Wednesday, December 07, 2011

Warning to invest in Genneva Malaysia or Goldco

5 points to consider seriously abt this scheme "-

1. The directors are charged by Bank Negara in court and the case is still pending.

2. You are buying gold at jack-up price. Price of 99.999 pure gold quoted by Maybank and Public Bank is about RM150/gram but Genneva sells to you at RM182/gram.

3. You will break even if the scheme can sustain about 15 months period because you will receive 1.5% x 15 = 22.5% return to offset the 20-25% higher price you pay.

4. How can the business model be sustainable? The company sell to you and buy-back at same price at end of 6 months period. And the company has to fork out 1.5% x 6 = 9% hibah + introducer commission + upline overriding + administration and company operation cost + etc expenses. I don't know how the company can sustain other than to use the payment by the later customers for the earlier customers. What if more people wish to redeem at the same time? Will the company has cash flow to meet the redemption? What will happen if cash flow is not enough to meet redemption? The whole scheme will collapsed.

5. Its true that you hold the gold bullion as security but the gold bullion is sold at jack-up price.  What you hold is not worth the value you pay? As at 10 May 2011, Genneva quoted price of RM182/gram for 999.9 gold while Maybank only quotes RM148.39 for similar grade, a 22% price difference. If the company closes shop tomorrow, the price of RM182,000/kg that I pay for Genneva gold will only be worth RM148,390 based on Maybank quoted selling price (prevalent market price + service charge). In all, I pay RM182,000 but get back only RM148,390, a loss of RM33,610 if the company close shop before maturity period. And the total hibah of 1.5% x 6 = 9% (or RM16,380) does not measure up to the risk of loss that I have to bear.


Added on May 18, 2011, 4:50 pm
How can the company sustain the payment for hibah, meet redemption, pay company operation expenses when the buying and selling price is the same in 6 months? Sound much like a Ponzi Scheme, those early birds will catch the worms and later ones will get burnt. Imagine the company pay to investor 1.5%/month, introducer 0.5%/month, upline 0.3%/month. Total 2.3%/month or 27.6%/year. Assuming operation/marketing cost at 1% per month or 12% per year and staff salary at 0.5% per year or 6% a year, Genneva will have to make 27.6% + 12% + 6% = 45.6% just to break even. 

Possible or not, you analyse yourself.

Assuming the gold you hold as security is genuine 99.999% purity, if the company go bust, the price of RM182,000 you pay for 1 kg will only be worth RM182,000 - 25% = RM136,500 in the open market.

Is 1.5% a month return worth the risk, you judge yourself.


Added on May 18, 2011, 5:04 pm

If no investor cash out, Genneva will make 7%. What if you are cashing out and Genneva needs to pay you back your buying price and you already make and keep the return? How will Genneva come up with the 18% yearly return and not forgetting, they also have to incur operation cost and expenses in runnng the company and paying their staff's salary.


Added on May 18, 2011, 5:21 pm
Pat Lu is happy because when you buy 1kg of Genneva gold from him at RM182,000, he promises you 1.5% x 6 months = 9 % return or RM16,380 for 6 months and he will also receive 3% or RM5,460 for the 6 months period. If he is a senior consultant (upline), he will receive an additional 0.3% x 6 months = 1.8% or RM3,276. If you renew after 6 months, he will continue to receive the amount.

Imagine Genevva sell gold at RM182,000/kg and has 5 ton or 5,000 kg of gold outstanding in circulation waiting for redemption with total selling price of RM910,000,000 (RM910 million) but with premium value of 20% or RM182,000,000 (RM182 million). If the Directors decide to close down business, they will get to keep the premium that you pay of RM182 million while you keep the gold that actually worth only RM728,000,000 (RM728 million).

Bear in mind that Genevva has paid-up capital of only RM1 million.

So there is no risk to Pat Lu when he try to convince you to buy but the risk is on the investor is tremendous if the company face cash flow problem. Only the Consultant will be laughing all the way to the bank and the Directors can retire wealthily with RM182 million in anywhere in the world.
*


full discussion found here: http://forum.lowyat.net/topic/1826578/+40
Thank God I do research first before I tell my mom to invest!
So do research properly before investing!
No wonder the accountant look like crap when I attended the talk about this company. He looks like a robot reading out whatever it is in the powerpoint and look so pale. Really pity him because I think the company is just using him because he is a foreigner. Never smile once during his presentation.

Dear All

I believe you've already spotted some players in town of late:

1. www.mysmartgold.com, which carries Pamp Suisse gold bars. If you look at the prices they are quoting and doing your math, you will note that they are definitely better positioned against P Gold, first for having a well known gold bar brand and secondly, for the pricing above 20g.

However, caveat emptor needs to apply as I don't know if those bars are genuine and I have not heard of Hong Cheong Jewellery. Maybe I have been under the lid too long.

2. If you were invited to a talk by True North Asia, they are affiliated with Auruma International, of which I believe it to be a Ponzi/pyramid scheme because of the statements they make during Q n A (they have 8 levels of payment but is not MLM - duh!). Google "auruma scam" and you will find an interesting piece written about them. They are not members of Direct Selling Association of Malaysia (or any other country I suspect).

3. buysilverinmalaysia.com does not exist online, and yet this website is touted and the address referred to as a location in Old Klang Road from previous post. I haven't been to this place to check it out and I think that this is suspect as well.

Caveat emptor!

Rgds
Pub Mutt.

No comments: