Is Genneva Gold a Ponzi Scheme?

I have heard about Genneva Gold from my clients. They asked me whether I have any investment in gold in Genneva. I came to know gold investment a few years ago reading the monthly magazine called "Money". From there I only knew that I can invest in gold via Public Bank Berhad and Maybank Berhad.

Prior to that, I thought to invest in gold, you need to buy in the form of gold jewelry.

I called up these two banks to find out how to invest gold in their banks. In general, it is very much like unit trust. There is a difference between buying and selling price. To open a gold investment account, your initial investment would be to purchase 10 gms of gold (about RM1790 now). Subsequent investment is 2 gm (about RM358). This is affordable. The banks will give you a gold saving account book for records. You do not have to keep the physical gold yourself. Since these banks have licenses from Bank Negara Malaysia to trade gold, you are rest assured. If you want to withdraw, you can sell the gold back to the bank, or withdraw in the form of physical gold.

Similar to unit trust, you wish for a return by hoping the gold price will rise eventually in the long run. You can check the gold price in the internet. They are the same globally.

Unlike Genneva gold, the company promises you very good return. I was told 2% monthly. In a year, you get a return of 24%! The agent told me that they get 1.5% of the customers' investment! If the customers do not sell back their gold, and renew their license, they continue to get 1.5%!

This scheme has attracted a lot of investors. Quite a number of investors invested their life saving because the monthly dividend is really attractive. If you are retired and withdraw your EPF of RM200K to buy Genneva Gold, you get RM4K monthly for your living expenses. Your agent will get RM3K from your investment. Doesn't that sound good? Better than rental income if you wish to purchase a house for rental. Where can you find a house that cost you RM200K and give you a monthly rental income of RM4K?

However, when investments are too good to believe, hold back and ask yourself this question. How do they make money from my investments to pay me dividend and the agent commission? Does gold price really rise so fast? Look up information in the internet. Plenty of discussions going on in the internet.