GOLDXTREME: A Review on the Newest Hype in Town
This is not to inform everyone reading this that the newly hyped pyramiding business scheme is a scam. This article would try to review the scheme in the most objective manner – why payout is possible and why the so-called company can even reward perks such as cars to top performers, give 14K gold, etc. To begin with, I am not a GoldXtreme member but having friends who are members and already got their payouts, I would just like to share what I had researched from the worldwide web and through personal queries with friends who have invested their money on.
THE LEGALITY ISSUE
Instead of having to start or talk about history, which is pretty much everywhere already in the web, I would like to delve rather first on the legality of the entity and its activities. According to the Securities and Exchange Commission (SEC), GOLDXTREME is registered as a partnership “engaged in the business of wholesale and retail sales of such products as gold jewelry but not limited to products such as fashion accessories, cellphone loads, prepaid cards, 3-pin, scents and other related products.” On legality point of view, I guess the fact that GOLDXTREME is registered with SEC means that the organization really exists and that the SEC had already approved its business activities.
Trust me when I say that in the Philippines, it is not that hard to create a new firm and have it registered. When I say “not hard”, I mean fast. I’ve been in a very volatile industry with cutthroat competition for quite some time now, doing competitive analysis works tracking down trends and, on the process, able to check on who’s in and out, and I have seen a lot of companies coming and going in a snap, that is, those who don’t have deeper pockets and able to swallow huge losses or couldn’t bounce back right away could easily disappear, but they can always re-enter the business with a whole new business name and all. Taking from this observation, in registering, which is the first thing any entrepreneur/business owner has to do to legalize any commercial activity, for as long as you have the requirements, you are good to go.
Going back to GOLDXTREME, what’s surprising to me though is that each of the “investors” I know had never really mentioned to me about the diversity of the business as is stated in SEC except that the business is into gold trading. There you go – gold trading or “wholesale and retail sales of gold products” in the language of SEC.
I couldn’t blame a lot of my friends who have joined in it because of the really attractive “investment offer”. I was informed that you can invest as low as PHP 5,000 and surely, you will get PHP 25,000 in as fast as a few weeks time only. Put in your PHPH 25,000 and be paid back with PHP 100,000. Wow isn’t it? Just WOW! Three hundred percent (300%) to 400% increase in a few weeks time, who doesn’t want that? – which brings me to my next interest for discussion.
A typical business owner would give investors a fair and reasonable share of the profits. Fair and reasonable would mean an amount that would not jeopardize the sustainability of the business to keep its income stream and therefore protect the organization’s health and longevity. This means that in order for a Return on Investment equivalent to as high as 300%-400% to be feasible and at a relatively short time at that, the business must be doing really really really good; hence my next topic.
THE GOLD MARKET
What’s the business about again? Gold trading I was told, and etcetera according to SEC. We all know that the etcetera part would not give you that much profits in too short a time. So let’s take a look at the rather new-sounding business venture.
Just like any other business, gold trading is not as easy as it may seem. Since gold is traded globally, prices and profits are affected also by movements in the global market for precious metals which is driven by supply and demand, forex, stock markets, seasonality to name a few. There are a lot of websites in the internet which you can browse on for some no-nonsense updates on the world gold industry. Here are some of my picks:
Judging from the looks of it, there is only one conclusion I can draw from: There is no way you can earn huge profits in crazily short time with gold trading. This mind-boggling fact led me to believe that a big chunk, if not 100%, of the earnings each investor receives come from the money put in by recruits. So let me go back to my previous discussion on the promise of return.
THE RETURN – PART 2
GOLDXTREME promises of a payout of as high as PHP 25,000 for every PHP 5,000 investment, and as much as PHP 100,000 if you invest PHP 25,000. The catch however, is you have to reach Level 4 to be able to “exit the table” and receive the payout. Here is a diagram of the levelling and the required members to achieve Level 4 on the table.
Upon joining and cashing out, you would need to recruit for member/s to build your table. To reach level 4 in order for you to “exit”, you would need to fill in a total of 14 more slots in the table or a total of 14 members under you with 2 members below each member. After “exit”, you can re-invest and once again build your table of 15 members (including you) and “exit” again. For each “exit”, you will be receiving a payout. To illustrate, here is a table I made showing the cash inflows (investments from recruits) and cash outflows (payouts).
The 5,000 refers to the PHP 5,000 investment of each recruit which is the minimum investment set by GOLDXTREME. Since “exit” and payout happens after completing 4th level in the table (or if the member achieves Level 4), I colored the columns the same for entry (left column) and exit points (right column) of the member/s.
For example, in the orange colored columns, the one in the left is the entry point of the member and the one in the right is the exit period, that is after completing the 4th level on the table or after 8 new members are recruited to fill in the last 8 slots of the 4-level table. As can be seen, once 15 members is completed which also completes a table for the 1st member in the table of 15 members, payout for that 1st member of the table is made, and so on.
In the SUMMARY BOARD, Row A shows the number of participants per investment level. Assuming, for the purpose of discussion, that we start at the very beginning of the business operations, we therefore have only 1 member yet. That 1 member is required to recruit 2 members which will be placed directly under him on the table.
Row B presents that during the time the 1st member is able to recruit 2, total number of recruits is already 3. When these 2 new recruits are able to have 2 recruits each resulting in additional 4 members, total number of members by then would be 7, and so on.
In Row C and D, you will see the number of recruits or members that will be paid out once each of them reach Level 4.
With the assumption of pay-out of PHP 25,000 for each PHP 5,000 investment, Row E shows the total payout for all members reaching level 4.
Collected cash from members is shown in Row F, while Row G is basically the Net Cash remained after the all cash outlays. As can be seen, net of payouts is about 52% of the total cash investments.
In Row I, it can be noted that only a maximum of about 11% of the total members are paid out at a time, that is assuming the pyramidic table is perfectly filled up.
Extending the above SUMMARY BOARD, that is with increasing number of members, investment, payout, and net cash received by the company also increases.
In Row G in above board, notice the very large accumulation of cash. With this amount, giving additional rewards won’t hurt. GOLDXTREME, as I learned from the net and videos made by members trying to encourage the public to join, is giving away cars for top performers. I wonder how many top performers are rewarded with cars each month or each year. Nonetheless, I still think, the cash GOLDXTREME collects from recruitment is quite a lot and is more than enough to fuel their current investment scheme.
While researching, I chanced upon an advisory from the SEC. Here is a screenshot of the notice from the Philippine government agency. It is up to you on how you'll take it.
On a personal note, whether or not to give away some cash for a much bigger cash in return is really your choice. You will be lucky if you are part of the 11-12% who will be able to get their investment back with growth way higher than what banks can offer, in a time period way too short than what stocks can give. But what about the 88-89% which you have direct or indirect contribution to having them join? Surely, if the return on investment would only heavily rely on "membership fees", then it is doomed to fail. It will surely fail.
To be honest, at some point, I entertained the idea of having a family member join to at least earn additional cash. But the more I think about it and the more I researched about it, I realized it would not be a good decision. I just think that earning directly from other people's money isn't right. I would rather earn from profits coming from true productive investments, rather than from a pool of cash collected from members.
I intend for this article to be progressive. So this will be edited from time to time whenever I get more information about GOLDXTREME.