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

[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.

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[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!

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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.