Defending EmGoldex, and Failing Miserably

Photo Credit: EyadHainey via Compfight cc
Photo Credit: EyadHainey via Compfight cc

I received a lot of feedback on my previous article, “Is EmGoldex a Scam?” both in the comments section, as well as via email. Of particular interest to me were the staunch defenders who proclaimed that my logic “sucks” and that I didn’t do the proper research, and they proceeded to explain how I wrongly described this or that specific detail in their payout scheme.

Truth to tell, I expected this because as I have already mentioned, I have seen this happen over and over again in the past. It’s like knowing the secret to a magic trick. Once you’ve seen it, then you know how it’s done and even if the magician does variations to the trick, you can still probably figure out how it’s done, because you know the basic principle.

In other words, I don’t need to fully understand the marketing plan of EmGoldex or whatever other company out there. All I need to know is the gist of it, as well as some knowledge of its products, and it’s easy to tell if it’s a scam or not. Perhaps it’s my critics who should recheck their logic and do their proper research on pyramid schemes. I was, after all, a teacher of algebra, geometry, physics and computer programming. So I have every reason to be very confident with the soundness of my logic.

The bottom line is this: How is the company earning money?

If it earns money mainly via recruitment, then it is a pyramid scheme BY DEFINITION. It may even be registered with SEC (it’s not that hard to register a corporation and make it sound legal at first). Many past scams were registered with SEC so that’s not really a guarantee — although a company that isn’t registered ought to make you really doubtful.

It also doesn’t matter whether this celebrity or that politician endorsed it. Come on, these people are human too and they can make mistakes, or they can be scammers as well. What? You don’t believe that politicians or celebrities can be scammers? Then you might be interested in buying a 2.5 billion peso parking building in Makati that I happen to be selling.

So what if it’s a pyramid scheme? If people know what they’re getting into and are willing to take the risk, why shouldn’t they be free to do so?

Well, the problem is that sponsors or uplines are RARELY transparent about the risk. They will always focus on the upside and downplay the downside. They will show you how easy it is to double, triple, quadruple or quintuple your money. And all you have to do is to “invite two, only two.” They don’t tell you that majority of those who invested have not yet earned anything. In fact, they spend a lot of time trying to convince you that the company is legitimate, and that it is not a scam, and so on and so forth.

But as I have shown in the last article, for every person who exits, there are 14 other people who are waiting — in other words, they haven’t earned anything yet. What they don’t know is that the money they invested was used to pay out the exiting person and the rest goes to the pocket of the owners.

Ah, but they will say that it doesn’t really go into their pockets because they have to pay out the next exiting person. True, but remember that the next person can’t exit unless there are new people coming in (or old people who “reinvested”) so there’s always fresh cash coming in and only a fraction of that is used to pay out the exiting person.

Now, experienced schemers will rarely admit that they make money from recruitment (because they know that they will be trapped by the definition of a pyramid scheme). Therefore, they will try to persuade you that they are really in the business of buying and selling gold, and that is how the company makes money.

Again, that is patently false and is relatively easy to demonstrate. The historical price per gram of gold can be found in the goldpriceoz.com website, which uses the London gold fixing price as its reference. If we look at a 6-month window on the price of gold (from Dec 2014 to June 2015), we can see that the highest point is at $41.66. and the lowest point at $36.88. That means even if I bought at the lowest point and sold at the highest point, I would have earned $4.78 which is roughly 13% return on my original investment.

gold-price-6-months

Let’s look at a one year window (from June 2014 to June 2015). The highest point is at $43.09. and the lowest point at $36.72. Following the previous analogy, I would have earned $6.37 or 17% return on my original investment.

gold-price-1-year

(Note that in both these scenarios, I am presenting the BEST CASE — buying at lowest and selling at highest — but we know this RARELY happens in reality. In fact, if you had bought gold in June 2014 at around 40.50 and held on to it, your portfolio would have a  NEGATIVE net value today because gold in June 2015 is only 37.80.)

But going back to the analogy, we have seen that in even the best case for one year, we only got a 17% return by buying and selling gold. In contrast, EmGoldex promises to turn your PHP35,000 into PHP180,000. That’s a whopping 514% return on investment. So tell me, how did they earn that much money in such a short time? By buying and selling gold? But we have already shown that’s not possible.

Therefore, they earn from recruitment, and therefore, it’s a pyramid scheme.

Originally published in Sunstar Davao.

Send me your thoughts at andy@freethinking.me. View previous articles at www.freethinking.me.

For the people who misread last week’s article, please note that I am not and have never been a pastor, nor have I been kidnapped. Please read the first paragraph of that article again and you will know who the author of that piece really is. All I wrote was the first paragraph.

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9 thoughts on “Defending EmGoldex, and Failing Miserably”

  1. Very informative. Thank you for taking your time in explaining. A must read as a knowledge one can use in the future against abusive persons who usually victimize “not so smart” individuals. Kudos Mr. Andy!

  2. You took a lot of effort explaining Emgoldex, even presenting graphs and all that. Very laudable. I don’t know what your detractors are complaining about–the mere fact that SEC has declared it a scam should be enough if you have even a tiny bit of common sense left in you. Even if Emgoldex, or any business for that matter, is making millionaires out of people, it’s still a crime just the same if the government declares it illegal. I don’t know why some people can’t understand that. I don’t care if it’s allowed in other countries. As long as you’re in PH, you follow PH laws. Ain’t that simple enough?

    I’ve been a networker since 1996 and I’ve seen all sorts of scams and scammers–been victimized by them , too, at the start when networking was new in the country. I’d also seen how so many people could be so naive and gullible especially when they were shown how other people had been earning lots of money from scams. They’d fight for it till their last breath.

    It should be as simple as this–if government declares it illegal, then that’s it. End of story. It’s a scam, period. Otherwise, they should form their own government.

  3. I understand the plea of those who defend it. Don’t get me wrong, I’m not a member of any kind of Networking or whatsoever. But I do understand where those sentiments of those who defend it are coming from. THEY HAVE INVESTED. That’s it. They’ve invested a lot. Of course, they want to take back what’s rightfully theirs – what’s supposed to be theirs. That’s why no matter how much you present the truth, they will still believe in that one big mask of lie. Those graphs and nifty explanation won’t help as long as they refuse to believe that they have just lost. Like what Choy said, they would fight for it until their last breath.

    But I hope this information will help those who are still thinking of stepping into the world of networking. One less gullible person would mean a lot to the world.

  4. Thank you for your comments. The point of this article is not to convince the fanatics. You are right, Choy and Sarah, that they have invested and would “fight for it until their last breath.”

    This article is for those who are still thinking about it, who are on the verge of joining, or who are researching on whether or not they should jump in. That’s the reason for the graphs, the illustrations and the detailed arguments. Because that is precisely what those people who are researching need.

    That the SEC says so may not be enough for some. After all, the SEC allowed past scams like Aman Futures or Multitel to operate freely before realizing their mistake. That’s why I give all these tools for analysis so that people will be educated on how to detect other scams or future scams.

    We cannot always depend on other people to do our analysis for us. My aim is to help people analyze and think for themselves.

  5. People nowadays are fond of pointing fingers on others and throwing big accusations especially if they see that the person, company or any other subject is reaching some sort of success. . . I think that’s inherent in every Filipino but I hope before we say that something is a SCAM or NOT, please consider both sides first and take a look at all of the other companies who has the same scheme as well. . .

    DO YOU GUYS KNOW THAT EVERYTHING IN OUR WORLD IS A SCAM??? IF THE WRITER OF THIS ARTICLE IS WHO HE/SHE CLAIMS HE IS THEN HE SHOULD REALIZE THAT EVEN THE BIG BANKS, INSURANCE COMPANIES AND EVEN GOVERNMENTS, YES! OUR VERY OWN GOVERNMENT IS A BIG SCAM!

    IF YOU DEFINE SCAM AS AN ENTITY THAT COLLECTS MONEY FROM PEOPLE AND GIVE MONEY OR SERVICES BACK MANY FOLDS OR AT LEAST OFFER SOMETHING THAT WILL BENEFIT THE SUBJECT THAT THEY’VE COLLECTED MONEY FROM AND THEN EVENTUALLY COME CRUMBLING DOWN AND COLLAPSE THEN THOSE BIG BANKS, INSURANCE COMPANIES AND EVEN OUR GOVERNMENT IS A BIG SCAM! ! !

    HAVE YOU EVER THOUGHT ABOUT THAT SIR/MADAM??? THESE ENTITIES ALL COLLECT MONEY FROM US AND WHAT DO THEY DO WITH THE MONEY??? THEY KEEP IT FOR THEMSELVES, INVEST IT IN OTHER STUFF, KEEP A BIG PORTION FOR THE COMPANY IN ORDER TO GIVE MEAGER PAYS TO EMPLOYEES AND RETURN A LITTLE PERCENTAGE TO US. . . IF YOU ARE REALLY A FREE THINKING EARTHLING THEN YOU SHOULD BE ABLE TO THINK ABOUT THIS BECAUSE IT IS VERY OBVIOUS!!!

    NOW STOP THROWING ACCUSATIONS AT ANYONE BECAUSE YOU YOURSELF IS A PART OF A BIGGER SCAM WHETHER YOU LIKE IT OR NOT. . . YOU ARE ESSENTIALLY A SLAVE OF THE BIGGEST SCAM THAT ENGULFS THE WHOLE WORLD!!!

    STOP PROFESSING TO BE SOMEONE WHO KNOWS MANY THINGS BECAUSE WE ALL KNOW THAT WE ARE AWARE OF JUST A FRACTION OF WHAT IS REALLY GOING ON WITH OUR WORLD. . . YOU HAVE SEEN COMPANIES LIKE EMGOLDEX COME AND GO AND I AM SURE THAT IN YOUR LIFETIME, YOU HAVE ALSO SEEN BIG BANKS, INSURANCE COMPANIES AND EVEN GOVERNMENTS COME AND GO! ! ! NOW TELL EVERYONE TO STOP PUTTING MONEY IN BANKS AND INSURANCE COMPANIES, TELL EVERYONE TO STOP PAYING THEIR TAXES AND LET’S SEE IF EVERYONE WILL! ! ! LET’S SEE IF THEY WILL BELIEVE YOU! ! !

    THE SAME IS THE CASE FOR THE PEOPLE WHO ARE CLIENTS OF EMGOLDEX! ! ! YOU MAY DO YOUR VERY BEST TO INFORM AND CONVINCE THEM THAT IT IS A SCAM BUT THEY WILL DEFEND THE COMPANY AND KEEP GOING ON WITH THE BUSINESS JUST AS YOU WOULD DO WITH YOUR BANK ACCOUNT, YOUR INSURANCE INVESTMENT AND YOUR TAX. . .

    YOU WILL DEFEND THAT THESE ENTITIES ARE NOT SCAM BECAUSE YOU GET BENEFIT FROM THEM BUT IN THE END AND IT IS VERY NEAR, YOU WILL SEE EVERYTHING CRUMBLING DOWN AND WHERE DID ALL YOUR MONEY GO??? YOU WERE SCAMMED! ! !

  6. Hi. What are your thoughts about Klikmart rewards? I can’t find any reviews on the internet, except from those who supposedly earned from it.

  7. Hi Nicky,

    Sorry but I have no experience/exposure/information on Klikmart. But you can apply the same analysis used here and see if it’s similar. If it is, then it’s most probably also a scam.

  8. All things connected with obtaining large amount of money in a short period of time are evil.. karma strikes hard.

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