Was Genneva Gold Investment Scheme a Scam?

Lately, I have a long-lost friend calling me out for a drink. Without hesitation, I am more than happy to meet up with him, a successful businessman. Well, we started off with very casual conversation from politic to investment. Yes, investment is my all-time favorite topic and he knew it. Once my hot button was pressed, he share with me the Genneva Gold Investment Scheme.

With its headquarter situated at Kuchai Entrepreneurs Park, Genneva has evolved to become one of the leading and most innovative gold traders in Malaysia and neighboring countries. What I want to stress here is INNOVATIVE. Why? Please read on...

About the Scheme

Through Genneva's unique wealth sharing platform, you are not only the owner of the gold bullion in hand, you also will get 1.8-2.5% cash return (hibah) every month for 3 months under Genneva's Syariah principle-based product plan. (see picture below)

It is similar to placing your savings in Fixed Deposit. Whether the price of gold goes up or down, your capital is 100% protected with an annualized return of 21.6-30.0%. Whilst if you placed your money into fixed deposit, which only gives you around 3% per year, which one is better? In addition, at the end of each tenure (4 months), you can return the Gold Bullion at the SAME price that you bought the gold. This means a 100% capital protection and guaranteed above 20% return.

WOW. Amazing, fantastic, unbelievable, right? Wait.................................

As an investor, we always reminded that be careful on whatever schemes that promise to gives us high return. Some more, there is NO risk at all in this case. Without rushing for a deal, I search through their website and read some forums on the scheme. It was stated that the company has complied with BAFIA 1989 act and AMLA 2001 act in its website. However, forums are hot in this topic with many people commenting that it was a scam and many Genneva-friendly people refuted their claims. Which side was correct?

Here, Finance Malaysia would like to gather public opinions and comments. Whether you like it or not, it's up to you to judge and decide. For many people, they would rather refrained from entering into this scheme. Why?

1. The return is too good to be true. Minimum of 21.6% annualized return, some more it is Guaranteed!!! How Genneva going to guaranteed such attractive return?
2. Can Genneva generate better return from other investment using the capital? (Better than Warren Buffett?) If not, the business model for sure will fail and it's a scam...
3. Some said Genneva sell gold at a rate more than 20% above market price? Some claims that this is Genneva's admin and processing costs. If that's true, Genneva is making huge profit from us then giving us back the said hibah. Why invest then?
4. Yes. You can get the physical gold bullion after 4 months. But, how are you going to store it? Investors should look at the cost of holding gold bullion too. That is investment expenses which will eat into the return.
5. Who is going to certify that the gold bullion was genuine?