Someone sent me a question to ask me about Genneva Gold Sdn Bhd.
According to the information on the website, Genneva Gold sells you Gold Bullion at a 2% discount to the market price with a buy-back guarantee.
At the end of one month, the buyer can
- Sell buy the gold to Genneva Gold at the market price based on the time he bought (thus making an immediate 2% profit)
- Keep the Gold Bullion.
- Rollover. Meaning do step one and buy a new Gold Bullion at a 2% discount to the current market price.
The deal seems too good to be true because the company is essentially selling you gold at a 2% discount and giving you a free put option.
There doesn’t seem to be any downside for the investor. If the price of gold goes down, he can sell it back to the company. If the price of gold goes up, he can keep the gold and sell it on a secondary market by himself.
- How does Genneva Gold generate revenue/profit from this entire transaction?
- Assuming an investor does just the bare minimum and rollovers his investment for 12 months, he would have made a 24% return. How does Genneva Gold substain this payout?
- How do you verify that the gold you receive is worth its weight in gold?
There is a “Terms and Conditions” to the 2% discount thing though. I would be interested to know what they are.