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

[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.