Topic: [LTC-GLOBAL] Litecoin Gold Trust (Read 1023 times)

Please refer to the new thread for further updates.

Saturday, December 1, 2012

Overview

Assets: 1 oz.
Shares Outstanding: 1000
NAV: 20.6215 LTC
Basket Size: 1000 shares

Commentary

This week was all about volatility, both in the price of gold and the price of LTC.

The big news was the halving of the Bitcoin block reward. While the halving had little effect on the price of BTC, it seemed to have a major effect on the price of LTC. The cause of this effect is unclear, but the correlation is unmistakable. The price of LTC and the total hash rate both began climbing steeply when the reward was halved. The price of LTC rose from $0.0608 last week to $0.0837 (+37.7%), occurring mostly in the two days following the halving.

The price of gold (in dollars) is about the same now as it was at this time last week, going from $1734 to $1726 (-0.46%). This small decline does not reveal the dramatic rise in price of gold last weekend to over $1750, followed by the long decline during the rest of the week to the current price of $1726.

The combination of a huge rise in the value of LTC with a mostly constant price of gold has resulted in a big decline in the NAV from 28.5 LTC to 20.6 LTC (-27.7%).

Saturday, November 24, 2012

Overview

Assets: 1 oz.
Shares Outstanding: 1000
NAV: 28.5280 LTC
Basket Size: 1000 shares

Commentary

The NAV has risen moderately (+3.5%) over the last week from 27.5 LTC to 28.5  LTC, posting a new high of 30.5 LTC on Tuesday. This small overall increase hides the drama that occurred during the week. The dramatic slide in the value of LTC finally bottomed out last Saturday at around $0.0550. Since then, it has been rising slowly and has settled at around the current value of $0.0608, after a sharp drop back to $0.0567 on Tuesday. Overall, it is down about 2.3% from $0.0622. Meanwhile, gold has been steady, reversing last week's small drop and rising back from $1714 to the previous week's level of $1734 (+1.1%).

Even during what appears to have been a slow week, there was money to be made by the speculator. Taking advantage of uncorrelated movements in the price of gold and Litecoin, the trader could have moved back and forth between Litecoin and gold in order to take advantage of the individual price movements of the two components.

Saturday, November 17, 2012

Overview

Assets: 1 oz.
Shares Outstanding: 1000
NAV: 27.5305 LTC
Basket Size: 1000 shares

Commentary

The NAV has risen sharply again (+14%) over the last week from 24.3 LTC to 27.5 LTC. This increase is due to another huge drop in the value of LTC (-13%) from $0.0717 to $0.0622 during the week, offset by a small drop in gold's value (-1.4%) from $1738 to $1714.

The dramatic rise in LGT's NAV this week, in contrast to the drop in the value of LTC, again demonstrates how buying shares of Litecoin Gold Trust can help protect an investor from falling LTC prices.

Saturday, November 10, 2012

Overview

Assets: 1 oz.
Shares Outstanding: 1000
NAV: 24.2535 LTC
Basket Size: 1000 shares

Commentary

The NAV has risen sharply (+12%) over the last week from 21.7 LTC to 24.2 LTC. This is increase is due to a significant drop in the value of LTC (-7.8%) from $0.0778 to $0.0717, as well as an encouraging rise in the value of gold (+3.2%) from $1685 to $1738.

The rise in LGT's NAV compared to the drop in the value of LTC demonstrates how investing in the Litecoin Gold Trust can help protect an investor from falling LTC prices. An investor with a large investment in LTC or LTC-denominated bonds is highly susceptible the whims of the LTC currency exchange rate. Holding gold or a gold ETF like LGT, diversifies the investor's portfolio, lowering overall risk and  exposure to LTC price changes.

Litecoin Gold Trust is traded as LGT on the Litecoin Global Stock Exchange: https://www.litecoinglobal.com/security/LGT
Please read the prospectus before investing: https://docs.google.com/document/d/1jwsxyjs1KQqeScAz__55BgIbkgRBRvCE71eHoz65hjo/edit

As of Friday, November 30, 2012:

Assets: 1 oz.
Shares Outstanding: 1000
NAV: 20.6215 LTC
Basket Size: 1000 shares


This is a summary. Please read the prospectus before investing. A copy of the prospectus can be found here: https://docs.google.com/document/d/1jwsxyjs1KQqeScAz__55BgIbkgRBRvCE71eHoz65hjo/edit.


Highlights:

• Shares represent 1/1000th of a troy oz. of gold (initially).
• Shares can be redeemed for physical gold bullion (in 1 oz. units).
• Shares normally trade at the spot price, but can be higher or lower.
• The fund strives to maintain liquidity and price stability (relative to the spot price).

The Litecoin Gold Trust is an exchange-traded fund listed on the Litecoin Global Stock Exchange. The trust holds physical gold bullion and issues shares representing its holdings. The purpose of the trust is to provide a way in invest in gold through litecoin without the inconvenience of holding physical gold bullion.

The objective of the trust is for the value of the shares to reflect the price of gold owned by the trust, less the trust’s expenses and liabilities. The trust receives gold in exchange for shares and delivers gold in exchange for redeemed shares. The ability to exchange of gold for shares is what maintains the nominal value of the shares at the value of the gold that they represent. The trust is not actively managed and does not engage in activities designed to profit from changes in the price of gold.

With the exception of cash held to pay expenses and facilitate operations, the fund invests exclusively in physical gold bullion. The gold is unencumbered, fully allocated, and will never be borrowed, lent, or used as collateral. It is stored in a vault at Wells Fargo and is audited periodically. The initial value of a share is 1/1000th of a troy oz. of gold, though fees may reduce that value over time (see below). Regardless of the nominal value, shares can trade at a premium or a discount to that value.

The trust does not intend to pay dividends or cash distributions.

The trust issues and redeems "baskets" of shares on a continuous basis (a basket equals the equivalent of 1 troy ounce of gold in shares). A 5% fee is charged for redeeming a basket of shares. The person redeeming the shares is also responsible for paying shipping and insurance costs. Persons may redeem fractions of a basket at the discretion of the sponsor, but the fee may be substantially higher.

The size of the initial offering will be 1000 shares, or 1 troy oz. of gold.

The only ordinary expenses paid by the trust is a fee of 1% per year paid to the sponsor. The fee is paid issuing an appropriate number of additional shares and assigning them to the sponsor, so the amount of gold that a share represents will slowly decrease from the initial 1/1000th ounce. The sponsor currently agrees to waive the fee.

The fund allows a person to invest in gold with the following  benefits over owning physical gold:

• Increased liquidity. Shares can be traded whenever the exchange is operating.
• Lower fees and overhead. Typically, buying and selling physical gold incurs steep premiums, especially when dealing in small amounts. The fees for trading shares of the trust are extremely low.
• A convenient way to accumulate gold bullion. A person can buy small numbers of shares over time, and then later exchange the shares for physical gold bullion.
• A way to hedge against drops in the value of LTC.

Liquidity should not be a concern. Bid and ask walls will be maintained at  approximately +/- 5% of the spot price in order to ensure liquidity. There will always be shares to buy at a reasonable price and shares can always be sold at a reasonable price.

Assets of the trust are listed here and are updated periodically:  https://docs.google.com/spreadsheet/ccc?key=0Am3m7aRNI-JbdGhaT2RvWC1aeFFaSEMzMnE4OWkzMFE

The trust is run by John Bolton, Belmont, California, U.S.A. I will read and respond to PMs, emails to [email protected], and posts in this thread (and others).

A picture of the gold held by the trust can be seen here: https://docs.google.com/open?id=0B23m7aRNI-JbcC1RRXZhaEFvLUE
I appreciate any kind of feedback -- criticisms, comments, and suggestions.