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Genneva Gold

There have been a lot of talk on using gold as an investment vehicle. To most, it is the face of the commodity bull run. Given if that one invested in gold rather than stocks in 2008, one would yield helluva decent returns in the former than a loss in the latter.

A recent few months ago, someone introduced to me gold trading as an investment strategy. Particularly in companies like Genneva.

In the face of many gold scams like HYIPs, I have doubts on my own with regards to the sustainability of the business model in the likes of Genneva and Gold Label.

Yet at the same time, it is indeed fascinating to see people really profiting from such schemes that runs for a significant length of time.

Perhaps I will list down the “For”s and “Against”s at first glance of investing in such a scheme, using Genneva as an illustration:

FOR

  1. Physical gold is retained by the investor
  2. Gold issued by a registered government bank
  3. A contract is issued by a legal entity
  4. Legal entity is ISO certified
  5. Legal entity is confirmed as a Associate Member of the Singapore Retailers Association
  6. Real life examples exist and currently profiting
  7. Not sold via MLM or pyramid
  8. Gold is on the bull run currently, supporting fundamentals of the “business”

AGAINST

  1. Whilst it is does not seem like a pyramid or MLM, do note that there are agents who take a cut in getting investors in. (This point is moot as FAs also get a cut for selling unit trusts).
  2. The physical gold that exchanges hands maybe a pure distraction to the “investor” since the “investor” is paying a premium over the actual worth of the gold. The premium alone seems to me like it is used to feed a ponzi. However, the explanation given is that the company uses these extra cash as working capital for the “vertical integration of their businesses”.
  3. The website does not seem very well maintained and they use very distracting words like “proprietary trading platform”, claiming that their method appeals to “sophisticated” investors etc.
  4. Nil disclosure on financial statements

There are 2 camps for such an investment scheme as seen in Lioninvestor’s website. His blog post had attracted many many readers and commenters . You may need sometime to read about them though.

I hope to delve more about the fundamentals and see whether the business model (though claimed to be legitimate) is sustainable or not.

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  • Richie

    Hi bro,

    Some points for you to consider on the “Against” points you listed.

    AGAINST

    1.
    Everyone needs to earn their living right? So even a banker will earn their commission based on what they bring to a bank from potential clients just like the agents. Same like what you pointed out on the FA reps. Even the sales person selling the tickets for a airticket also earns a commission.

    2.
    You’re right that they paid a premium over, but this is the exact premium you pay for your gold jewellery from any gold dealer in the retail market if you noticed.

    24K gold is traded about $70/gm which translate to $75 approx. after GST included

    For Gold jewellery
    The price of 22K and 24K gold is calculated using the following formula:

    Nett Weight x Prevailing retail gold price + Workmanship + Goods & Services tax (GST) = Total Price.

    3.
    Website designs are not the best benchmarks for the stability of the company and their strength of weaknesses, but rather your first hand experience. Like getting to know the company by virtue of visits to onsite, seeing the product, seeing the relevant authorised licences, exemptions, associations, etc…which you listed also…

    Of course your argument maybe, that in today’s IT savvy world the company should maintain a better website. Unfortunately this is really not necessary when the company is really strong with referral businesses and the reputation is growing without the use of fanciful website. Sometimes the most spectacular website can also just be a con job…

    4.
    I agree with you on this point. But a Pte Ltd Company do not need to disclose its financial statements. Some of the biggest companies are Pte Ltd Companies and they are ones that gone from PLCs to being PTE LTD so that they can retain the biggest profits for companies and immediate shareholders rather than pay out shareholders dividends to savvy investors like you and me who speculate and try to make the quick buck out of them without any interest in their business success…

    so my point is, if today you’re starting a business as a Pte Ltd, would you disclose to the public your financial statements?
    you probably only give these statements to the banks or your immediate stakeholders to get loans, tax depts to pay your taxes and duties, but other than that you probably won’t just leave your finances lying around on the internet or even publish it…

    hahaha
    richie

  • Richie

    oh forgot to add this,

    known fundamentals or business models are hard to ensure full-proof success…

    look at Lehman brothers, the banks that collasped or ended up winding up most of their ops and businesses that have closed during the financial crisis. Even the airline businesses also suffered…no one is 100% risk free… at best is limited risks…

    then my question to you now is that, do you even know the companies’ fundamentals and business models that you have bought shares or are trading now? how sure do you know their models? have you gone for their shareholder meetings? how sure are you, on what they listed on the websites or documents posted are valid? or do you also rely on information fed to you via, bank’s newsletters, newspaper article, trading houses views etc? the list can go on and on…hahaha

    even i do not have a clue nor answer for you unless i am truly a stakeholder…

  • http://www.goldprice.com.sg Dennis Lim

    Hi,

    I fully agree with Richie.

    Genneva is not an investment company that alot of people thought so. It is just only a physical gold trading company that provide a program with a buy back guarantee. They provide a choice to the buyer whether to keep it, sell it in the open market or return back to them with their buy back guarantee. It has also a cooling period for the buyer to consider.

    People were saying this is a ponzi or scam and it will not last for one year. But indeed the company had lasted more than 3 years since they started the business in Singapore on Jan 2008.

    Infact through this platform, I had accumalated more physical gold reserves for myself by using my existing physical gold to deal with Genneva and I can say that I am risk free. I say this because I believe that gold is equal to money (at present) but gold is not equal to money (in future). With physical gold, you will not go bankrupt!

    With the gold reserves that I had, I started to mint my own gold bar, the 1st Singapore-made Lion head 100g 999.9 that was launched last year. It was featured in the newspapers(Wanbao, Zaobao, Business Times) and I was interviewed by Channel New Asia why I started to mint the gold bar. The reason is very simple, I am trying to promote Singapore-made gold bar to the world.
    Gold Trader Asia Pte Ltd is handling my sales through is online web portal (www.goldprice.com.sg)using credit card payment. The price is slightly higher than the bank but if you know how to tap on some credits cards that provide cash rebate (upto 5% cash rebate) then you find that it is cheaper than the bank, more over you earn points from your credit cards. If you pay by cash, there is a 2% discount which is also slightly cheaper than the bank.

    The purpose to put up this message is to share how I tap on Genneva’s gold trading platform to increase my gold reserves as well as $$$………

    Cheers!

    Dennis Lim
    Gold Trader

  • http://www.goldprice.com.sg Dennis Lim

    Hi,

    I fully agree with Richie.

    Genneva is not an investment company that alot of people thought so. It is just only a physical gold trading company that provide a program with a buy back guarantee. They provide a choice to the buyer whether to keep it, sell it in the open market or return back to them with their buy back guarantee. It has also a cooling period for the buyer to consider.

    People were saying this is a ponzi or scam and it will not last for one year. But indeed the company had lasted more than 3 years since they started the business in Singapore on Jan 2008.

    Infact through this platform, I had accumalated more physical gold reserves for myself by using my existing physical gold to deal with Genneva and I can say that I am risk free. I say this because I believe that gold is equal to money (at present) but gold is not equal to money (in future). With physical gold, you will not go bankrupt!

    With the gold reserves that I had, I started to mint my own gold bar, the 1st Singapore-made Lion head 100g 999.9 that was launched last year. It was featured in the newspapers(Wanbao, Zaobao, Business Times) and I was interviewed by Channel New Asia why I started to mint the gold bar. The reason is very simple, I am trying to promote Singapore-made gold bar to the world.
    Gold Trader Asia Pte Ltd is handling my sales through is online web portal (www.goldprice.com.sg)using credit card payment. The price is slightly higher than the bank but if you know how to tap on some credits cards that provide cash rebate (upto 5% cash rebate) then you find that it is cheaper than the bank, more over you earn points from your credit cards. If you pay by cash, there is a 2% discount which is also slightly cheaper than the bank.

    The purpose to put up this message is to share how I tap on Genneva’s gold trading platform to increase my gold reserves as well as $$$………

    Cheers!

    Dennis Lim
    Gold Trader

  • http://mygoldgoose.wordpress.com/ Pat Lu

    How I see Genneva Gold… It is similar to placing your savings in Fixed Deposit. Whether the price of gold goes up or down, your capital is protected 100% with 1.5% return every month (for a tenure of 6 months); compared to FD which gives you only 2.85% PER YEAR.

    More about Genneva Gold Savings Plan, read:
    http://mygoldgoose.wordpress.com/about/

    Hope this helps. Cheers!

    Pat Lu

  • http://www.igmarkets.co.nz/cfd/commodities.html Options Trading

    what is difference between gold trading and gold investment?I think in both of them there is no need to buy physical gold so what is the difference between these?Ether genneva gold is more profitable for investment rather than trading.

  • http://pulse.yahoo.com/_UNLP45OEQMC5MJTZ4KSCSEB6LM Daniel Fisher

    Hi,
    Nice information providing by you. I will follow these point for my investment in gold which is under planning….Thanks a lot..
    Buy Gold

  • Kechung

    U r right, but why they borrow money at 18% form you (gold investor) when the bank are offering 6% ?

  • http://www.acatholicmarriage.com Paul Wong

    Probably it is because they do not meet some regulatory rules for borrowing from the bank? And it may be easier to raise funds from individual investors etc.

  • http://www.acatholicmarriage.com Paul Wong

    I suppose that you run the wordpress site and that you are an agent for Genneva Gold?
     

  • Thonetrading

    Becareful. Don’t invest all your money there….

  • http://www.acatholicmarriage.com Paul Wong

    well.. you are somewhat right. Caveat Emptor!

  • John Doe

    Hi, Gold as much as other commodities, cannot give you passive income. You cannot get fix dividend by buying rice, sugar or salt. But how on earth can they do this? It is simple! Just see how much are they selling compare others (particularly http://www.nubex.com.my). For the same quality, weight, purity, they are charging something like 25% over spot vs 2.5% if you buy from Nubex. See the article they have about this “scam” at their blog. http://nubexblog.blogspot.com/2011/12/kenapa-masih-tak-reti.html (Bahasa). What I am trying to share is, treat gold as what it should be treated. It is more logical to surrender your gold to Genneva for them to treat it as capital and give you dividend from the business activity. But keeping them to yourself and enjoying the benefits? I would say that is actually your own money, especially when you can buy from company who are a bullion trader like kitco, apmex, nubex, perthmint, etc. 

  • interested analyst

    i’m not a member of genneva after reading much i suppose they are in the view of people not selling back gold to them but sell it out in the market 

    Say if i buy at usd 70 price per gram or what ever unit with a rebate of 2 % 

    i am going to earn say 2% in a months time i can choose to rollover , or sell the gold bar back to them or sell it in the open market 

    Scenario 1 (Price goes all the way up) above 70

    the buyer will choose to sell in open market where they will make more then 2% if they are able to they will choose to sell it in the open market 

    Analysis this gold is not up to the notch of 70 in the first place in the open market you will lose 20% say if you buy and sell immediately this scenario is perfectly advantageous to genneva as they have managed to sell their gold bullion in the market for 20% higher now that the client has sold it in the open market.

    Scenario 2 (Price does down) below 70 

    Buyer at this moment of course would like to stick to the 70 they have purchased 
    sell the gold back to genneva with 2% profit 

    buyer returns the gold bullion to genneva in this scene Genneva did not make a lost 
    in actual fact they have at least 10 times chances of trading this gold piece in the market before they make a lost ?

    20% lower then market price gold bullion divide by 2% = 10 try

    if we make the sum right Genneva Business structural is somehow clever in a way

    Well i could be wrong but at least that’s how i look at it 

    cheers !

  • http://www.acatholicmarriage.com Paul Wong

    Am not an investor in Genneva but there might be a clause somewhere that when you buy the gold and wish to sell it back, you can only do it via Genneva.

    There is already a 20% markup from the traded value of gold so for your purchase to reach a profitable stage to sell it off to the market instead to Genneva, you would already have to wait very long. It makes more sense to “sell” the gold back to Genneva.

  • http://www.acatholicmarriage.com Paul Wong

    There is an article in IMSavvy on a new player in the market.

    http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={493019264-12271-5755273699}

    Given how lucrative this is, there may be “copycats” spinoffs for such business. You will know that it is a bubble if people are using leverage to purchase such products and it reaches a feverish state.

  • Guest

    Genneva Malaysia Sdn Bhd  being raided was a joint operation by police,
    Domestic Trade, Cooperatives and Consumerism Ministry and BNM under the Anti
    Money Laundering Act.

     

    The company was set up
    in 2007 and has been charged for a similar offence before.

    Similarly, Singapore’s Commercial Affairs Department also
    conducted a similar raid operation against Genneva Pte Ltd in the republic.

    The reason also being to probe suspected offences under the laws administered
    by the agencies.

    The public is advised to be cautious in investing money to avoid becoming
    victims of activities that are illegal and in breach of the law.