(15-01-2012, 06:50 PM)Bibi Wrote: [ -> ] (15-01-2012, 05:04 PM)MrValue Wrote: [ -> ]This guy runs a gold ponzi scheme. Current gold price is ard $67 per gram but he sells his gold bars at $87. $80m sales will generate $23m of gross profit before cost n buy back guarantee obligation.
Not difficult to afford a Bentley with that kind of money.
Hmm, i dont quite get it. Though gold price is at $67/gram, if one pops into a jewellery shop, the shop owner wont charge their products at 67/gram right? I thought should compare with another company selling gold bar at what price? Also, the customer are getting the real gold bars and not any gold bar's certificate so how is it a ponzi scheme?
I think the plan will fail due to the buy-back guarantee if gold price plunge over the next decade. Well, if it fails, at least the customer still holding on to their real gold bars.
For this 'scheme' of buy-back guarantee to work, either,
1) Rising Gold Price Environment : Gold Price need to appreciate at least 30% within the buy-back guarantee period so that no customer will activate the guarantee.
2) Falling Gold Price Environment : The company need to use the proceeds from the 30% Gross Margin to Pay Staff Salary/Commission + other operating costs + Gold Price Hedging Expenses (assuming they are doing that) + Initial 1.5% - 1.7% Discount + 1 Bentley as it's very likely customers are going to activate the guarantee.
Ya, worst case if the scheme fails, the customer would be still holding the physical Gold but would have lost at least 30% of their money.
My take is the 'investors' are attracted by the zero downside due to the buy back guarantee (will in fact make a min. 1.5-1.7% due to the initial discount) and the potential upside if Gold Price should rise above 30% (they can sell the physical Gold elsewhere). Here, I'm assuming the customer has possession of the physical Gold (mentioned by one customer under customer testimonials in their website), which gives them added 'assurance' that they won't lose everything.
Only time will tell if this is a scheme / scam. So, let's watch and learn...
During my early days in Shanghai, I learnt quite a lot from a driver who is connoisseur of Jade.
What he told me stuck in my head:
Gold and silver got market (that means there's a worldwide market price where we can easily refer to); but gemstones no price.
It means for jades, diamonds, pearls, etc - the price will depend on the skill of the buyer. For eg, he said the same piece of Jade can be sold for USD 300 to USD 30,000!?
"Expert" like him can buy at $300; while toursits buying "direct" from those super classy export/manufacturer will pay $30,000 - thinking they have bought a bargain bypassing the middle-man. Someone has to "cover" the tour guide mah
Would you pay 30% above the traded price for your stocks? We still got the shares what? Or would you exchange your Sing dollars for Ringgit at money changers with 30% worse off rates? Is that an arbitrage or what!?
With this kind spread, I can be a market-maker!
Wo de tian ah! Or Oh my heavans!
(15-01-2012, 06:50 PM)Bibi Wrote: [ -> ] (15-01-2012, 05:04 PM)MrValue Wrote: [ -> ]This guy runs a gold ponzi scheme. Current gold price is ard $67 per gram but he sells his gold bars at $87. $80m sales will generate $23m of gross profit before cost n buy back guarantee obligation.
Not difficult to afford a Bentley with that kind of money.
Hmm, i dont quite get it. Though gold price is at $67/gram, if one pops into a jewellery shop, the shop owner wont charge their products at 67/gram right? I thought should compare with another company selling gold bar at what price? Also, the customer are getting the real gold bars and not any gold bar's certificate so how is it a ponzi scheme?
I think the plan will fail due to the buy-back guarantee if gold price plunge over the next decade. Well, if it fails, at least the customer still holding on to their real gold bars.
Physical Gold bars can be purchased at UOB, and their markup is far far lower.
http://www.uob.com.sg/personal/investmen...etals.html
UOB indicative price for physical bar from above website is just under $73 per gm as of yest, and Int'l mkt price is $68. The price dif is primarily caused by the 7% GST. If u open a gold savings account w them, price is only $68.17 as GST is not applicable, a more 0.25% markup. So there is a reliable way to long gold and pay minimum markup.
Just google on gold ponzi scheme and u can read up abt their operation.
If i understand correctly, customer will only activate if the gold value falls -30%.
In the unfortunate case it does hit, the Company will just collapse but the business owners may have extract most of the money out of it already legally through high bonus, expense and salary.
(15-01-2012, 10:46 PM)corydorus Wrote: [ -> ]If i understand correctly, customer will only activate if the gold value falls -30%.
In the unfortunate case it does hit, the Company will just collapse but the business owners may have extract most of the money out of it already legally through high bonus, expense and salary.
If it's like that, then goodness, :O
ST might need to address this type of profile and biz model... :O
A lot of people(not sophisticated or investment savvy enough) will think in simple language terms guarantee means = “包吃”. So a lot of scams prey on this common people's thinking. Actually it's almost certainly "包 死". i use to be one of them but fortunately i learned from others' experiences like the recently CDO structured investment products. So i never, ever believe there is a real guarantee ( “包吃”) investment in this world. No! Never will be!
(15-01-2012, 07:29 AM)Musicwhiz Wrote: [ -> ]I would say it would be the money and time I invested in my real estate agent career as I hated the job.
The first year was fine but by the second year, I just didn't want to go to work when I woke up every morning. My perception of the business is such that you have to invent some truths, but I wasn't comfortable with that, so I took longer to close deals.
Hope he's nt inventing truths at Gold Guarantee.
Nonetheless, have to give credit to sponsorship of a dozen children with World Vision...
(15-01-2012, 09:10 PM)corydorus Wrote: [ -> ]It just say buy back guaranteed. Noting about price right ?
So is just an avenue for investor to offload. Ofcourse he will skim another huge margin off it.
Cory
Hi Cory,
The best part of my wife's cousin offer was the company would buy back at a "guarantee" price. Such that the gold investment seemed to have upside but no downside; downside was the "guarantee price".
If it waddles like a duck, it must be a duck. HA! HA!
(16-01-2012, 05:40 AM)Temperament Wrote: [ -> ] (15-01-2012, 09:10 PM)corydorus Wrote: [ -> ]It just say buy back guaranteed. Noting about price right ?
So is just an avenue for investor to offload. Ofcourse he will skim another huge margin off it.
Cory
Hi Cory,
The best part of my wife's cousin offer was the company would buy back at a "guarantee" price. Such that the gold investment seemed to have upside but no downside; downside was the "guarantee price".
If it waddles like a duck, it must be a duck. HA! HA!
In their website, they gave a worked example that they'll buy back at the original selling price (which was ~30% above market price). The guarantee appears to be that you'll make at least the discount of 1.5-1.7%.
That's why me thinks there's a very high chance of failure in the event gold price doesn't move up 30%. In the meantime, they'd have consumed part of their initial 30% margin for Operating Expenses (Salary, Office,...) and they have to utilise the leftover to hedge / earn enough to make up the difference in the event gold price drops or doesn't move up by 30%.
Beware...
(15-01-2012, 05:04 PM)MrValue Wrote: [ -> ]Physical Gold bars can be purchased at UOB, and their markup is far far lower.
http://www.uob.com.sg/personal/investmen...etals.html
UOB indicative price for physical bar from above website is just under $73 per gm as of yest, and Int'l mkt price is $68. The price dif is primarily caused by the 7% GST. If u open a gold savings account w them, price is only $68.17 as GST is not applicable, a more 0.25% markup. So there is a reliable way to long gold and pay minimum markup.
Just google on gold ponzi scheme and u can read up abt their operation.
This company is a GST registered company. According to its website, it has "special arrangement" so that GST does not have to be printed on the receipt. The IRAS website does list a few circumstances where GST does not have to be paid, but I can't find one for this gold trading business.