Nope, the model uses spot and retail price only. Retail is 20% margin.

Your gold assets costed you RM118,200 to buy up, but who said you must sell them at cost? That would be a bit dumb.

Refer back to principle #1. Gold traders can sell gold at a premium over non-gold traders.
Consumers can only hope to sell to shops at retail - 21%. Traders can sell to consumers at retail price.

Again refer back to the break-even rate. The gold trader only needs to sell his 1.182kg of gold for RM130,852 to break even. That is a mark-up of 10.7% ONLY.

As long as in the last round they can sell off all their gold, they will be able to pay off all hibahs, all commissions, all overhead costs, and deliver all the gold sold, and still be profitable. Noone has been able to challenge this yet.

Never forget, the company still makes a clean profit from the last sell. Everything in between is just leverage with interest paid to investors, in order to quickly generate very high volumes of trade.

This post has been edited by digitalcode: Oct 19 2012, 04:03 PM

You fundamentally don't understand the fact that any gold trader in the world never sells gold at the exact same price as they buy it.
You also miss the point that retail shops always sell their gold at retail price, not SPOT GOLD price (what you call market rate).

Trading must have spread. Retail selling must have profit margin. Why do you keep harping the fact that GM must sell off gold at COST? WTF?!

If I buy RM100 worth of gold, and then I go and sell it all for RM100, that's a really stupid businessman. Who pays for cost of doing business? My rental, my staff, my agents, my own pay, etc.? Even Poh Kong can't survive...

Before we argue about semantics, let's set our assumptions straight.

1. What is the price you assume GM to buy gold at?
2. What is the current bullion retail price in UOB?
3. What is the current spot price?

GM sell 39% above spot? That's a lot.

http://www1.uob.com.my/jsp/finance/fin_gold.jsp?func=gold

UOB sells 1g PAMP gold for RM334, buys the same 1g PAMP gold for RM201.

Gold traders make plenty of profit from the spread.

Can we move kopitiam talk to /k

Refer earlier post, as mentioned let's clarify your assumptions first:
http://www1.uob.com.my/jsp/finance/fin_gold.jsp?func=gold

1 GM PAMP GOLD
SELL 334 BUY 201

1/20 OZ GOLD MAPLE LEAF
SELL 426 BUY 296

Please take out your calculator, and see if the spread is indeed fraction of 1% like you claim.

Nonsense indeed. Ishh.

Yes, you got it! Poh Kong and PYT quote their gold at retail (FGJAM/GOLDBEAM). Genneva is selling their gold at the same price. So let's not doubt that:

1. Genneva can indeed sell gold at a price higher than their cost to acquire it, and they sell 50g, 100g, etc.
2. Like you proved above, buying in volume yield a better price (or smaller spread), hence with high volume Genneva can probably get even better rates than you or me.
3. Finally, not sure if it makes a difference, but doesn't Genneva, in fact, smith their own gold bars for sale?

We are not debating about why it is ridiculous that Genneva could sell their gold products at premium. The fact is that they did. It's the buyers who are gambling at their own risk. High risk, high return.

The point of the financial model is not to show whether it is ethical or legal. The point is that if Genneva suddenly finds itself with no buyers left (no new source of cashflow) it can still casually close shop with profit. It's the buyers who are left holding slightly overpriced gold, but that's all.

If follow FGJAM also statement still holds.

I don't like that they abuse Tun Mahathir advice. His speech advice them to invest in gold bullion. That means buy and keep.

The moment GM buyers almost immediately sell off their gold for the paper money they so strongly advocate against, they are contradicting their own sales pitch.

http://www.businessinsider.com/gold-has-lo...r-again-2012-10

After experiencing a remarkable bull market run from $250 an ounce in 2001 to $1,900 an ounce last summer, gold has not had an easy time of it since.

Three times it plunged as much as 19%, and rallied back, only to run into resistance each time at $1,800. It is potentially doing so again.

Back to seaweed farming?

actually my model is the same as Eddy like I said earlier already... also, I also mentioned earlier already that you needed exponential growth to sustain the model... so, no need to go around in circles.

Eddy's reply is what I would have said to you as well. i call it the break-even point from cash-in-hand, and if we take out the debate about HOW that ROI is achieved, fact is it is possible and the necessary break-even is not high, as long as you have enough growth.

glad you got it.

If all buybacks were honored, should only have about RM200 mil of gold in circulation