The maths of Karatbars

We've mentioned the Karatbars pyramid scheme before, in particular the claim by their local distributors that they have been "approved" or been given "a thumbs up" by Consumer Watchdog, which is A LIE.

Karatbars is a scheme based on selling tiny quantities of gold.

Gold seems attractive to most of us because of its historical significance. We all know about gold and its importance but Karatbars exploits our ignorance about gold prices.

They suggest on their web site that they'll buy gold at €48.91 per gram.

Which is curious.

My bank today says that the price of gold is about $1,349 per ounce. Note that this is typically a "troy ounce" which is roughly 31g.

Let's do the maths. The price at which Karatbars is offering gold of €48.91 per gram equates to €1,516 per troy ounce. Convert that to US$ at an exchange rate of about 1.4 and you get a US$ price of about $2,122 per ounce, compared to the real price of $1,349 per ounce.

As others have said, buying gold from Karatbars is a remarkably expensive way to buy gold particularly as the price of gold has dropped 15% in the last year.

But what do you expect from a pyramid scheme?