Topic: [BitFunder] TU.SILVER -- Interim Report April 12th, 2013 - page 9. (Read 12890 times)

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

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

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

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

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

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

2. How soon is the proposed launch date?

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

[BitFunder] TU.SILVER FAQ:

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

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

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

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

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

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



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

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

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

OP/Thread moved to: https://bitcointalksearch.org/topic/bitfunder-tusilver-news-reports-177747