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

[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.

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[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!