Samudera aka Genneva Gold Ponzi scheme.

I've more or less left this blog inactive, but I'm returning momentarily just to blog about this scam/ scheme which recently caught my attention. Of course, it's old news to some people, but then again, some other will not have heard of this at all.

This Ponzi scheme is done by the company Genneva Gold Sdn. Bhd.

What the deal involves is: They will sell you gold bullion at a marked up price. Say 1 kilo of gold costs RM130,000 today. They will sell 1 kilo of gold to you for RM170,000.
Now, here is the interesting bit. They also offer you a buyback guarantee at your initial buying price of RM170,000 in 6 months time. On top of that, they also give you a MONTHLY rebate of between 2% and 2.5%. That's 24-30% per annum! Sounds too good to be true?

That's cause it IS. I have double checked with several agents from Genneva aka Samudera, and they have replied that this gold trading is the sole source of revenue for the company.

Here is the basic problem in a nutshell: Effectively, Genneva is borrowing from customers at 24% per annum, with gold bullion as collateral, with a term of 6 months. This is pretty ridiculous, seeing as how bank borrowing rates are at around the lowest in history. It makes no sense for them to borrow from the public at grossly inflated prices.
The thing is, these agents are (stupidly) saying that Genneva is generating profit, because their cost price for the gold was RM130,000 and they sell to you at RM170,000. They are completely WRONG, and are complete idiots. Let me illustrate to you. Let's say, for example, you have a Proton car, which you bought for RM50,000. You sell it to me for RM1 million. Then you pay me interest of RM 20k a month. Then at the end of 6 months you buy it back from me at RM1 million. Do you think you made a profit? ... no, OBVIOUSLY. You have made a spectacular loss of RM 20k x 6 = RM120k.

In other words, what we have here is a company that does nothing but borrow money, it pays out super high interest rates using said borrowed money.

This is the very definition of a Ponzi scheme in action.


Honestly, there are a lot of very gullible people out there.

The trouble is, just like any other ponzi scheme, they are still paying out their "investors" right now. And boy are those investors crowing about their fabulous returns.

It's actually a very interesting pschological exercise. You can see how cocky and confident all those current investors are now and how they tell non-believers that they are being foolish for not taking the offer. I'm watching with bated breath to see what will happen when the scheme eventually collapses.

BTW, the company is under investigation by Bank Negara, changed itself to Samudera to resume operations, now it's changing back to Genneva, and is now operating under shariah regulations from BNM.