On Monday, June 23, 2003, at 01:47 AM, Robert S.Z. wrote:
You can't take friction away from a frictionless system.Of course not! But calling e-gold or DBourse frictionless is the same as
calling a bottle an endless supply. First you gotta get it in there,
before you can use it.
...
That's 12% in a week of - frictionless - trading. Of course, the market
loss is book value only, but if a system is frictionless then there should
be no loss in commissions and cost of owenership, let alone a weeks delay,
don't you think?
You are attributing all the costs of converting dollars to 1mdc grams to the Dbourse trading process itself.
As a personal, bottom line consideration, this may be accurate, but then you'd have to include the price of the gasoline you burned getting to the bank to do the bank wire, opportunity cost of time spent fussing with the bank wire, etc. Where would it end?
You are complaining about the cost of converting dollars to 1mdc grams. That's fine, but to attribute that to the Dbourse and say the market is loaded down with friction is a bit misleading.
For those who have already funded 1mdc accounts, the process has extremely low friction. The only friction at this point is the time spent waiting for the human at the Dbourse service desk to fund your account. That is not a big deal to me yet because I Am Not a Day Trader and this market is too slow to day-trade anyway.
Although it seems that TGC could have easily developed an automated funding mechanism, I can perhaps understand their decision not to do so, at least at first. Maybe they just want to lovingly and carefully respond to the people forking over such large amounts to invest, to test the waters so to speak, before attempting automated funding which might pose unnecessary risks in a brand new system.
To reiterate: for those with already heavily funded gold accounts, the Dbourse system has amazingly low friction.
Instead let's do the maths:
I buy $11,500 worth of e-gold and pay 3% commission to the exchanger.
Four days and $65 transfer costs later, I have the e-gold in my account.
Robert, if you had gotten off your ass and done this 3 months ago you wouldn't be complaining about it today. :-|
But yes, until more of us find ways to acquire IG grams directly, in direct trade of goods and services, many will have to go through exchange agents and endure that friction. But again, it is misleading to attribute that friction to the Dbourse exchange process itself. In cost accounting, everything in its proper place, right? It would be like buying a cup of coffee in Paris and including the cost of converting your dollars to Euros, exclaiming how ridiculously high the price of a cup of coffee is in Paris, that you could get it at least 5% lower state-side (even though it would probably suck in comparison).
The day after that I have it in the DBourse account and am ready to trade.
Cost to get started is above 3% [=5 months dividends] Initial risk is that
by the time I get my e-gold the price per share may have increased AND the
gold price might have gone up, so I get less shares for my Dollars.
Using last week's spot price trading range (Monday-Thursday), between the
spot raise and the exchanger's fees I could have lost about 10% before
getting my hands on shares. And then on Friday alone the spot dropped by
almost 2% between Sydney HIGH and New York LOW.
Well yeah, you could have a car wreck on the way to the bank to send a wire and losing your freakin' LIFE! Hardly worth it for a TGC share!
You could just as easily turn your scenario right on its head and everything comes up roses. You see Robert, if you had gotten off your ass and done this 3 months ago you wouldn't be complaining about it today. :-| Oh yeah, I already said that.
All that said, I still think DBourse is great. It just would be much greater with brokerages - or with a decent clearing system...
A clearing system would be GREAT. But in the meantime, funding a Dbourse account more like living in Mayberry R.F.D. than New York City. You get to chat with Goober when you take your car in for maintenance, chat with the repair guy when you take in that broken Grammophone, and chat with Barney as he issues you a warning for double-parking in front of the produce store. It's quaint!!
-- Patrick
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