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For The Etf Buyers, Heres A New Scheme

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Hi Guys.

Ive been pondering the machinations of ETFs in PMs, exchanges, indexes, stocks, whatever.

My question to myself was....how do these things come about, I mean, there are only so many shares on the FTSE, yet you could buy into a fund tracking the FTSE, or Gold prices, yet in the case of PMs in particular, there are many times more ETF shares than there are actual physical product.

So, I created my own ETF...feel free to buy in.

Its a silver ETF ( this is not a PMS thread mods). What I do, is you send me currently $48 Plus $2 for admin, $50 for a deluxe printed certificate that you own a Bloo Loo ETF (BLETF).

Ok you buy 1, TMT buys one IRRO buys one, all the posters here buy one, they tell their freinds and they all buy one. Note BLETF doesnt take part in the trading.

fine so far....there will be a simple website where you can trade these.....the price will be the current silver price and a trade costs $2.

All fine and Dandy....now...wheres the beef? where is the skin in the game for BLETF?

BLETF just issues paper certificates. BLETF receives currently $50 for each one issued.

BLETF wont buy them back....you sell them amongst yourselves. As the price fluctuates you will gain and can sell on the web site.

What can possibly go wrong?

:ph34r:

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fine so far....there will be a simple website where you can trade these.....the price will be the current silver price and a trade costs $2.

Not quite, as you don't set the price, the market does. The BLETF will only trade in line with the silver price if the issuer (that's you) can convince the market every day that the fund is correctly exposed to the underlying asset/index. How you achieve that exposure is of course your problem to resolve. As hotairmail hints, you may choose not to simply buy and hold the required amount of physical silver....

Edited by Tricksy

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Yup, risky instruments. Useful, though. I'm gonna buy a new motorbike out of my profits.

Edit: no offence, but this is old hat, isn't it? Probably a long thread on it in the pm forum.

Edited by Cash with Nowhere to Go

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Well I've bought and sold ETF's many times. PM ones, FTSE Trackers, China Trackers etc. Never had any problems with them. Banked the profits at the click of the mouse.

I believe the PM ETF's I currently hold actually store the physical. So not like your BLETF.

Try PHAG (silver) and GBS (gold)

http://www.moneyweek.com/investments/precious-metals-and-gems/investing-in-gold-why-you-should-buy-gold-now

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Not quite, as you don't set the price, the market does. The BLETF will only trade in line with the silver price if the issuer (that's you) can convince the market every day that the fund is correctly exposed to the underlying asset/index. How you achieve that exposure is of course your problem to resolve. As hotairmail hints, you may choose not to simply buy and hold the required amount of physical silver....

I realise BLETF wont set the price...Why would it.? it has no skin in the game...the entire BLETF business is based on holders of the certificates to trade amongst themselves.

BLETF makes no promise to buy them back at any time.....

This is how ETFs, say in silver, must work...they dont have to have the silver, they only issue certificates....selling them back simply relies on another person, other than BLETF, wanting to buy them.

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It's much, much better than that.

You give them your cash and they charge you for it. Then they massively lever it up and place their own bets on the markets.

Then because etf's are all about creating liquidity for securities that may be relatively illiquid by nature, whenever everyone wants their money back - TSHTF.

And don't mention the derivatives that underlie many of these constructs. Just don't.

EDIT: Disregarding all that nonsense, can I have 3 BLETF's for my pension please. Will you promise it will still be there when I come to retire?

of course, the certificates are valid forever....you simply trade them with another punter at the silver price at the time you need.

Indeed, thinking about it, Ive just created an unbacked currency....totally debt free.

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Well I've bought and sold ETF's many times. PM ones, FTSE Trackers, China Trackers etc. Never had any problems with them. Banked the profits at the click of the mouse.

I believe the PM ETF's I currently hold actually store the physical. So not like your BLETF.

Try PHAG (silver) and GBS (gold)

http://www.moneyweek.com/investments/precious-metals-and-gems/investing-in-gold-why-you-should-buy-gold-now

Yes they are convenient, and within an ISA the gains are tax free. You are wrong about them actually storing the physical - try taking delivery and see what happens. You need to understand the risks if you are going to invest in PMs through ETFs; it is not as straightforward as the brochure claims. They are convenient, though, no need to pop down and haggle with a merchant.

And, I would generally try to do the opposite of what MoneyWeek tells you to do!

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So, apologies if i've spotted even less sarcasm than i thought - 2 problems:

"fine so far....there will be a simple website where you can trade these.....the price will be the current silver price and a trade costs $2".

Not only do people need to be able to trade them with eachother, and let you take the $2 profit, they also need to be able to redeem them for the current market price.

So if they bought in at 48, silver went to 100, then you need to pay them 98 back. Where you got that extra $50 from in the meantime in the interesting part - did you hold physical metal, and need to sell that on to someone else, did you buy a CFD or something else complicated? Did you do nothing, pay it back out of the money you've taken from new people buying in, and pray that the ponzi isn't detected?

Sounds to me like transparency in ETFs would be quite important to consider investing in one ;)

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So, apologies if i've spotted even less sarcasm than i thought - 2 problems:

"fine so far....there will be a simple website where you can trade these.....the price will be the current silver price and a trade costs $2".

Not only do people need to be able to trade them with eachother, and let you take the $2 profit, they also need to be able to redeem them for the current market price.

So if they bought in at 48, silver went to 100, then you need to pay them 98 back. Where you got that extra $50 from in the meantime in the interesting part - did you hold physical metal, and need to sell that on to someone else, did you buy a CFD or something else complicated? Did you do nothing, pay it back out of the money you've taken from new people buying in, and pray that the ponzi isn't detected?

Sounds to me like transparency in ETFs would be quite important to consider investing in one ;)

thats the beauty, and the very question i was asking myself about ETFs in general....I dont need the silver, or whatever the basis was, we dont trade them....same as the pound in your pocket as it happens.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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