@derryb said:
The same can't be said for the silver ETFs. With the exception of the Sprott ETF, an ounce of silver can likely be
claimed by many parties.
I haven't read the offering circular or prosptectus for SLV, but I would doubt it. They want to track silver 1-for-1.
I read the SLV prospectus when it first came out and it’s been discussed here previously. The ownership of actual metal is opaque and offshore. If you think that you have any convertibility, it’s doubtful.
Q: Are You Printing Money? Bernanke: Not Literally
Yes, one has to be careful. When SLV first came out, I read through the prospectus.... sounded great! They invest in the physical silver! The REAL stuff!
But it is the 'additional information' documents that were referenced in the prospectus where the fine print was revealed. Where it was revealed that yes, they can do swaps, trades, loans, and many other paper games... and what one really had to do if they wanted to take physical possession. In other words.... it's a paper game. It may be 'based' on actual silver... but who really owns that silver, and where it really is.... good luck.
If you don't physically hold it, do you really own it? (or do you just own a piece of paper or a computer screen just says you own it?)
@jmski52 said:
I read the SLV prospectus when it first came out and it’s been discussed here previously. The ownership of actual metal is opaque and offshore. If you think that you have any convertibility, it’s doubtful.
The gold ETF is not the same. As I said, I will research the SLV ETF. If it's an ETN, then it's worth crap.
@jmski52 said:
This thread exemplifies the reasons NOT to deal in paper or electronic “assets”. Counterparty risk can be a biatch.
There is no counterparty risk with an ETF. Only an ETN.
@tincup said:
Yes, one has to be careful. When SLV first came out, I read through the prospectus.... sounded great! They invest in the physical silver! The REAL stuff!
But it is the 'additional information' documents that were referenced in the prospectus where the fine print was revealed. Where it was revealed that yes, they can do swaps, trades, loans, and many other paper games... and what one really had to do if they wanted to take physical possession. In other words.... it's a paper game. It may be 'based' on actual silver... but who really owns that silver, and where it really is.... good luck.
If you don't physically hold it, do you really own it? (or do you just own a piece of paper or a computer screen just says you own it?)
This is called counterparty risk and yes it is with an ETF.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
Hmm... well, I don't know. Just took a 'quick' look at one gold fund; SPDR gold shares GLD. Already having suspicions.
First, the prospectus sounds good. But.... it incorporates additional forms and paperwork by reference. I checked the GLD Form 10K for 2023 4th Quarter (the annual reports are incorporated by reference in the prospectus.) This document clarifies the requirements and responsibilities of the custodian... the one who 'holds' the gold.
"Custody of the gold bullion deposited with and held by the Trust is provided by HSBC at its London vault and by JPMorgan at its London, New York and Zurich vaults."
"Each Custodian, as instructed by the Trustee, is authorized to accept, on behalf of the Trust, deposits of gold in unallocated form. Acting on instructions given by the Trustee, each Custodian allocates gold deposited in unallocated form with the Trust by selecting bars of gold bullion for deposit to the Trust's allocated account with that Custodian from unallocated bars which the Custodian holds or by instructing a subcustodian to allocate bars from unallocated bars held by the subcustodian. All gold bullion allocated to the Trust must conform to the rules, regulations, practices and customs of the LBMA, and the Custodians must replace any non-conforming gold bullion with conforming bullion as soon as practical.
The Trustee has entered into Custody Agreements with each Custodian which establish the Trust's_ unallocated and allocated accounts with that Custodian._ The Trust's unallocated accounts are used to facilitate the transfer of gold deposits and gold redemption distributions between Authorized Participants and the Trust in connection with the creation and redemption of Baskets and the sales of gold made by the Trustee for the Trust. Except when gold is transferred in and out of the Trust, all gold deposited with the Trust is held in the Trust's allocated accounts with the Custodians."
OK, question I have.... looks like custodians use unallocated gold to some extent, for various purposes. According to the last sentence above, "All gold deposited with the Trust is held in the Trust's allocated accounts with the Custodians". But.... the Custodian 'selects' the gold from unallocated gold that they have..., which they then allocate to the Trust. Hmmm.... could those unallocated bars have other owners from loans, swaps, and other incumbrances?? Does any person actually see a physical bar? Purchase a NEW physical bar? Just wondering. I haven't read any further yet.... but suspect the Custodians may likely be able to utilize swaps and things like that, to 'expedite' fund redemptions, transfers, etc.
Just sayin'.... if you can't hold it, you don't own it. (but I am not a financial expert and do not work in the industry)
"The Custodians are required to use reasonable care in selecting subcustodians, but otherwise have limited responsibility in relation to the subcustodians appointed by them. The Custodians are obligated to use commercially reasonable efforts to obtain delivery of gold from those subcustodians appointed by them. Otherwise, the Custodians do not undertake to monitor the performance by subcustodians of their custody functions. Since August 13, 2020, the Custodians have not utilized any subcustodians on behalf of the Trust.
Selected subcustodians appointed by HSBC, as Custodian, have the ability to appoint further subcustodians who are not expected to have written custody agreements with HSBC's subcustodians that selected them. HSBC may not have the right to, and does not have the obligation to, seek recovery of the gold from any subcustodian appointed by a subcustodian. HSBC does not undertake to monitor the performance by subcustodians of their selection of further subcustodians"
Bottom line, from my very limited look, I would say once the bars are 'allocated', they are not used for any loans, swaps, etc. (just have to assume the bars selected for allocation have not had any paperwork hanging on them beforehand). And, looks like they maintain both allocated and unallocated gold, to facilitate redemptions, etc.
So as long as Custodians provide the Trustee's with reports showing numbers of the 'allocated' gold, all is good....
So as long as Custodians provide the Trustee's with reports showing numbers of the 'allocated' gold, all is good....
Who's to say allocated bars can't be used as collateral or used to back a loan to another party? Any paper form of a precious metal should be used strictly for short term trading and not held for the long haul. Music might stop before the long haul arrives.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
@derryb said: @tincup said:
So as long as Custodians provide the Trustee's with reports showing numbers of the 'allocated' gold, all is good....
Who's to say allocated bars can't be used as collateral or used to back a loan to another party? Any paper form of a >precious metal should be used strictly for short term trading and not held for the long haul. Music might stop > >before the long haul arrives.
The funds are marked-to-market every day. The gold must be there.
@derryb said: @tincup said:
So as long as Custodians provide the Trustee's with reports showing numbers of the 'allocated' gold, all is good....
Who's to say allocated bars can't be used as collateral or used to back a loan to another party? Any paper form of a >precious metal should be used strictly for short term trading and not held for the long haul. Music might stop > >before the long haul arrives.
The funds are marked-to-market every day. The gold must be there.
.
Shareholders of an ETF have to trust that the counter-party (the ETF's administration) is not fraudulent.
We have seen the extents that some financial entities will go to when things get tight.
@derryb said: @tincup said:
So as long as Custodians provide the Trustee's with reports showing numbers of the 'allocated' gold, all is good....
Who's to say allocated bars can't be used as collateral or used to back a loan to another party? Any paper form of a >precious metal should be used strictly for short term trading and not held for the long haul. Music might stop > >before the long haul arrives.
The funds are marked-to-market every day. The gold must be there.
@derryb said: @tincup said:
So as long as Custodians provide the Trustee's with reports showing numbers of the 'allocated' gold, all is good....
Who's to say allocated bars can't be used as collateral or used to back a loan to another party? Any paper form of a >precious metal should be used strictly for short term trading and not held for the long haul. Music might stop > >before the long haul arrives.
The funds are marked-to-market every day. The gold must be there.
Bernie said the money was there, LOL
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
@dcarr said:
We have seen the extents that some financial entities will go to when things get tight.
There's a difference between a 1- or 2-man shop and an institution that has been around since the 1930's and employs thousands of workers.
It is very easy to determine counterparty fraud if you know where to look. Our firm had Madoff on our list of IM's (lots of our clients wanted in) but we never put him on the approved list.
@derryb said:
Bernie said the money was there, LOL
Yes, and he was shocked that he got away with it so long because a simple phone call would have shown there was not the positions he claimed.
I would have noted it sooner: no big hedge fund or investment manager clears through a firm in Rockland County behind a bagel shop (I lived right nearby). This was CLEAR fraud easily detected....but the SEC is harassing Wall Streeters and investors over gray-area insider trading allegations instead of going after clear-cut fraud and theft.
I recall when Bitcoin hit 1k, I thought that was ridiculously high. LOL
Last year when it plummeted to around 16k, I thought Bitcoin could easily drop below 10k or more. I knew Bitcoin wasn't going away at this point. But my thinking was there are now so many cryptos available out there, that it would dilute the value of Bitcoin. Which of course didn't happen as now it's back up over 40k.
Didn't bother me one way or the other because I've never traded crypto, or even used it. However it is interesting to follow its price.
I read the SLV prospectus when it first came out and it’s been discussed here previously. The ownership of actual metal is opaque and offshore. If you think that you have any convertibility, it’s doubtful.
Agree!
Also of note, One could take delivery of silver via future contracts.
"Poets are the unacknowledged legislators of the world." PBShelley
One could take delivery of a futures contract, but it's been the experience of some people that they make it difficult to do that, and that the exchange usually tries to settle the account in cash, not physical metal.
Q: Are You Printing Money? Bernanke: Not Literally
buying contracts on the futures market is difficult enough. taking delivery just adds to the difficulty. You want physical silver? Buy it on the open market. Currently on sale.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
Anyone Buying....Selling...Hodling prior to the expected SEC approval for Bitcoin ETFs? Gut says it will be a sell the news event but it's a crazy world and it could be too da moon. Currently only holding BTC and ETH. Dumped all the other shat coins. THKS!
@blitzdude said:
Anyone Buying....Selling...Hodling prior to the expected SEC approval for Bitcoin ETFs? Gut says it will be a sell the news event but it's a crazy world and it could be too da moon. Currently only holding BTC and ETH. Dumped all the other shat coins. THKS!
Update: missed the sell opportunity at 2686, currently at 2619, looking to catch a spike to sell.
All out at 2650.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
@blitzdude said:
Anyone Buying....Selling...Hodling prior to the expected SEC approval for Bitcoin ETFs? Gut says it will be a sell the news event but it's a crazy world and it could be too da moon. Currently only holding BTC and ETH. Dumped all the other shat coins. THKS!
spot BTC ETFs might start trading today. They were already approved by the CBOE yesterday. Institutional investment will likely pick up over the next few weeks. I expect a slow burn upwards for crypto as BTC buying pressure from the ETFs take root.
Bitcoin up 4.5% on the day, I suspect a drop in BTC once the hoola subsides, be ready to sell.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
Grayscale, the manager of GBTC, is claiming bragging rights for being the first of the newly approved crop of spot bitcoin (BTC) exchange-traded funds (ETFs) to begin trading, a representative for the firm said on Thursday.
“I am happy to confirm that GBTC started pre-market trading at 4 am EST this morning,” Grayscale’s head of comms Jennifer Rosenthal said via email.
...
"Money for nothin'. Chicks for free". Dire Straits
Had a customer sell me gold. They want to go buy Bitcoin. I just asked : "why don't you just give me the gold and your Bitcoin address". Okay fine. $7000 Bitcoin for $7000 in gold. What's the problem ? The problem is Bitcoin went up overnight and gold went down. Hmmmmmmm.
@cohodk said:
Now the big institutional holders have an easy way to offload on the retail crowd.
and retail buying crowd is what is driving price. Institutionals have to first buy the ETF. This will also drive price up. The ETFs give EVERYONE an easy way to buy and to offload.
One question to ask on any of these ETFs you are considering: Does the fund have to hold the coin that they are selling or is it just another paper market with unlimited supply?
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
@cohodk said:
Now the big institutional holders have an easy way to offload on the retail crowd.
and retail buying crowd is what is driving price. Institutionals have to first buy the ETF. This will also drive price up. The ETFs give EVERYONE an easy way to buy and to offload.
One question to ask on any of these ETFs you are considering: Does the fund have to hold the coin that they are selling or is it just another paper market with unlimited supply?
.
Good question. I don't know, but it won't affect me regardless since I'm not in that arena.
.
The ETFs give EVERYONE an easy way to buy and to offload.
.
But I thought the whole point of "BitCoin" is that it is easy for anyone to set up a wallet and send/receive BitCoin to/from any other wallet anywhere in the world ? Why would anyone buy an ETF (and pay fees) for "convenience" when BitCoin itself is supposedly more convenient (and fee-free, and anonymous) ?
It seems strange to put so much money into something that is really just an electronic ledger entry with nothing else there. I can see why people might want to use BitCoin and other crypto-currencies for the original intended utilitarian purpose.
But an ETF on top of that makes no sense to me. At least tulip bulbs are something physical and pretty to look at (if you plant them and wait a while).
@dcarr said:
But I thought the whole point of "BitCoin" is that it is easy for anyone to set up a wallet and send/receive BitCoin to/from any other wallet anywhere in the world ? Why would anyone buy an ETF (and pay fees) for "convenience" when BitCoin itself is supposedly more convenient (and fee-free, and anonymous) ?
Insitutional investors (pension funds, etc.) have to navigate a bunch of issues with managing wallets/custody of client assets. They want clean exposure without attendant liability/risks in managing custody issues.
Self custody of BTC is absolutely better for individuals IMO.
The ETFs give EVERYONE an easy way to buy and to offload.
.
But I thought the whole point of "BitCoin" is that it is easy for anyone to set up a wallet and send/receive BitCoin to/from any other wallet anywhere in the world ? Why would anyone buy an ETF (and pay fees) for "convenience" when BitCoin itself is supposedly more convenient (and fee-free, and anonymous) ?
It seems strange to put so much money into something that is really just an electronic ledger entry with nothing else there. I can see why people might want to use BitCoin and other crypto-currencies for the original intended utilitarian purpose.
But an ETF on top of that makes no sense to me. At least tulip bulbs are something physical and pretty to look at (if you plant them and wait a while).
.
A wallet is for those who wish to take advantage of paying/receiving bitcoin.
ETFs allow for immediate buy and sell opportunities in the price movement of the particular crypto or whatever assets (oil, SP500, etc.) I buy and sell individual cryptos with accounts on Paypal and Robinhood that reprice and trade 24/7. I trade ETFs in many sectors on Robinhood.
ETFs have been around for a while now and are very similar to mutual funds but trade much easier. Just like a stock they have their own platform symbol and can be traded just like stocks during exchange hours.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
@dcarr said:
But I thought the whole point of "BitCoin" is that it is easy for anyone to set up a wallet and send/receive BitCoin to/from any other wallet anywhere in the world ? Why would anyone buy an ETF (and pay fees) for "convenience" when BitCoin itself is supposedly more convenient (and fee-free, and anonymous) ?
Insitutional investors (pension funds, etc.) have to navigate a bunch of issues with managing wallets/custody of client assets. They want clean exposure without attendant liability/risks in managing custody issues.
Self custody of BTC is absolutely better for individuals IMO.
self custody of BTC requires the wallet approach. Buying and selling individual cryptos as an investment with quick execution and without a wallet requires a platform that offers the particular coin. There are many exchanges that deal only in crypto. I use Paypal and Robinhood (they offer a limited number of different cryptos). All ETFs, including the new bitcoin funds, are traded on the major US stock exchanges just like stocks.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
@cohodk said:
Now the big institutional holders have an easy way to offload on the retail crowd.
and retail buying crowd is what is driving price. Institutionals have to first buy the ETF. This will also drive price up. The ETFs give EVERYONE an easy way to buy and to offload.
One question to ask on any of these ETFs you are considering: Does the fund have to hold the coin that they are selling or is it just another paper market with unlimited supply?
How do you think the ETF was established in the first place? When the retail guy bought, who was on the other side (who sold)?
The institutions.
The only demand for these will come from retail, and the supply from institutions. Eventually it will all be transferred from one to the other.
It was fun listening to the various supporters today. Sounded just like the presidential campaigns.
The ETFs give EVERYONE an easy way to buy and to offload.
.
But I thought the whole point of "BitCoin" is that it is easy for anyone to set up a wallet and send/receive BitCoin to/from any other wallet anywhere in the world ? Why would anyone buy an ETF (and pay fees) for "convenience" when BitCoin itself is supposedly more convenient (and fee-free, and anonymous) ?
It seems strange to put so much money into something that is really just an electronic ledger entry with nothing else there. I can see why people might want to use BitCoin and other crypto-currencies for the original intended utilitarian purpose.
But an ETF on top of that makes no sense to me. At least tulip bulbs are something physical and pretty to look at (if you plant them and wait a while).
.
A wallet is for those who wish to take advantage of paying/receiving bitcoin.
ETFs allow for immediate buy and sell opportunities in the price movement of the particular crypto or whatever assets (oil, SP500, etc.) I buy and sell individual cryptos with accounts on Paypal and Robinhood that reprice and trade 24/7. I trade ETFs in many sectors on Robinhood.
ETFs have been around for a while now and are very similar to mutual funds but trade much easier. Just like a stock they have their own platform symbol and can be traded just like stocks during exchange hours.
An EFT for something like silver (for example) makes some sense to me since it can facilitate trading of the commodity without having to actually transfer physical materials.
But BitCoin is supposedly easy to trade with nothing physical to deliver.
Trading a BitCoin ETF is not any easier than trading BitCoin itself.
But I can see where an institutional "investor" might want to go through a traditional broker to trade BitCoin (via ETF).
@cohodk said:
How do you think the ETF was established in the first place?
It took Grayscale winning a decisive court battle with the SEC to force the SEC's hand in approving the spot BTC ETFs after many years of bad faith on the SECs part. SEC commissioner Hester Peirce wrote a savage statement about it:
Trading a BitCoin ETF is not any easier than trading BitCoin itself.
agree, if one is buying and selling bitcoin without the hassle of using a "wallet." I can buy bitcoin on Paypal or Robinhood with a couple of key strokes. Same with ETFs thru my on line brokerage account. A wallet? Pain in the butt to establish.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
One question to ask on any of these ETFs you are considering: Does the fund have to hold the coin that they are selling or is it just another paper market with unlimited supply?
.
Well they use the term "physically" backed, so the coins must be there, isn't
One question to ask on any of these ETFs you are considering: Does the fund have to hold the coin that they are selling or is it just another paper market with unlimited supply?
.
Well they use the term "physically" backed, so the coins must be there, isn't
if true then the ETFs will actually have an impact on coin price as the ETFs will have to buy the actual coins on the open market. Any new players the ETFs bring into the arena should increase coin demand/price.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
if true then the ETFs will actually have an impact on coin price as the ETFs will have to buy the actual coins on the open market. Any new players the ETFs bring into the arena should increase coin demand/price.
.
... actually it was an attempt at making a joke exploiting the fact that something immaterial like algorithms is said to physically back a financial product
So, converting now this discussion into serious, I looked up today whether the newly approved Bitcoin ETFs need to be audited i.e. whether there was a requirement by the SEC of an independent audit on a regular basis... I couldn't find anything.
Is it possible that with the SEC having been so skeptical of these ETFs, with them stressing the need of protecting naive investors from frauds and scams, is it possible that the SEC didn't require from the companies managing them a proof - in form of a regular independent audit - of these ETFs being "physically" backed?
proving an ETF is physically back by something that has no physical form may be difficult.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
Coinbase is the sole btc custodian for most of these ETFs. In one way or another all parties will be under scrutiny. A bigger issue might just be any mistep in cyber security at Coinbase. You can audit an ETF's digital info all you want, but if Coinbase gets hacked, then what?
@RobM said:
Coinbase is the sole btc custodian for most of these ETFs. In one way or another all parties will be under scrutiny. A bigger issue might just be any mistep in cyber security at Coinbase. You can audit an ETF's digital info all you want, but if Coinbase gets hacked, then what?
Maybe this whole ETF approval turns out to be nothing more than an opportunity by the policy making crypto haters to create a trap to deal with cryptos once and for all. LOL
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
Comments
This thread exemplifies the reasons NOT to deal in paper or electronic “assets”. Counterparty risk can be a biatch.
I knew it would happen.
I haven't read the offering circular or prosptectus for SLV, but I would doubt it. They want to track silver 1-for-1.
I read the SLV prospectus when it first came out and it’s been discussed here previously. The ownership of actual metal is opaque and offshore. If you think that you have any convertibility, it’s doubtful.
I knew it would happen.
Yes, one has to be careful. When SLV first came out, I read through the prospectus.... sounded great! They invest in the physical silver! The REAL stuff!
But it is the 'additional information' documents that were referenced in the prospectus where the fine print was revealed. Where it was revealed that yes, they can do swaps, trades, loans, and many other paper games... and what one really had to do if they wanted to take physical possession. In other words.... it's a paper game. It may be 'based' on actual silver... but who really owns that silver, and where it really is.... good luck.
If you don't physically hold it, do you really own it? (or do you just own a piece of paper or a computer screen just says you own it?)
There is no counterparty risk with an ETF. Only an ETN.
The gold ETF is not the same. As I said, I will research the SLV ETF. If it's an ETN, then it's worth crap.
The Central Fund of Canada has always had great custodian ownership of gold.
This is called counterparty risk and yes it is with an ETF.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
Hmm... well, I don't know. Just took a 'quick' look at one gold fund; SPDR gold shares GLD. Already having suspicions.
First, the prospectus sounds good. But.... it incorporates additional forms and paperwork by reference. I checked the GLD Form 10K for 2023 4th Quarter (the annual reports are incorporated by reference in the prospectus.) This document clarifies the requirements and responsibilities of the custodian... the one who 'holds' the gold.
"Custody of the gold bullion deposited with and held by the Trust is provided by HSBC at its London vault and by JPMorgan at its London, New York and Zurich vaults."
"Each Custodian, as instructed by the Trustee, is authorized to accept, on behalf of the Trust, deposits of gold in unallocated form. Acting on instructions given by the Trustee, each Custodian allocates gold deposited in unallocated form with the Trust by selecting bars of gold bullion for deposit to the Trust's allocated account with that Custodian from unallocated bars which the Custodian holds or by instructing a subcustodian to allocate bars from unallocated bars held by the subcustodian. All gold bullion allocated to the Trust must conform to the rules, regulations, practices and customs of the LBMA, and the Custodians must replace any non-conforming gold bullion with conforming bullion as soon as practical.
The Trustee has entered into Custody Agreements with each Custodian which establish the Trust's_ unallocated and allocated accounts with that Custodian._ The Trust's unallocated accounts are used to facilitate the transfer of gold deposits and gold redemption distributions between Authorized Participants and the Trust in connection with the creation and redemption of Baskets and the sales of gold made by the Trustee for the Trust. Except when gold is transferred in and out of the Trust, all gold deposited with the Trust is held in the Trust's allocated accounts with the Custodians."
OK, question I have.... looks like custodians use unallocated gold to some extent, for various purposes. According to the last sentence above, "All gold deposited with the Trust is held in the Trust's allocated accounts with the Custodians". But.... the Custodian 'selects' the gold from unallocated gold that they have..., which they then allocate to the Trust. Hmmm.... could those unallocated bars have other owners from loans, swaps, and other incumbrances?? Does any person actually see a physical bar? Purchase a NEW physical bar? Just wondering. I haven't read any further yet.... but suspect the Custodians may likely be able to utilize swaps and things like that, to 'expedite' fund redemptions, transfers, etc.
Just sayin'.... if you can't hold it, you don't own it. (but I am not a financial expert and do not work in the industry)
OK, nothing can go wrong here, right??
"The Custodians are required to use reasonable care in selecting subcustodians, but otherwise have limited responsibility in relation to the subcustodians appointed by them. The Custodians are obligated to use commercially reasonable efforts to obtain delivery of gold from those subcustodians appointed by them. Otherwise, the Custodians do not undertake to monitor the performance by subcustodians of their custody functions. Since August 13, 2020, the Custodians have not utilized any subcustodians on behalf of the Trust.
Selected subcustodians appointed by HSBC, as Custodian, have the ability to appoint further subcustodians who are not expected to have written custody agreements with HSBC's subcustodians that selected them. HSBC may not have the right to, and does not have the obligation to, seek recovery of the gold from any subcustodian appointed by a subcustodian. HSBC does not undertake to monitor the performance by subcustodians of their selection of further subcustodians"
Bottom line, from my very limited look, I would say once the bars are 'allocated', they are not used for any loans, swaps, etc. (just have to assume the bars selected for allocation have not had any paperwork hanging on them beforehand). And, looks like they maintain both allocated and unallocated gold, to facilitate redemptions, etc.
So as long as Custodians provide the Trustee's with reports showing numbers of the 'allocated' gold, all is good....
Who's to say allocated bars can't be used as collateral or used to back a loan to another party? Any paper form of a precious metal should be used strictly for short term trading and not held for the long haul. Music might stop before the long haul arrives.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
The funds are marked-to-market every day. The gold must be there.
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Shareholders of an ETF have to trust that the counter-party (the ETF's administration) is not fraudulent.
We have seen the extents that some financial entities will go to when things get tight.
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Ah yes. The brush with black paint knows no boundaries, so best to cover all.
https://www.investmentexecutive.com/news/from-the-regulators/cftc-nasaa-settle-fraud-targeting-seniors/
https://www.hklaw.com/en/insights/publications/2023/10/good-as-gold-dual-sec-cftc-trials-loom-for-alleged-precious-metals
So everyone who sells metals to the public should be hit by that brush, right?
Knowledge is the enemy of fear
Bernie said the money was there, LOL
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
There's a difference between a 1- or 2-man shop and an institution that has been around since the 1930's and employs thousands of workers.
It is very easy to determine counterparty fraud if you know where to look. Our firm had Madoff on our list of IM's (lots of our clients wanted in) but we never put him on the approved list.
Yes, and he was shocked that he got away with it so long because a simple phone call would have shown there was not the positions he claimed.
I would have noted it sooner: no big hedge fund or investment manager clears through a firm in Rockland County behind a bagel shop (I lived right nearby). This was CLEAR fraud easily detected....but the SEC is harassing Wall Streeters and investors over gray-area insider trading allegations instead of going after clear-cut fraud and theft.
I recall when Bitcoin hit 1k, I thought that was ridiculously high. LOL
Last year when it plummeted to around 16k, I thought Bitcoin could easily drop below 10k or more. I knew Bitcoin wasn't going away at this point. But my thinking was there are now so many cryptos available out there, that it would dilute the value of Bitcoin. Which of course didn't happen as now it's back up over 40k.
Didn't bother me one way or the other because I've never traded crypto, or even used it. However it is interesting to follow its price.
Interesting crypto listing website if it hasn't been posted before: https://www.coingecko.com/
BOOMIN! Now lets play catchup BTC. THKS!
The whole worlds off its rocker, buy Gold™.
0> @jmski52 said:
Agree!
Also of note, One could take delivery of silver via future contracts.
One could take delivery of a futures contract, but it's been the experience of some people that they make it difficult to do that, and that the exchange usually tries to settle the account in cash, not physical metal.
I knew it would happen.
buying contracts on the futures market is difficult enough. taking delivery just adds to the difficulty. You want physical silver? Buy it on the open market. Currently on sale.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
Certainly not the gutter. RGDS!
The whole worlds off its rocker, buy Gold™.
Anyone Buying....Selling...Hodling prior to the expected SEC approval for Bitcoin ETFs? Gut says it will be a sell the news event but it's a crazy world and it could be too da moon. Currently only holding BTC and ETH. Dumped all the other shat coins. THKS!
The whole worlds off its rocker, buy Gold™.
SEC getting absolutely roasted on X over yesterday's false tweet regarding ETF approval. Congress critters getting involved too.
https://cointelegraph.com/news/lawyers-politicians-investigation-sec-bitcoin-etf-post
Yelling at clouds on pmbug.com
All in on ETH @$2303 on 1/8. Currently @$2447.
Update: missed the sell opportunity at 2686, currently at 2619, looking to catch a spike to sell.
All out at 2650.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
Make that @$2520. HODL. LULZ!
Edit @$2615
The whole worlds off its rocker, buy Gold™.
spot BTC ETFs might start trading today. They were already approved by the CBOE yesterday. Institutional investment will likely pick up over the next few weeks. I expect a slow burn upwards for crypto as BTC buying pressure from the ETFs take root.
Yelling at clouds on pmbug.com
11 bitcoin ETFs begin trading 1/11
Bitcoin up 4.5% on the day, I suspect a drop in BTC once the hoola subsides, be ready to sell.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
https://www.coindesk.com/markets/2024/01/11/grayscale-claims-bragging-rights-for-first-spot-bitcoin-etf-to-trade/?utm_medium=referral&utm_source=rss&utm_campaign=headlines
Yelling at clouds on pmbug.com
Now the big institutional holders have an easy way to offload on the retail crowd.
Knowledge is the enemy of fear
"Money for nothin'. Chicks for free". Dire Straits
Had a customer sell me gold. They want to go buy Bitcoin. I just asked : "why don't you just give me the gold and your Bitcoin address". Okay fine. $7000 Bitcoin for $7000 in gold. What's the problem ? The problem is Bitcoin went up overnight and gold went down. Hmmmmmmm.
and retail buying crowd is what is driving price. Institutionals have to first buy the ETF. This will also drive price up. The ETFs give EVERYONE an easy way to buy and to offload.
One question to ask on any of these ETFs you are considering: Does the fund have to hold the coin that they are selling or is it just another paper market with unlimited supply?
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
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Good question. I don't know, but it won't affect me regardless since I'm not in that arena.
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But I thought the whole point of "BitCoin" is that it is easy for anyone to set up a wallet and send/receive BitCoin to/from any other wallet anywhere in the world ? Why would anyone buy an ETF (and pay fees) for "convenience" when BitCoin itself is supposedly more convenient (and fee-free, and anonymous) ?
It seems strange to put so much money into something that is really just an electronic ledger entry with nothing else there. I can see why people might want to use BitCoin and other crypto-currencies for the original intended utilitarian purpose.
But an ETF on top of that makes no sense to me. At least tulip bulbs are something physical and pretty to look at (if you plant them and wait a while).
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Insitutional investors (pension funds, etc.) have to navigate a bunch of issues with managing wallets/custody of client assets. They want clean exposure without attendant liability/risks in managing custody issues.
Self custody of BTC is absolutely better for individuals IMO.
Yelling at clouds on pmbug.com
A wallet is for those who wish to take advantage of paying/receiving bitcoin.
ETFs allow for immediate buy and sell opportunities in the price movement of the particular crypto or whatever assets (oil, SP500, etc.) I buy and sell individual cryptos with accounts on Paypal and Robinhood that reprice and trade 24/7. I trade ETFs in many sectors on Robinhood.
ETFs have been around for a while now and are very similar to mutual funds but trade much easier. Just like a stock they have their own platform symbol and can be traded just like stocks during exchange hours.
Here's a website/database researching ETFs
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
self custody of BTC requires the wallet approach. Buying and selling individual cryptos as an investment with quick execution and without a wallet requires a platform that offers the particular coin. There are many exchanges that deal only in crypto. I use Paypal and Robinhood (they offer a limited number of different cryptos). All ETFs, including the new bitcoin funds, are traded on the major US stock exchanges just like stocks.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
How do you think the ETF was established in the first place? When the retail guy bought, who was on the other side (who sold)?
The institutions.
The only demand for these will come from retail, and the supply from institutions. Eventually it will all be transferred from one to the other.
It was fun listening to the various supporters today. Sounded just like the presidential campaigns.
Knowledge is the enemy of fear
An EFT for something like silver (for example) makes some sense to me since it can facilitate trading of the commodity without having to actually transfer physical materials.
But BitCoin is supposedly easy to trade with nothing physical to deliver.
Trading a BitCoin ETF is not any easier than trading BitCoin itself.
But I can see where an institutional "investor" might want to go through a traditional broker to trade BitCoin (via ETF).
It took Grayscale winning a decisive court battle with the SEC to force the SEC's hand in approving the spot BTC ETFs after many years of bad faith on the SECs part. SEC commissioner Hester Peirce wrote a savage statement about it:
https://www.sec.gov/news/statement/peirce-statement-spot-bitcoin-011023?source=pmbug.com
Yelling at clouds on pmbug.com
agree, if one is buying and selling bitcoin without the hassle of using a "wallet." I can buy bitcoin on Paypal or Robinhood with a couple of key strokes. Same with ETFs thru my on line brokerage account. A wallet? Pain in the butt to establish.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
It's actually very easy, but to do "cold storage" right does require a little bit of an up front investment.
Yelling at clouds on pmbug.com
Cashed out BTC at $46,437 on 1/11 and ETH at $2677 today. Will buy back in after the shakeout. RGDS!
The whole worlds off its rocker, buy Gold™.
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Well they use the term "physically" backed, so the coins must be there, isn't
if true then the ETFs will actually have an impact on coin price as the ETFs will have to buy the actual coins on the open market. Any new players the ETFs bring into the arena should increase coin demand/price.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
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exploiting the fact that something immaterial like algorithms is said to physically back a financial product 
... actually it was an attempt at making a joke
So, converting now this discussion into serious, I looked up today whether the newly approved Bitcoin ETFs need to be audited i.e. whether there was a requirement by the SEC of an independent audit on a regular basis... I couldn't find anything.
Is it possible that with the SEC having been so skeptical of these ETFs, with them stressing the need of protecting naive investors from frauds and scams, is it possible that the SEC didn't require from the companies managing them a proof - in form of a regular independent audit - of these ETFs being "physically" backed?
proving an ETF is physically back by something that has no physical form may be difficult.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto
Coinbase is the sole btc custodian for most of these ETFs. In one way or another all parties will be under scrutiny. A bigger issue might just be any mistep in cyber security at Coinbase. You can audit an ETF's digital info all you want, but if Coinbase gets hacked, then what?
Maybe this whole ETF approval turns out to be nothing more than an opportunity by the policy making crypto haters to create a trap to deal with cryptos once and for all. LOL
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto