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Genneva Gold Placed on MAS Alert List

Genneva Gold has been recently placed on MAS Investors’ Alert List.

This comes a few months after another company operating under a similar business model, The Gold Label, was also placed on the list.

Business Times has covered a story on this last weekend. You can read it here:

Golden Fleece

Extracted from the article:

Effectively, Genneva has sold investors a put option along with gold, charging them a premium for it, and sweetening that by sharing some of that premium at the end of the contract period of a month or three months.

Some people may think along the same line. But actually, this put option thing will never work out.

Assume spot gold is at $1000 and Genneva quotes you a selling price of $1200. Factoring in a discount, you only pay $1180 and have the option of selling it back to them at $1200 in one month’s time.

What has happened is that you have paid $1000 for spot gold, and $180 for a one-month put option with an exercise price of $1200. Charging $180 for an option that has an intrinsic value of $200 just doesn’t make any sense. The price of this option should be more than $200 if you factor in the time value of the option.

If you can understand the logic of this, then you will know that the deal is too good to be true.

Because if it is feasible for Genneva (due to whatever trading strategy they have in the backend), then they would have sold a similar put option to financial institutions at a price much higher than $180. Why would they want to sell it to you and get only $180?

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10 comments
rudy says 7 years ago

Good and generous ponzi scheme give 10% per month, but bad and evil ponzi scheme like GM only give 2% pm, really blood sucker.

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James says 8 years ago

When the gold is returned, money does not change hands immediately. There is a waiting time of about 2 weeks. Therein lies the danger for the ‘investors’. This ponzi scheme will shut down one day. For those who are still holding their gold bars when the music stops, they will lose more than 20%.

But for those who has just ‘surrendered’ their gold for redemption when the Genneva promoters close shop, they will lose everything.

A company that promises 24% pa is a ponzi scheme – no two ways about it. For those who want to make a quick buck, if the company stays open for the next 12 months, you will breakeven by ‘recovering’ the 20% discount. After 12 months, you will start to make profit.

The caveat is that you must not be one of the unlucky ones who happen to surrender your gold when the music stops.

For the rest, holding your gold does not mean you lose nothing if Genneva close shop. Consider this:

You buy the gold from Genneva at a mark-up of 20%. You think you lose 20% if the company close down? Try to sell your gold to a goldsmith shop. They will offer to buy at another 25% discount.

Example:
Bullion price RM1000. You pay Genneva at RM1200.
The goldsmith shop will offer you RM750!

Your loss is RM1200 – 750 = RM450.

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klbull says 8 years ago

The gullible can include even PhD holders, not just Masters degree holders. Greed blinds. Schemes such as Genneva Gold are thinly disguised Ponzis and may survive for many years under the right conditions. Early birds may profit but woe to many others. Ultimately they will fail. Remember Bernie Madoff? His scheme ran for decades because he was believable. No one put his so called investments under the microscope.

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guilty as charged says 8 years ago

Very interesting.

I know a couple both not yet 40, both Masters degree holders, husband is a Stanford grad & worked in S’pore’s Civil Service. Upon discovering this opportunity in Dec 2008, which happened to coincide with the sale of their private apartment, they decided to plonk in $500,000. Since then, they’ve been living debt-free & having a passive income of at least $10,000 per month (much more now, as they also market this opportunity). They are both stay-home parents bringing up their 4 young kids, renting an apartment in Orchard Road. Waste of education & talent? I think not. It just gives them reason to enjoy real & meaningful life.

Well, perhaps the Big Boys are trying to keep such good oportunities away from the masses so they can continue to roll in dough while the masses work themselves to the bone and “rejoice” when they see things like FDs giving 0.85% pa.

You may be completely skeptical & deride this real-life account. That’s perfectly fine. But that doesn’t change the fact that this family has been enjoying financial freedom since Dec 2008 and still continues to do so.

Maybe the best thing for well-educated armchair critics to do would be to try it out for themselves before they comment & thereby squander away a valid opportunity that could very well have been the ladder for others to climb out of their wells.

Ever read “Green Eggs And Ham” by Dr Seuss?

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innocent says 8 years ago

Dear Investor,

This is a wake up call. Ask yourself this question: What kind of business model does the GMSB provide? Earn your money (25%) and after 3 mths they give back (6%). When you sell back upon maturity, they will buy back from you at a discounted price as mentioned by Mei May because the contract did not stipulate that GMSB will buy back at purchase price.
Just imagine, in the event that the gold price slide, do you think GMSB and GMPLwill be around to share your losses not forgetting those crude agents. They will disappear because the investors are mainly consists of family members, relatives, close friends etc.The business model is to waylaid all naive immediate family members and then establish its network through these greedy mentality to enhance its present.
In the past forum, I remember someone mentioned that this business was own by a immediate family of Poh Kong Jewellery in KL. This absurd! Can someone proof this claims. Final reminder: “Too good to be true” there isn’t any income from GMSB or Genneva Singapore. If this invesment model is workable then the banks and institution are MORON.

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Pat Lu says 8 years ago

“Overpriced”? Genneva Gold is not like trading on the stock market nor is it a “gold savings account” promoted by banks and financial institutions where you only hold a very expensive savings book made of paper not worth its weight in gold.

Genneva Malaysia Sdn Bhd (parent company) is simply a goldsmith shop that sells gold bullion bought at wholesale price (you and I can’t buy at that price) and retailed at a higher price for profit; same time share some profit with their buyers based on Syariah principles. You HOLD PHYSICAL GOLD and earn Hibah through the Genneva Gold Savings Plan. At the end of each tenure (3 months) you can choose to sell the gold back to Genneva at the same price you bought at. This potentially gives you 100% capital protection.

Why are people so fearful and keep repeating the mantra, “Too good to be true”? Perhaps no other business nor investment gives you such high returns or maybe people “study too much” at universities and can’t believe Genneva can make money and share profit the same time with their buyers based on a very simple (practically in-your-face) business model — buy at wholesale price and retail at higher price. For centuries, businesses selling products do that for profit, why not apply the same to gold? 🙂

Watch Genneva’s Corporate Video – There you’ll see they are also into other businesses related to gold.

Cheers!
Pat Lu (+6012) 2104898
Senior Consultant, Genneva Malaysia Sdn Bhd

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    Lee Mei May says 8 years ago

    Dear Pat Lu,

    Your “contributions” smell of “agitprop” which was the hallmark of the nazi era. Let me disabuse you of the misconceptions which you are diseminating to earn your commission.
    1. Customers who wanted to discontinue at the end of the tenure are refused “Buy Back” and if you look at the contract, it is nowhere mentioned and the customers are not “principal protected”;
    2. Wholesale price is available to gold players in the market. In fact, GMSB is getting the gold from middlemen and banks at wholesale price plus. Gold trading is for professionals and should not be debased with misinformation;
    3. Goldcos will work when gold prices are on the upswing since they are profiting from the gold held by the customers. Worst case scenerio, they buy back at 20% discount since nowhere is it mentioned that they have to buy back at purchase price. The goldcos have mentioned that it is not legal to have a buy back clause. Please let the public know which particular clause or regulation have such prohibition. The “scheme” also requires new buyers to come in in order for the goldco to be able to pay the expenses including hibah, consultant commission and operating expenses and overheads.
    4. If putting a 25% premium on the purchase price is not over-pricing then how is over-pricing defined. At 1.5 – 2.0% hibah/discount, it will take more than a year to cover the over-pricing. On top, please remember there is NO GUARANTEED BUY BACK, ONLY DISCRETIONARY. History had it that with Genneva Sdn. Bhd. even with a guaranteed buy back, when BNM suspended GSB, a sister company buys back at 20% discount!
    5. Buy low and sell high doesn’t jive, if you are truly principal protected, since the buyer is getting his principal back at the end of the tenure.
    Nowaday, even aunties and uncles are smart enough to see through scams when they occur. Only greed and addiction will propel people to put their money in such schemes. Remember what happened to the “PARKED – IN” customer on 21/07/2011? History can repeat itself and had been repeating itself. TIG NET, The Gold Label, et el.

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March says 8 years ago

Does this mean that they are having cashflow problem like TGL ?

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?? says 8 years ago

So what’s gonna happen next….??

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Daniel P says 8 years ago

Our “news” papers are well behind the curve again, if only they had came out with their analysis much much earlier.

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