BV calc to be more accurate and redone how we account for certain things such as the investment position. Ironically I was undervaluing the unsold silver position at the price-guide "ask". It's been redone to calculate a bv over the outstanding units and then use this intermediate figure to price the unsold silver. I have also been laying the groundwork for two important actions. One, I'm going to change how we account for bought silver so that we don't need to show a negative number in cash balance, because the physical representation of our accounts (i.e. bitcoins in an address) does not go negative. This should help the people who've access to our books understand what we are doing a little better. Secondly, as you can see below we have begun making inroads on LTC-GLOBAL. This is to set the stage for the acquisition of LTC-SILVER. We have been in positive talks with SaltySpitoon and will likely move to buy out LTC-SILVER in August.

No report this week. I'm feeling under the weather. In lieu, here's a short summary of what I am doing to protect the shareholders of TU.SILVER.

1. I am closing the IPO of TU.SILVER by personally buying out the 207 remaining units of the fund at .1201, which is more than 20% above it's bv calc and is above the current market ASK price and depth of only 15 shares. The company will use the money to invest into 1,000 shares of BTC-BOND and 1,000 shares of LTC-ATF.B1 until further notice.
2. Our cash position is now 13.5226 BTC, and the investment position is 1,000 shares of BTC-BOND and 1,000 shares of LTC-ATF.B1 valued at 0.01/unit each. (33.5226 BTC total).
3. I've sacrificed my management fee for march and moved 4 BTC into the Kitty (total is now 10 BTC in the kitty).
4. The current bv calc states 0.10477199.
5. Going forward I will increase the distribution by 10%. February's dividend was 0.00128. The dividend for March will be 0.001408/unit and will be paid on the full moon of Easter (March 27th, 2013).

After these actions the cash position will be 12.3962 BTC (plus investments) and the bv calc will read ~0.1034/unit. With 40+ BTC in bitcoin or bitcoin-face-value securities, plus slow accumulation of LTC, we should be reasonably insulated against further BTC price shocks, and that much closer to our goal of sustainable expansion of the fund.

Thanks to my investors, happy Easter everyone.

[usagi]

I'm pleased to announce financial reports for March 2013. I'm sorry it's a few days "late", I've been a bit ill recently

Please view our latest report online here: 20130405TSR.pdf

I've also started an archive of past reports. I'll get around to fleshing it out later.

Fun TU.SILVER fact of the day: Our 30-day turnover is now 233 shares (29.5%). This means we're more liquid than all other precious metals funds in the community combined, by an order of magnitude.

-----

The TU.SILVER Report
April 5th, 2013

Dear Investor; it is our pleasure to present this week’s report. In this issue, we are once again humbled by BTC’s amazing 200% rise these past two weeks. Here are the “Right Now” numbers:
kitco.com gold: $1553.9 / $129.05 = 12.04 BTC/oz.
kitcosilver.com silver: $26.87 / $129.05 = .2082 BTC/oz.

The Takeaway: BTC has continued to surprise this week, gaining 200% since our last report. The rally isn’t over till it’s over?

FINANCIAL REPORT FOR MARCH 2013
Here are our numbers as of April 5th.
• Inventory: 79oz. of Silver
• Shares outstanding / issued : 657 / 790
• Cash Balance: 0.1359 BTC / 790 = 0.00017 BTC ea. (A)
• Cash Kitty 10BTC / 790 = 0.0127 ea. (B)
• Expected value from unsold silver (spot + markup): 9.079 BTC / 790 = 0.0115 ea. (C)
• Investment Position: 24.5158 BTC / 790 = 0.0310 ea. (D)
• Our cost price (spot + coin premium/etc.) : 0.0277 ea. (E)
• A+B+C+D+E = 0.08360951 (this figure is from our BV Calculator on our spreadsheet).

This represents the cost we need to sell shares at in order to provide this service. We suggest a fair ask price of 0.085 today representing a premium of 1.67
% to BV.

These numbers have been independently checked by our financial advisor. Questions about our finances should be e-mailed to DeaDTerra or posted online. The CEO (usagi) is not responsible for financial reporting.

Any investor may gain access to our books for 1 share of TU.SILVER provided they do not violate our disclosure policy (do not disclose the information
to non-shareholders, if you do, ensure it is never published).

For more information on TU.SILVER and how to protect your money in today’s crazy BTC market, please visit the TU.SILVER page on BitFunder:

https://bitfunder.com/asset/TU.SILVER

[Deprived]

The face value of it is 1/10th of an oz of silver.  The price that you sell at is OVER DOUBLE that (around treble now) ... Silver now represents (using YOUR formula for calculating the silver element) a MINORITY of what people buying your shares pay.  It's NOT your primary business any more.

As with everything the price of TU.SILVER is driven by market demand. I am not the one selling at the ASK price right now. So you're not arguing with me -- I don't even need to say anything -- you're arguing with Mr. Market, and you're losing.

Most of your mistakes are addressed in our recent reports. You're free to disagree; and I am free not to care. I've put up bids at .1 and above, and I've written PUTs for an additional 150 shares at .1. Go ahead and put your money where your mouth is.

I stated that I turned down this offer - in fact that wasn't true: I'd already bought some.

The below are the ONLY transactions I've had on this asset recently and I hold no other units of it.


2013-03-20 21:05:34    Option Purchase: (TU.SILVER)
PUT: 35 Share/s @ ฿0.10 each    ฿0.17500000

2013-04-03 01:47:48    BUY: (TU.SILVER):
13 @ ฿0.07401000/ea    ฿0.96213000     
2013-04-02 19:20:43    BUY: (TU.SILVER):
5 @ ฿0.07310000/ea    ฿0.36550000
2013-04-01 17:31:05    BUY: (TU.SILVER):
2 @ ฿0.06000000/ea    ฿0.12000000    
2013-04-01 17:30:51    BUY: (TU.SILVER):
13 @ ฿0.07000000/ea    ฿0.91000000    
2013-04-01 16:07:19    BUY: (TU.SILVER):
2 @ ฿0.07100020/ea    ฿0.14200040    

2013-04-04 14:04:22    Option Execution: TU.SILVER
-35 Share/s @ 0.10/each         ฿3.47200000

Total spent (including option purchase) : ~2.67 BTC
Total received : 3.472 BTC
Profit : ~0.8 BTC
Percentage profit : ~23%

Maybe that also helps answer your questions in this thread:

https://bitcointalk.org/index.php?topic=129985.0

Part of the reason I consistently make decent profit is because some people insist on doing totally stupid things - like selling PUTs with a strike above actual value cheaply.  But that's the beauty of trading in these markets - loads of retards throwing money away all over the place.  That's 80% of this week's bond interest paid right there from a tiny trade that had a maximum downside of .175 BTC.

Would have bought more but think someone else beat me to the rest as they'd gone when I decided maybe I'd get a few more - plus wasn't confident there'd be enough liquidity to do a load anyway.

[usagi]

[...]
Total spent (including option purchase) : ~2.67 BTC
Total received : 3.472 BTC
Profit : ~0.8 BTC
Percentage profit : ~23%

Nice job. I've written a new series of PUT and CALLs for TU.SILVER. Three PUTS and four or five CALLS. Go to town! Good luck.

[Deprived]

[...]
Total spent (including option purchase) : ~2.67 BTC
Total received : 3.472 BTC
Profit : ~0.8 BTC
Percentage profit : ~23%

Nice job. I've written a new series of PUT and CALLs for TU.SILVER. Three PUTS and four or five CALLS. Go to town! Good luck.

I'm tempted by one of the options but there's an issue which makes your options less useful than they could be.

In general I'd LOVE to be able to buy CALL options on Silver/Gold at reasonable prices (and your prices aren't unreasonable on the face of it) as they allow me to hedge other trades I do vs BTC down-swings.

But at present the majority of the value of your shares is actually BTC - cash/LTC-ATF.B1/BTC-BOND (and the last 2 are basically cash equivalent as both offer fast redemption).  So if I buy optons on the shares right now, 2/3 of that option is for value that's basically BTC - so can't possibly be used to hedge vs exchange-rate movement (price movement of silver/gold is in my view always going to drowned out by BTC/USD movement).

That makes the cost less attractive - and also means if I buy then get to execute (for CALLs I'd generally prefer I did NOT ever get to execute) then I have to tie up 3 times the capital I otherwise would for the same profit.

This is one of the reasons I've been so vocal about you no longer just selling silver - as your shares COULD have been something I could make a lot of use of (either by buying as a hedge or better still by using options to gain leveraged protection), but because they're now mainly backed by BTC rather than silver they have a lot less utility for me.

[Francesco]

[...]
Total spent (including option purchase) : ~2.67 BTC
Total received : 3.472 BTC
Profit : ~0.8 BTC
Percentage profit : ~23%

Nice job. I've written a new series of PUT and CALLs for TU.SILVER. Three PUTS and four or five CALLS. Go to town! Good luck.

I'm tempted by one of the options but there's an issue which makes your options less useful than they could be.

In general I'd LOVE to be able to buy CALL options on Silver/Gold at reasonable prices (and your prices aren't unreasonable on the face of it) as they allow me to hedge other trades I do vs BTC down-swings.

But at present the majority of the value of your shares is actually BTC - cash/LTC-ATF.B1/BTC-BOND (and the last 2 are basically cash equivalent as both offer fast redemption).  So if I buy optons on the shares right now, 2/3 of that option is for value that's basically BTC - so can't possibly be used to hedge vs exchange-rate movement (price movement of silver/gold is in my view always going to drowned out by BTC/USD movement).

That makes the cost less attractive - and also means if I buy then get to execute (for CALLs I'd generally prefer I did NOT ever get to execute) then I have to tie up 3 times the capital I otherwise would for the same profit.

This is one of the reasons I've been so vocal about you no longer just selling silver - as your shares COULD have been something I could make a lot of use of (either by buying as a hedge or better still by using options to gain leveraged protection), but because they're now mainly backed by BTC rather than silver they have a lot less utility for me.

+1.

You should buy silver, in order to keep it not only covered anyway, but covered with silver.

However, it's the only asset of this kind on the marketplace. So I guess I can't be too fussy, also considering the situation...

I just sincerely hope you really have learnt from last time. I still have those NYAN.B taking rust...

[usagi]

TU.SILVER interim report

http://kongzi.ca/silver/TSR/20130412TSRi.pdf

forum version (for your convenience):

The TU.SILVER Report
Interim Report
April 12th, 2013

Dear Investor; welcome to our interim report.

At TU.SILVER, our goal is to keep the price of our units very close to the price of silver, plus a small and reasonable premium which is used to cover secure storage fees.

Fortunately or unfortunately, in March and early April 2013 we experienced an unusual surge in trading profits due to a string of lucky trades. As a result, we made far more money than we needed to guarantee secure storage and cover the other expenses of the fund.

As a result of this and due to the rapidly rising BTC price, management carefully and wisely invested in BTC denominated securities such as BTC-BOND, as well as keeping 10 BTC in the TU.SILVER kitty.

While this had the effect of saving our current unitholders from a complete 95%+ collapse in our BTC share price as BTC moved from $10 to over $200 (such as what happened to unlucky investors in other dollar-denominated investments), this is a poor long-term strategy. No one wants to buy a coin for 3x what it’s worth – and what’s the point of selling silver if units of the fund do not leverage to the price of silver? Silver investors will shun the fund and no one will redeem their coins because it is no longer an effective vehicle for owning silver.

Therefore, we will now execute on the original business plan to “sell options and invest the cash position to generate revenue and pay for secure storage fees” as we have been mandated to do since day 1. We are pleased to announce a special dividend of 0.017 per share on an audited and approved book value of 0.08480918. This represents a one-time special distribution of 20%.

This will lower our (immediate) unit price by exactly 0.017 BTC/unit and bring us much closer to parity with the spot price of silver (plus a fair and reasonable coin premium and vault storage premium). This will make the fund much more attractive to silver investors while still retaining the ability to offer free shipping worldwide to all of our customers.

We will review these policies on a weekly basis depending on mtgoxBTC and other factors.




For more information on TU.SILVER and how to protect your money in today’s crazy BTC market, please visit the TU.SILVER page on BitFunder:
https://bitfunder.com/asset/TU.SILVER