[GLBSE] First Silver Futures on GLBSE [SLV-BUFFALO]

[BitSense Informatics]

I'm going to go ahead and give this a go and see what the actual interest is.  I will be offering the first silver bullion contract on GLBSE.  
I realize that the price of these contracts' value compared to the stocks and bonds that are trading on GLBSE, as well as the low contract count (I'll be offering 8 contracts) will limit the liquidity of the contracts, and I am open to suggestions on how to possibly improve this moving forward.

I'm targeting an IPO date of Friday 7/27.


Contract Specs
ticker: SLV-BUFFALO

Description: Generic “Buffalo Design” Coins
Grade: .999 Silver
Weight: 1 Troy Ounce each
Quantity: 5
Total Contract Size: 5 Troy Ounces (5 coins)

Contract Expiration: Saturday September 1st 00:00 UTC
This contract will NOT expire.

Settlement Type: Physical Delivery to anywhere in the United States.

Settlement Details:  

• Contract price includes shipping, and insurance charges to anywhere in the United States.
• Shipment to international buyers is not available at this time.
• If you hold this contract at expiration there will be no further charges in order to take delivery of the underlying asset(s).
• Buyer of the contract will contact me within 3 days of contract expiration to arrange delivery details.
• Buyer of the contract may request delivery of the underlying assets before contract expiration at any time.

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[BitSense Informatics]

Reserved

[BitSense Informatics]

Settlement Type: Physical Delivery to anywhere in the United States.

• Shipment to international buyers is not available at this time.

This would make sense if you're taking credit card or paypal, but otherwise why on earth wouldn't you write a different address on the envelope?

I 100% agree with you.  Its a matter of insurance.  I won't ship these items unless I can provide insurance for them.  The shipments are currently insured domestically under coverage I have, but I need to work out the details with my insurance carrier regarding international shipments.  USPS only insures up to a certain limit, and UPS and FedEx will not insure bullion products.  

If there is enough interest in the bullion futures I'm listing through GLBSE I will be happy to purchase the additional coverage for international shipments.

[ccliu]

If you ever need more buffalos, I have many in stock an have access to many more.

[FreeMoney]

You are doing 8 worth 5oz each right? Is the reason for not doing 1oz the shipping and handling hassle? It might be fine to just require 5 or more to get delivery.

Have you considered letting it run continually (delivery any time)?

[BitSense Informatics]

You are doing 8 worth 5oz each right? Is the reason for not doing 1oz the shipping and handling hassle? It might be fine to just require 5 or more to get delivery.

Have you considered letting it run continually (delivery any time)?

Yes, there are 8 contracts at 5 oz each.  Part of the reason for the 5oz size is the hassle, but also the fact that the shipping and insurance would make up a disproportional amount of the contract price if the contracts were 1 ounce each.

I like the idea however of making the contract 1 ounce and requiring at least 5 contracts to take delivery, this would probably improve liquidity and allow those that want to speculate in the SLV/BTC price to participate without needing much capital nor needing to take delivery if they didn't want to.

As far as running the contracts continually, from what I had read on GLBSE, the futures contracts needed to have an expiration date, but after filling out the New Asset form on the website, there wasn't anywhere to enter an expiration, so in theory these could potentially run continually

[FreeMoney]

You are doing 8 worth 5oz each right? Is the reason for not doing 1oz the shipping and handling hassle? It might be fine to just require 5 or more to get delivery.

Have you considered letting it run continually (delivery any time)?

Yes, there are 8 contracts at 5 oz each.  Part of the reason for the 5oz size is the hassle, but also the fact that the shipping and insurance would make up a disproportional amount of the contract price if the contracts were 1 ounce each.

I like the idea however of making the contract 1 ounce and requiring at least 5 contracts to take delivery, this would probably improve liquidity and allow those that want to speculate in the SLV/BTC price to participate without needing much capital nor needing to take delivery if they didn't want to.

As far as running the contracts continually, from what I had read on GLBSE, the futures contracts needed to have an expiration date, but after filling out the New Asset form on the website, there wasn't anywhere to enter an expiration, so in theory these could potentially run continually

Hmm, I'm pretty sure it would be fine, it just wouldn't be exactly a future.. it would be... I don't know what to call it but it seems natural. You'd just be buying the right to an ounce (or 5) any time. Ask Nefario I guess.

I don't think I'd ever want to take delivery (unless the price persisted in being 'wrong' on the low side) but I'd definitely like to participate in trying to profit by helping get the price 'right'. So I'm pretty interested.

I've taken a casual glance at other threads mentioning things like this, but I don't think they had delivery on reasonable terms like you intend.

[TTBit]

You need to allow for people to ship you silver to get shares.  A good way for people with silver to get bitcoins.

Just a thought, change the terms a bit so you can offer generic .999, which these buffalos are. Maybe include a specific premium for eagles, and a discount for junk silver. For delivery, buyers get what you send and must pay the agreeded premium or take the discount.

[FreeMoney]

You need to allow for people to ship you silver to get shares.  A good way for people with silver to get bitcoins.

Just a thought, change the terms a bit so you can offer generic .999, which these buffalos are. Maybe include a specific premium for eagles, and a discount for junk silver. For delivery, buyers get what you send and must pay the agreeded premium or take the discount.

Beyond quality issues it seems like the sender would also have to include the outgoing postage, insurance, and handling fee in order to keep the "1oz delivery included" definition. Also this could get to be a lot of managing work. It might be good to have 'registered' silver shippers working with the issuer/organizer.

[TTBit]

You need to allow for people to ship you silver to get shares.  A good way for people with silver to get bitcoins.

Just a thought, change the terms a bit so you can offer generic .999, which these buffalos are. Maybe include a specific premium for eagles, and a discount for junk silver. For delivery, buyers get what you send and must pay the agreeded premium or take the discount.

Beyond quality issues it seems like the sender would also have to include the outgoing postage, insurance, and handling fee in order to keep the "1oz delivery included" definition. Also this could get to be a lot of managing work. It might be good to have 'registered' silver shippers working with the issuer/organizer.

It would be a lot of managing work. I considered doing this a while ago, but thought it would be a lot of work for no money and a lot of risk.

Overall suggestions:
* Shares should trade at silver price, not with shipping. If you ship to warehouse, it is on you. If you xfer shares for silver, you must pay for shipping. Otherwise, you lose the economies of scale for transporting large amounts.
* Don't have a expiration date. More like an ETF with delivery.
* 1 share = 1/20 oz. Redeem/Issue in 20 share lots per oz.
* 1 oz bullion rounds and bars only.
* Need to have recent updates on silver proof of inventory
* Need a slush account to handle redemption and issues.

[BitSense Informatics]

Wow, these are all really good ideas.  Let me tell you the direction I was initially planning on going with offering these contracts, and if you have any feedback feel free to comment.

I was planning on offering separate contracts delivering a very specific type of bullion product so there would be separate contracts for say:
1 oz generic silver rounds
1 oz silver American Eagles
1 oz bars
10 oz bars
100 oz bar
1/10 oz Gold American Eagles
1/4 oz Gold American Eagles
etc...

The reason for the separate contracts is that each of these products carries a different premium (as you mentioned) above the spot price of the metal, so a 1oz Generic round would cost you less than a 1oz silver American Eagle. 

As far as delivery goes, since there is no extra cost in exercising the right to take delivery (its embedded in the contract price), I figured that's what most people would want in the end, so there would be no need to haggle in the end about adding/removing premium or shipping charges if the person wanted the physical bullion.  If they own the contract, they can request delivery and there are no further negotiations on charges/credits required.

It was a few years ago that I was selling quite a bit of bullion on ebay (userId: black-swan-bullion), but due to the rising costs of doing business there the profit margin shrank to the point where it wasn't worth it anymore. I see the GLBSE as a venue to allow people to purchase bullion and keep the costs down as much as possible because the reasonable listing and transaction fees they have in place.

[BitSense Informatics]

I posted my last reply just as TTBit posted their's, so let me comment...

It would be a lot of managing work. I considered doing this a while ago, but thought it would be a lot of work for no money and a lot of risk.

Yes, I agree with this.

Overall suggestions:
* Shares should trade at silver price, not with shipping. If you ship to warehouse, it is on you. If you xfer shares for silver, you must pay for shipping. Otherwise, you lose the economies of scale for transporting large amounts.
* Don't have a expiration date. More like an ETF with delivery.
* 1 share = 1/20 oz. Redeem/Issue in 20 share lots per oz.
* 1 oz bullion rounds and bars only.
* Need to have recent updates on silver proof of inventory
* Need a slush account to handle redemption and issues.

Yes,  I'm beginning to think that the "Futures without expiration" or "ETF w/ delivery" idea may be the way to go.  It seems like people may use this more to speculate on the price of silver rather than as a way to purchase bullion (which I thought would be the other way around).  The great thing about GLBSE is that the listing rates are very reasonable so I could try a few different variations of these contracts and see what works the best.

[Btc4Domains]

I posted my last reply just as TTBit posted their's, so let me comment...

It would be a lot of managing work. I considered doing this a while ago, but thought it would be a lot of work for no money and a lot of risk.

Yes, I agree with this.

Overall suggestions:
* Shares should trade at silver price, not with shipping. If you ship to warehouse, it is on you. If you xfer shares for silver, you must pay for shipping. Otherwise, you lose the economies of scale for transporting large amounts.
* Don't have a expiration date. More like an ETF with delivery.
* 1 share = 1/20 oz. Redeem/Issue in 20 share lots per oz.
* 1 oz bullion rounds and bars only.
* Need to have recent updates on silver proof of inventory
* Need a slush account to handle redemption and issues.

Yes,  I'm beginning to think that the "Futures without expiration" or "ETF w/ delivery" idea may be the way to go.  It seems like people may use this more to speculate on the price of silver rather than as a way to purchase bullion (which I thought would be the other way around).  The great thing about GLBSE is that the listing rates are very reasonable so I could try a few different variations of these contracts and see what works the best.

Hi @BitSense Informatics
Nice to see more BTC precious metals! I can't speak for others but personally very interested in leveraging the BTC price to buy physical Silver when the ratio is good. Maybe you could consider something like this..

Investors/Speculators buy contracts denominated in BTC, you hold the BTC in guaranteed interest earning deposits that you compound and build up. You maintain liquidity so you can withdraw the BTC whenever you need to buy physical metal. For example: I could guarantee you BTC liquidity at short notice with the SILVER, GOLD, PLATINUM or RAREEARTH assets on GLBSE. My metals assets would earn you at least 3.52% a month before compounding the weekly interest. BTC lenders will pay you 1% a week or more at the moment for BTC deposits that you could have on call also. The BTC investments your asset has could sit in escrow accounts which may add more confidence for your investors.

Assuming the BTC price goes through spikes (just assuming) the cost of ounces and kilos could start looking pretty attractive for anyone who has committed BTC while it is low. Working out the prices you quote may be tricky. Maybe contracts could be filled early if the price is met.. 1 BTC to 1 Troy Oz of Ag within 12 months  You never know! Interesting to see what you come up with. If I can help provide any part of the liquidity you may need let me know.

[FreeMoney]

Yes,  I'm beginning to think that the "Futures without expiration" or "ETF w/ delivery" idea may be the way to go.  It seems like people may use this more to speculate on the price of silver rather than as a way to purchase bullion (which I thought would be the other way around).  The great thing about GLBSE is that the listing rates are very reasonable so I could try a few different variations of these contracts and see what works the best.

Yes, I think you'll miss both markets doing it the way you originally proposed. People who want to buy silver don't want to buy it at a specific time far away from now and people who want to speculate don't want to be forced to take delivery or risk having to sell below market to convince someone else to. Continual with redemption is best imo.

I think making shipping fees separate as TT suggested is fine as long as you commit to a fee schedule and a period of notice for changing that.

[BitSense Informatics]

I'll be removing the expiration date for this contract, however since I'm not able to update the contract details on GLBSE, I'll document it here.  The next time I create a bullion asset on GLBSE the contract will be an ETF w/ delivery option, but will be open ended with no expiration.

[BitSense Informatics]

Hi @BitSense Informatics
Nice to see more BTC precious metals! I can't speak for others but personally very interested in leveraging the BTC price to buy physical Silver when the ratio is good. Maybe you could consider something like this..

Investors/Speculators buy contracts denominated in BTC, you hold the BTC in guaranteed interest earning deposits that you compound and build up. You maintain liquidity so you can withdraw the BTC whenever you need to buy physical metal. For example: I could guarantee you BTC liquidity at short notice with the SILVER, GOLD, PLATINUM or RAREEARTH assets on GLBSE. My metals assets would earn you at least 3.52% a month before compounding the weekly interest. BTC lenders will pay you 1% a week or more at the moment for BTC deposits that you could have on call also. The BTC investments your asset has could sit in escrow accounts which may add more confidence for your investors.

Assuming the BTC price goes through spikes (just assuming) the cost of ounces and kilos could start looking pretty attractive for anyone who has committed BTC while it is low. Working out the prices you quote may be tricky. Maybe contracts could be filled early if the price is met.. 1 BTC to 1 Troy Oz of Ag within 12 months  You never know! Interesting to see what you come up with. If I can help provide any part of the liquidity you may need let me know.

Interesting idea,  I could see a lot of potential derivative-type products coming out of this.

[BitSense Informatics]

Will be going live with this on GLBSE at noon PDT tomorrow.

Plans are in the works for a Silver ETF w/ delivery option.  I'm currently investigating different silver products (I may or may not go with the 1oz "Buffalo" rounds for this), and will start a new thread once I have more information.

Thanks!

[BitSense Informatics]

Live on GLBSE now.  Ask price is BTC18.90 for 5 1oz Rounds, (shipping and insurance included)

https://glbse.com/asset/view/SLV-BUFFALO

[RandomQ]

Is the Price going to be adjusted since the Value of BTC has gone Up?

[BitSense Informatics]

I'm pulling this contract and will be working on an ETF w/ delivery option.  I'll be writing an app that will automatically update the bid/ask price of the asset in real time on GLBSE as the price of spot silver and the exchange rate of BTC/USD fluctuates.  The ETF will have a smaller contract size and hopefully create some liquidity since most assets on GLBSE seem to trade around 1BTC or less.