Sunday, September 9, 2012

Cheated or Own Ignorance ?

a Guaranteed 20% return investment was introduced earlier and it is indeed legitimate.  But do you know it is like an offer " Give me $10 now, I will give you back $9 ".  And of course it is Guaranteed !

Gold Price is about $17,000 at the time that offer was made.  You could easily buy a 100g gold bullion at $18,000 at market rate.

A recap of the offer as below

SummaryMaximum Capital : $ 23,500
Total Return : $4,590
Rough Return : ~20%
As you can see, you are actually paying an extra of $5,500 at the beginning without realizing it.  ( If you know the gold price, you would probably NOT buying it, would you ? )

23,500 - 18,000 = 5,500

Then through out the period, they will pay you back $4,590 and yet they can keep an extra profit of about $1,000

5,500 - 4,590 = 910

Of course it is Guaranteed !  Because you already pay them the money they will pay you back.  All they need to do is to keep the extra money in a FD and they can easily honour the 'contract' they promise to pay you back.

Is that a scam ?  Well, not really.  Because they didn't really cheat or present any incorrect facts.  They will even show you the gold price at that point of time.  Gold selling price is always higher than the gold index price because traders need to pay other fees and make a profit.  

The problem is you don't know how much other gold traders are selling gold bullions at.

So the only 'trick' for a person who 'invest' into such a scheme is his own 'ignorance'.  There isn't really a crime nor fault of the business here.  It always PAY to be IGNORANT.  And this is the best real life lesson you can get.  After all, you only pay $910 for such a lesson.

Then again, almost ALL of those who invested in such a scheme STILL DO NOT UNDERSTAND what they have got into.  They will simply just get out of this scheme one day and get into another similar ones.


ChampDog said...

Very interesting, so the key thing is the actual gold price here. That is not considered scam? I thought is still so.

Let's say after you bought and the prices drop RM 1K, will they paid back the RM1K? If yes, how possible the investor will lose it money? I curious this will be the true.

Michael Tsen said...

according to the Terms and Conditions, they are NOT REQUIRED to buy the gold back from you. But if they do, they will pay you 1k yes.

If this is a scam, then is insurance a scam ? it is also a form of pay me some $, I pay you back some $, similar goes with REIT, and many other profit sharing scheme. This one falls into a grey area. If you knew the trick, you think its a scam. if not, you may just earn more money than any other well informed investors.

ChampDog said...

If the gold price drops badly, they will not able to buy back then unless they purposely fake the actual gold price again.