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  #21  
Old 04-04-2012, 10:14 PM
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anlok anlok is offline
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Originally Posted by GoldBull5000 View Post
Hi Anlok,

you have been around in this forum for almost 2 years already. I am sure that you know what futures and options are. I know you are just pulling my legs or want to figure out my "secret sauce".

For those real beginners, here is a simple explaination:

Futures and options are exchange traded financial instruments used by professionals to speculate on price fluctuations and to hedge price risks for their products.

By using the right instruments, you can lock in your buy/sell price for anything far into the future dates.

Myself, I was the largest private silver futures trader in SG from 2005 - 2008. At the height of my career, I was controlling more than 2000 contracts at one point of time. (one contract equals to 5000 ounces of silver)

During my active years, I paid more trading commissions to my futures brokers than anyone else in their private client base for 3 years in a row.

Now I am retired since some time. But the experience in those years give me the ability to hedge any price swings of those bullion I sell here with capital guarantee.

The only uncertainty is if this product actually is in demand by general public.

The next few months will be extremely volatile in the metals markets. Anyone who wants a price hedge on the downside would be well served to buy our capital guaranteed bullion product.

The beauty of our product is that the buyer still maintain all the upside without any downside risk. Please remember that as a buyer and holder of those bullions, you do NOT need to sell it back to us in the third year.

We are here to guarantee you a floor price for your bullion, not to cap your gains.
Very informative but I need time to digest Yes, I'm in the forum for almost 2 years & collecting Gold for more than 10years but frankly speaking, I'm an amatuer as I do not know the technical aspects Neither am I into stocks, ETFs, or any other form of investments. All I did was buy/sell. Before I get to know this forum, I only deal with Goldsmiths initially (imagine loss incurred for workmanships & later on, workmanships + GST!) & subsequently pawnshops.

So do not think I'm stealing your "recipes"
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  #22  
Old 04-04-2012, 10:43 PM
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Dun understand the portion on holding the silver for 24 months .. I thought can sell anytime we like ?
So if silver goes up to 2000 and i sell to another person . Then the contract need to change name ?
Sorry bro .. just throwing some question as i am REALLY interested on this .
  #23  
Old 04-04-2012, 10:57 PM
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Originally Posted by lim View Post
Dun understand the portion on holding the silver for 24 months .. I thought can sell anytime we like ?
So if silver goes up to 2000 and i sell to another person . Then the contract need to change name ?
Sorry bro .. just throwing some question as i am REALLY interested on this .
Thanks for the question. Its a very good one and address an important point of contractual obligations.

Yes, as the owner and holder of this bullion, you have the right to hold it indefinitely or sell it to anyone you want to at the price of your choice.

Financially speaking, it makes no difference to me as underwriter of this guarantee who is going to claim from me in the third year for the capital guarantee. However, legally speaking, it will be nightmare to manage. Imagine that you sell the bullion to someone in year one and he sells to someone in year two. Then in third year, another person obtain some of it and come back to me to claim the capital guarantee. Now it is highly likely someone along the chain might just tamper the bullion along the way. How do I know that who was the person who did that?

The current form of capital guarantee is only valid from me as underwriter and you, the buyer, as insured person. It is a clear contract and does not allow any tampering of underlying assets.

To put it clearly, yes, you are free to do whatever you want with the bullion you buy from me.

But the personally underwritten Capital Guarantee is only between you and me. Later on, if this scheme is popular, it will be between you and my company.

If you decide to sell the bullion to another person before the period of the Capital Guarantee is up, then the next buyer from you can not claim the full purchase from me in the third year.

In other words, the ownership of the bullion is fully transferable. The right to sell the bullion back to me at original price is NOT.

My idea is to promote long term investment in bullion form and give the buyer the peace of mind for the long term. Not to provide floor price for speculative activities.
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  #24  
Old 04-04-2012, 11:09 PM
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Hi bro , am i right to say that it does not protect third party transaction.
So what advantage i have as a buyer to sell this product to a third person since the under laying contract is between ME and YOU but the third buyer does not enjoy the capital guarantee promise by YOU ..
If you are doing it as a biz , is that meant that i have to sell at a cheaper price than YOU so that i can sell this bullion off . But even i sell this cheaper the third party might not want to buy since it does not cover the 2nd or 3rd year (assume- i sold off at the first year ) as the third buyer does not enjoy the guarantee part at all . The third party might as well buy from you to enjoy 3 years benefit ?
Correct ? Just throwing more question ..


Sorry the ME is (lim) YOU is (GoldBull5000)
  #25  
Old 04-04-2012, 11:39 PM
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Quote:
Originally Posted by lim View Post
Hi bro , am i right to say that it does not protect third party transaction.
So what advantage i have as a buyer to sell this product to a third person since the under laying contract is between ME and YOU but the third buyer does not enjoy the capital guarantee promise by YOU ..
If you are doing it as a biz , is that meant that i have to sell at a cheaper price than YOU so that i can sell this bullion off . But even i sell this cheaper the third party might not want to buy since it does not cover the 2nd or 3rd year (assume- i sold off at the first year ) as the third buyer does not enjoy the guarantee part at all . The third party might as well buy from you to enjoy 3 years benefit ?
Correct ? Just throwing more question ..


Sorry the ME is (lim) YOU is (GoldBull5000)
A very good & valid debate point But on 2nd thoughts, if you buy from ANY other souces that sells Silver, won't it be the same You won't be able to sell cheaper than SM if you buy from SM right? At least as of now, what I can see is GoldBull 5000 is throwing in additional "benefits" compared to buying other sources Let the debate continue & see how things unfold
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  #26  
Old 04-04-2012, 11:43 PM
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Quote:
Originally Posted by lim View Post
Hi bro , am i right to say that it does not protect third party transaction.
So what advantage i have as a buyer to sell this product to a third person since the under laying contract is between ME and YOU but the third buyer does not enjoy the capital guarantee promise by YOU ..
If you are doing it as a biz , is that meant that i have to sell at a cheaper price than YOU so that i can sell this bullion off . But even i sell this cheaper the third party might not want to buy since it does not cover the 2nd or 3rd year (assume- i sold off at the first year ) as the third buyer does not enjoy the guarantee part at all . The third party might as well buy from you to enjoy 3 years benefit ?
Correct ? Just throwing more question ..


Sorry the ME is (lim) YOU is (GoldBull5000)

yes, you are correct to say that for third party transaction, the Capital Guarantee is not transfered.

Regarding the other points you raise here, it all boils down to price of entry for your buyer.

When I am selling those bullion with Capital Guarantees, I have a cost to carry to hedge my own exposure. I would not want to have couple of millions of bullions claim against my company without adequately covering my own price risks. This means, the costs is part of my bullion sales price.

If I want to continue to do this as a commercial service, it has to turn a small profit. Otherwise it is not sustainable. I am currently pegging the price to other successful commercial sellers in SG. They have costs like rental, staff, insurance, shipping etc to cover. I will keep my own costs to a minimum so that part of my costs go to cover capital guarantee.

When you want to sell your bullion to another person, I guess you would probably sell at slight discount to the established bullion sellers here in SG. Otherwise there is no incentive for your buyer to buy from you, regardless where you source your bullion in the past.

It is still profitable for you to sell to another private buyer, on ebay or here in the forum, as long as the buy back price from establish sellers in SG are around spot price.

But when you buy from me, you have the unique ability to sell it back to me at the original price without capital loss in the third year. It is not a free service, it is achieved by my company hedging our own price risks. But the price for that is small, it still allows us to offer you the bullion at competitive price compared to other vendors here in SG.

I think if I understand you correctly is this:

You want to buy bullion at the same price from me like any other vendors but you want to sell the bullion later at a premium price to other buyers when I did not charge you a premium to start with.

The simple answer to that is there is no free lunch. Sorry.

But with a simplified capital guarantee contract, we can assure you that you do get paid out in full when the bullion price crash below your entry price after 24 months.
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  #27  
Old 04-04-2012, 11:53 PM
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Hi, to hedge against the possibility that the KG you sell us might go under in the 3rd year, you mentioned you are using Futures to cover. So the Future Contract price must be higher or lower than spot now? Very confused.
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  #28  
Old 04-04-2012, 11:55 PM
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Originally Posted by anlok View Post
A very good & valid debate point But on 2nd thoughts, if you buy from ANY other souces that sells Silver, won't it be the same You won't be able to sell cheaper than SM if you buy from SM right? At least as of now, what I can see is GoldBull 5000 is throwing in additional "benefits" compared to buying other sources Let the debate continue & see how things unfold
The bullion dealing business in Singapore is still in its infancy. There are three ways to win this game locally:

1. be the price leader, sell your bullion at lowest possible price to the public at all times

2. be the quality leader, sell your bullion at high price with great service to match

3. be unique, sell your bullion at fair price with value added service that people really want

Currently, I am still in evaluation phase to see which one of the three models BullionShopSingapore should take on. What we want to offer right now is to be unique. But this strategy is the most risky one because people might get confused and therefore refuse to deal with unique sellers.

Here is my attempt to find out if my unique proposal meets market demands.

By using just ten high quality silver bullion bars to test the market is the fastest and cheapest way to find out the truth.

But regardless what happens to our business model, be assured that the buyer of these ten bars get the full capital guarantee as described in my sales conditions. I will set aside that full amount in cash to prepare to buy it all back from you guys in 2014.
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  #29  
Old 04-04-2012, 11:55 PM
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Nice points taken ..
One last question on my mind before i turn in for the night .

Can i assume that u are not buying back the bullion ( assuming silver went up ) in whatever case..

The only 2 risk that buyer have is zero return on this bullion assuming silver crash for the entire 3 years and another risk for buyer is you sell your 2 million condo and run road and i cannot find you .. haha

Can i make a suggestion is that u need to have some security features in packaging like UOB so that we can have the tampering portion off the radar .

Nice talking to you .. Let me think over one night as i have a flight to catch tml.
  #30  
Old 05-04-2012, 12:04 AM
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Hi, to hedge against the possibility that the KG you sell us might go under in the 3rd year, you mentioned you are using Futures to cover. So the Future Contract price must be higher or lower than spot now? Very confused.
My guarantee is currently for those ten bars and it is underwritten by myself in personal capacity. This means my entire personal asset is ready and available to back up your claims against me as buyer.

I am using these ten bars to test the market readiness. Those ten bars are NOT hedged by any financial products. I will just take the money and put into a fixed deposit and wait til 2015.

If the market is ready to accept such a product, I will start to capitalize one of my companies to do this full time. I wont be doing it alone. I have equity partners ready to jump in if the trial is successful. We will have staff, office and fixed trading hours for those who want to come visit.

yes, in the end, when the volume is kicking in, I would use various futures and options strategies to hedge our financial exposures to the Capital Guarantee.

But you can be assured as a customer that our company will be well capitalized. We will be ready and willing to meet our financial obligation.

Please understand that I can't disclose to you HOW we hedge our own price risks. Its the same like for Coca Cola, you can read on the can what is inside, but they will never tell you HOW they mix the stuff.

The key to our success is volume of trade. Without demand for the product and volume behind it, it won't be profitable. I would like to let the market tell me if what we want to offer can generate volume or not.
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