The criteria of get-broke-quick schemes (Part 2)

Phishy marketing strategies

Typically, those who sell beauty products would promote and show their products. Similarly, those who sell gold would show their gold products. But if the organizer kept showing a lot of money to attract their clients, what do they mean here?

We can deduce from their actions that the actual product they sell was never gold, and they are running a ‘money game’. They are showing a massive stack of money because that is what their business is all about.

With this in mind, we must be aware that if the marketing material is a massive stack of money, then it is an outright get-broke-quick scheme. There are numerous millionaires and billionaires whose wealth is kept secret. They usually appear low profile and not showing off (even if they can easily do so). To think about it, if we are wealthy, why would we drum rolls and show our wealth around? Just staying low profile and continuing with our activities is a better thing to do, would you agree with me?

Just look at the booming business people around us, regardless of various fields such as real estate, property investing, stock market investing, financial experts, etc. They are usually low profile and do not show off their wealth. Have you seen them flexing their wealth as a way of selling their products? Most likely, no. But people would still look for them because of the value they provide. The value would have a significant financial impact on their clients without actually showing off their wealth.

By that logic, those flexing their wealth via such marketing propaganda may not be wealthy. They could just use the stack of money as bait to bring more money to the table. The wealth that is being portrayed is nothing but a fake one.

Money Game under the pretext of gold

We can finally see a clearer picture of such schemes based on the criteria described earlier. It is just a money game that guarantees nothing but their clients being ‘broke’ quickly. The invested money was essentially utilised to profit the organizer by creating a fake successful business model.

If they are truly honest with their business model, they could do something like this. When their clients hand over money to invest, they could pass the gold to their clients. While doing so, they could proceed to deliver the guaranteed return as promised until the contract ends (one year is an excellent duration to try out). With such an arrangement, do you think any organizer would come forward and run their business this way? The answer is, No! How would they be able to deliver the return if not from a new stream of funds from a new batch of investors?

The scheme organizers (aka scammers) are getting smarter

If we were to observe the previous cases, such schemes delivered payout for a short period until they managed to gain trust from potential clients. But after a while, they would stop providing the returns. By the time the investors brought this up, the scheme organizer would have already left the scene. Of course, along with stacks of money due to intervention by the authorities.

However, scammers have become more innovative, learning from their own experiences. They have devised their operation so that no single entity is involved in managing the money. They registered numerous limited liability companies where each agent could operate from each entity. As we all know, limited liability entities have a limited scope. If the company were forced to shut down by the authorities, there would be no repercussions to the organizers per se. Their account has been loaded with money from their victims. When one company gets closed down, they could quickly establish a new one and continue the scam elsewhere.

The legitimate gold investment 

The underlying principle in gold investment is that we should ideally buy the gold and keep it ourselves. As seen in scams elaborated earlier, we must be aware that there is no monthly return and fixed profit.

The profit in gold investment essentially derives from the gold price appreciation. We buy when the gold price is low and sell when the gold appreciates; that is all it takes. Yes, it is boring. Yes, it is a slow process. But, this is the safest way to accumulate wealth. Having the gold in our hands is way better than having them in another person’s safekeeping. This way, no matter what happens, our wealth is still in our possession.

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Hope you find it useful.

Your buddy on gold investing,

Naresh G