Is EmGoldex a Scam?

Photo Credit: BullionVault via Compfight cc
Photo Credit: BullionVault via Compfight cc

I have been seeing numerous posts of EmGoldex on my online newsfeed for the past few months. And then someone I knew asked me for my advice about it. So I asked him to tell me briefly how it works. After he gave me an overview, my gut feel was that it was indeed a scam — more specifically, a pyramid scheme.

I am not saying this as a layman. I was a legitimate high-level multi-level marketer many years back. I was a speaker and a trainer. I have devoted considerable time studying many different marketing plans from different companies, and I have also studied how unscrupulous people use these techniques to perpetuate pyramid and ponzi schemes. It was very important in my previous line of work for me to know how to explain these things because I usually got many objections and questions at the end of a presentation. Also, a considerable number of people have the mistaken notion that ALL networking companies are scams.

(For those who are interested, I wrote a three-part series a few months back entitled “Truth and Lies of Network Marketing.”)

Like Liam Neeson in the movie, Taken, I can say that I “have a very special set of skills” when it comes to smelling out what is legitimate and what is not.

However, to truly understand EmGoldex and to give it a fair chance, I decided to browse through their company website as well as watch a couple of presentation videos (one in English and one in Filipino) made by actual distributors.

These are the facts I gathered about their company and marketing plan:

  1. The company sells gold. You may purchase these gold bars directly from the online retail store.
  2. The company has a marketing program that you can enroll in that allows you to order the gold bars, and then make money (eventually) by getting two other people to enroll in the program as well. Enrollment costs 540 euros or roughly PHP35,000.
  3. The two other people you recruit have to recruit two more each (four people) and those four people have to recruit two more each (eight people), and then you will “exit” with PHP180,000. In other words, in order for you to earn your PHP180,000, fourteen other people must have also invested PHP35,000 each into the system.*
  4. Recruit more, or reinvest your earned income into the system to earn more.

The US Securities and Exchange Commission (SEC) has come out with clear guidelines over what constitutes a pyramid scheme:

  • No genuine product or service. Unlike many legitimate MLMs, EmGoldex does not even have a unique product. There is no reason why one might prefer to buy or sell gold at EmGoldex except for the opportunity to participate in its recruitment system. This is a huge red flag.
  • Promises of high returns in a short time period. Promises of easy money or passive income. If there were really such a thing as easy money, don’t you think the business tycoons in our country would already be building businesses such as this? Why don’t we ever hear of the Henry Sys and the Ayalas in our country going into this business if it is indeed that lucrative? Why don’t major banks and investment companies do this? Let that sink in for a moment.
  • No demonstrated revenue from retail sales. Emphasis on recruiting. Does EmGoldex really make money from buying or selling gold? Or does it make money because people are buying in to the recruitment program? Think about this. Fifteen people paying PHP35,000 each is PHP525,000. The company pays out PHP180,000 to the “exiting” distributor, where does the remaining PHP345,000 go?*

So it is quite clear that the company earns its money mainly from recruitment, and that is a hallmark of pyramid schemes. The money used to pay the “exiting” distributors comes from the money paid in by new distributors. This will eventually lead to a collapse because there will come a point when there will simply not be enough new distributors to pay out all the existing ones.

Think about it. In order to pay out 1 person, the company needs 14 more people to join. So in order to pay out all 15 of them, they would need 225 more people (15×15). In order to pay out those people, they would need 3,375 more people (225×15). The more people who join, the more people they will need in order to pay out everyone who joined before them. Is that realistic and achievable? No, in due time, they will run out of new distributors coming in to support the existing user base, and if you are one of those who come in at that unfortunate time, you will lose your money, pure and simple. This is the time when the scammers pack up and run, when bonus checks bounce or no longer come in. I have seen too many of these kinds of schemes to know that it won’t last, and I can even prove to you mathematically why it is not sustainable.

I am not saying, however, that ALL those involved in this are scammers. No, I believe a lot of the distributors doing this sincerely believe that it is a legitimate enterprise and that they are helping other people in the process. What I am saying is that the people behind EmGoldex themselves are the scammers and they have fooled all these people who have joined them. Oh, but don’t take my word for it. Please do your research into “pyramid schemes,” “ponzi schemes,” and look for old news articles about Multitel, Aman Futures, and the like. Please, learn from history and do not get enticed by all the rosy visions these scammers paint.

In the heyday of Multitel and Aman Futures, people also earned from those and their participants staunchly defended the company, the founders and so on. But when they came down, they came down hard. I personally know someone who lost millions in one of those scams. Life for him and his family wasn’t pretty for the next few years as he struggled to recover.

If you are one of those who were still able to cash out, consider yourself fortunate. But I would strongly advise you against reinvesting or perpetuating this scam because there will come a time when you are either going to get hurt or you will hurt a lot of people in the process.

And some things just aren’t worth their weight in gold.

Here is another article I wrote more recently answering some objections from defenders of Emgoldex and showing why this is indeed a pyramid scheme: http://freethinking.me/essays/defending-emgoldex-and-failing-miserably/

See the following video and links for your further information and education:

http://www.thephilippinepride.com/more-ofw-victims-emerges-as-emgoldex-continues-to-scam-investors/

http://www.thephilippinepride.com/government-warns-massive-online-gold-investment-fraud-could-hit-ofws-badly/

http://www.sec.gov/investor/alerts/ia_pyramid.htm

 

* Some corrections have been made to the figures in the article because of minor computational errors. The analysis and conclusion remains the same.

Originally published in Sunstar Davao.

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

Related Posts with Thumbnails

60 thoughts on “Is EmGoldex a Scam?”

  1. can you share views on klikmart conceptualized based on rewards paluwagan coop networking etc.. 1500 is the initial share after 21days it will gain 500. maximum share per day per person is 10shares/15k safety net 195 cofi or coupon.

  2. Hello Everyone!

    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 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! ! !

  3. Can you also share your views about klikmart rewards?..I have invested 9k already and so far for consecutive 3weeks I’ve been getting 4k every week..thanks!

  4. Hey Mr Anonymous, there’s no logic comparing pyramiding with bank oprations! Totally incomparable!!!! Wake up, mate!!!

  5. Hi Allen!

    I assume you have connection to the Internet and I hope you know how to search videos in Youtube. . . If you have spare time, I encourage you to investigate, watch and find out about the SCAMS that I am referring to. . . There’s a rich resource available on the Internet at present that would tell you how GOVERNMENTS AND BANKS work. . . See for yourself and open your eyes to the deception that engulfs the whole world. . .

    It’s you who needs to WAKE UP! WAKE UP MATE! Here’s a link for you to start with. . . Watch it from start to end. . . WATCH OTHER RELATED VIDEOS AND EDUCATE YOURSELF. . .

Comments are closed.