I'm sharing this on my FB page for sharing and discussion and highlighting certain flaws.

Perhaps the Genneva top management plays the gold futures market internationally.... they are basically "borrowing" money from the investors for themselves to purchase gold contracts and then earning tonnes of money when the gold prices shoot up last year. The earnings here as well as capital from new members is more than enough to be shared as Hibah to all the members. Basically to them, they are just paying "interest" for the money they borrowed from the investors and giving you our locally-made gold bullion as so-called collateral. (excess in local distribution, then reprocessed as bullion - source: Poh Kong)

Bear in mind their earnings internationally is much more than the liabilities ONLY WHEN GOLD PRICE IS HIGH.

Now as more members joined their LIABILITIES have outpaced the earnings when gold prices have dropped abit from the highs. The breakeven point has gone by.

So now they need to find where to source the money to pay everyone Hibah? The only way is to attract more capitals from existing members by asking them to leverage (asking their members to sell their gold held to bank to get loan money to be reinvested back into Genneva, afterall their return is enough to cover the bank loan interest) and also the capital from new members must go up exponentially in order to sustain enough cash flows to pay Hibah to pay off the older members. Some new members might not get their Hibah anymore.

This post has been edited by accetera: Oct 8 2012, 12:10 AM