Tuesday, 14 January 2014

Why would you buy gold? And why would you buy it from Karatbars?

There many silly things you can do with your money but one of the silliest is invest in something when its price is steadily dropping. You don't have to be a financial expert to know that.

If I invest today in something that's worth P100 per share and tomorrow the price falls to P90 I've lost 10% of my money. If by the end of the month it's only worth P50 than half of my investment has evaporated. I now need to wait for the price to double just to get my original "investment" back and be where I started.

Gold would be a very good example of this.

Many schemes will try and sell you gold showing you graphs like this one:

Looks impressive, doesn't it? The price is climbing. But look closely at the x-axis. Those aren't dates, they're times. That's the price of gold over just a few hours.

This is what the gold price has done over the last YEAR. A very different picture. An ounce of gold that you bought a year ago for $1,700 is now only worth $1,250, losing you $450, 26% of your original investment.

So why are companies trying to sell us gold? Perhaps it's because selling gold isn't really their business? Is it actually not about the gold, but the fees you have to pay to buy the gold?

How do Karatbars, for instance, describe their income opportunity? Like this:

What does that remind me of?

Then you have the lies their local representative tells.

Following a tip-off I SMSed their local rep earlier today and asked about the Karatbars scheme. As with all such schemes he seemed reluctant to tell me everything but instead invited me to a meeting this coming weekend. Then came the surprise. Karatbars had been endorsed, he said, by some serious authorities. The reader who tipped me off about one of them and I think you'll work out who I mean.

Let's make this clear. Consumer Watchdog has never, does not currently and will never endorse any pyramid, network marketing, multi-level marketing or Get Rich Quick scheme. Certainly not this one.



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