Opportunity to Invest in Physical Gold

[wemakebread]

I recently came across an opportunity to buy physical gold that comes with Buy-Back Option. After further research, I found at least 2 such companies offering such schemes.

They are:
Wealth Foundation (related to The Gold Label)
XXX (related to Samudra)

I am sharing this because some of us may be interested in gold investment and may find the returns of such schemes very attractive. However, I feel that there is risk that such schemes may not be sustainable for the company in the long run, and may therefore eventually turn out to be some sort of Ponzi.
Buyers beware, please!

A) A short example of how Buy-Back scheme works:
1) Purchase physical gold from company for say $6200 for 100g.
2) Company gives a 2% discount off the purchase.
3) The purchase comes with buy-back guarantee at the same price $6200 in 1 month's time. Both the Buy-Back price & timeframe are clearly stated in the purchase contract.

B) Note:
Even if you bought bona fide 99.9% pure gold, the purchase price is about 20% above UOB's rates.
https://uniservices1.uobgroup.com/secur ... prices.jsp?&#

I feel that the benefits of this scheme is not really to enjoy potential rise in gold price, but rather to enjoy the "rebates". If Company honours the Buy-Back contract, then we are fully protected from any fall in gold price. In the event that the scheme collapses, we can still sell the physical gold in open market to recover capital. Therefore the purity & weight of the gold is important.

For those who are keen to find out more, there is some discussion at
http://www.lioninvestor.com/XXX-gold/
http://www.lioninvestor.com/the-gold-label/

C) Additional info:
Gold price are often quota in USD per troy ounce
1 troy ounce = exactly 31.1034768 grams
http://en.wikipedia.org/wiki/Gold_gram

The gold price now is about USD 1138 / troy ounce.
http://goldprice.org/live-gold-price.html

If you factor in USD to SGD exchange rate, you should get something close to UOB's rate.

Example:
1138 *1.4 / 31.1034768 = 51.22 SGD / g

Do note that prices are higher for denominations < 100g

[Dennis Ng]

I recently came across an opportunity to buy physical gold that comes with Buy-Back Option. After further research, I found at least 2 such companies offering such schemes.

They are:
Wealth Foundation (related to The Gold Label)
XXX (related to Samudra)

I am sharing this because some of us may be interested in gold investment and may find the returns of such schemes very attractive. However, I feel that there is risk that such schemes may not be sustainable for the company in the long run, and may therefore eventually turn out to be some sort of Ponzi.
Buyers beware, please!

A) A short example of how Buy-Back scheme works:
1) Purchase physical gold from company for say $6200 for 100g.
2) Company gives a 2% discount off the purchase.
3) The purchase comes with buy-back guarantee at the same price $6200 in 1 month's time. Both the Buy-Back price & timeframe are clearly stated in the purchase contract.

B) Note:
Even if you bought bona fide 99.9% pure gold, the purchase price is about 20% above UOB's rates.
https://uniservices1.uobgroup.com/secur ... prices.jsp?&#

I feel that the benefits of this scheme is not really to enjoy potential rise in gold price, but rather to enjoy the "rebates". If Company honours the Buy-Back contract, then we are fully protected from any fall in gold price. In the event that the scheme collapses, we can still sell the physical gold in open market to recover capital. Therefore the purity & weight of the gold is important.

For those who are keen to find out more, there is some discussion at
http://www.lioninvestor.com/XXX-gold/
http://www.lioninvestor.com/the-gold-label/

C) Additional info:
Gold price are often quota in USD per troy ounce
1 troy ounce = exactly 31.1034768 grams
http://en.wikipedia.org/wiki/Gold_gram

The gold price now is about USD 1138 / troy ounce.
http://goldprice.org/live-gold-price.html

If you factor in USD to SGD exchange rate, you should get something close to UOB's rate.

Example:
1138 *1.4 / 31.1034768 = 51.22 SGD / g

Do note that prices are higher for denominations < 100g

Hi all,
thanks for sharing. It is something that I've been asked for my opinion by several people already.

This is my understanding of How the Gold Label works:

you buy the Gold at retail price less 3% discount from them. Note: in general, Retail price is about 20% higher if you buy today and want to sell back to get Cash tomorrow at Pawnshops or goldsmith.

However, with the Gold Label, you can sell back the Gold to them at the same price 6 months later.

Thus, the worst case scenario if the company collapses, you still have the Gold with you and thus, you might lose about 20% of your money, assuming price of gold stays the same.

Thus, unlike Ponzi scheme whereby a person can get back NOTHING if the scheme collapses.

If a person buys gold bar from jewellery shop, prices would be at retail price.

As for whether the gold is indeed 999.9% Pure, this can be easily checked by bringing your Gold to any goldsmith or pawnshop, nowadays there are many "Maxi Cash" pawnshops where you can go to to check.

Gold bars have their own identification number, thus it is easy for pawnshops and goldsmiths to check their authencity, unlike precious stones such as ruby and sapphire, where even experts can be fooled sometimes.