Forex & Trading KaratBars International Review

Published on July 1st, 2014 | by Tom Wake

17

Review: KaratBars International

Review: KaratBars International Tom Wake
Risk Level
Ease of Use
Profitability

Summary:

1

Avoid


I’ve had a lot of readers ask me to take a look at this.

This one’s all about gold, gold, gold.

KaratBars International claims to be the only company of its kind doing what they’re doing. They may well be right and thank goodness for that – it’s a terrible business opportunity.

Set up in 2011, they focus in the trade of gold ingots and various gift items that incorporate gold ingots. These are usually in the form of real gold set into a wallet-friendly plastic card.

We’ll look at just how ‘friendly’ these cards are in just a moment, but first a little background…

The man behind KaratBars International is Harald Seiz. He markets his products worldwide in over 70 countries and says that his company’s vision is to ‘contribute to the financial security of each and in every country world-wide’. A bold claim.

Let’s pray that he never becomes head of the IMF.

KaratBars International ReviewHow does it work? (and what makes Karatbars ‘unique’?)

Any gold you are sold through the company is called a ‘Karatbar’. You can buy them one gram at a time (in 1, 2.5 and 5-gram cards).

Their big USP is this…

You can buy gold from them in small amounts (in grams, rather than ounces or pounds) making it, they claim, affordable for anyone.

They also claim that their gold is of the highest quality (not the stuff you find on the back of chocolate coins presumably) and promise that ‘The refineries are LBMA certified which guarantees purity and weight of the gold. Made of pure 999.9 24K fine gold that is recognized as real currency.”

Sounds pretty plausible so far, but are they good value for money?

No, no, no, no. No. A quick calculation reveals that the rate you pay per ounce is VASTLY overpriced.

Let’s do the maths.

1oz Krugerrand gold coin costs around £800 (at the time of writing)

1oz worth of Karatbars  (28.34 grams) costs around £1,120 (at the time of writing)

In other words, the same amount of gold would cost you over £300 more (and I’ve been generous with the conversions here).

Yes you can buy Karatbars in smaller amounts but why on earth would you want to when you’re paying nearly 30% more?

Go online and you’ll find dozens of websites created by KaratBars International members spitting out the same old spiel – pretty much word for word. They claim that you shouldn’t compare like for like, but then the problem is they all have a vested interest in saying that.

Here’s where things take a turn for the worse…

The more immediate money-making side of the ‘Karatbars’ business is essentially a multi-level marketing scheme.

I make no bones about it in Insider’s Edge – I don’t like MLM schemes. There are a handful of ‘genuine’ ones knocking about but in my experience even these are best avoided. The focus should always be on the product or service, not on how many people you can sign up.

With KaratBars the idea is that you ‘get paid weekly and monthly by a 7-streams income compensation plan… Each new sign-up, everyday, will go in your left leg.’

So, there’s selling involved via an affiliate system to promote the gold. You’re paid to promote KaratBar’s products.

I should point out at that KaratBar International desperately tries to distance itself from being called a ‘network marketing company’. They claim that ‘among the characteristics that makes us not exactly a MLM (multi-level marketing) is the fact that no purchase is required every month to stay active (auto-ship).’

Hmmm, heard that one before.

In order to make any immediate profit from this, beyond the investment in the small amounts of gold, you’re going to have to stay active. If not, you don’t receive your commissions – be they in the form of the ‘auto-save’ gold, or otherwise.

This means you’ll have to become a massive pub-bore and start pushing the product on anyone that’ll listen, in order to hit your targets and bank your commissions.

Here’s a breakdown of the packages on offer:

The bronze package doesn’t actually secure you any gold, but it gives you vouchers to use against gold and a 5% of personal commissions (on packages, gold and products).

The silver package gives you a 1g KaratBars Gold Card and 10% of personal commissions.

The gold package gets you 2g of gold, more of what’s included in the other two packages, as well as 15% of personal commissions.

The VIP package gets you all of the above, but 3g of gold and 20% of personal commissions.

No prizes for guessing which package they want you to sign up to.

To earn money from this, the idea is meant to be as simple as signing up, buying a package, and finding two more people to do the same.

In other words, this is unashamed MLM territory – no matter how they dress it up.

If you want to invest in gold AVOID Karatbars, there are much better alternatives

Yes, you can buy smaller quantities of gold from Karatbars International, but gram for gram you are getting a terrible deal.

If you’re serious about investing in gold you need to think longer term and invest in companies who can offer you gold at the most competitive prices and in the most saleable format.

For smaller investors that format is most likely to be gold coins NOT tiny slivers of gold tacked onto plastic cards (funnily enough).

Tempting as it might be to buy smaller amounts of gold remember you’ll need to be able to sell it on and to do this you want the most widely accessible format possible.

The other important thing to note is this. You don’t have to physically store gold yourself to invest. In fact unless you’ve got a particularly bulletproof mattress you’d be advised not to.

If you are looking to invest in gold then you’re better off taking a look at one of these companies instead: Baird, ATS Bullion, Chards, GoldCore, Bullionvault.

Yes, KaratBars International is undeniably based on a unique and sound premise – investing in gold in affordable quantities – but the figures simply don’t add up.

Not Recommended.

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About the Author

My name's Tom Wake and I'm the editor of Insider's Edge. I bring you tips, tricks and shortcuts to help you save money, make money and save time.



17 Responses to Review: KaratBars International

  1. Alex says:

    Dear Publisher,

    I would like to comment on your review of Karatbars International. From what you have written, I can see that you have not done sufficient research of the precious metals market.

    Since publishing your review, Karatbars International has grown to over 200,000 affiliates and customer in 121 countries.

    Now a little information on my background, I have studied the precious metals markets, bought and sold gold and silver online and held a number of investments. I have a GoldSavers account with Baird & Co and I am a Karatbars Affiliate.

    I would like to start with your comparison of the 1oz Krugerrand against a bar of gold. The Krugerrand, Sovereign and other coins are in no way comparable to a bar of pure gold. Krugerrands are made up of 31.10g or 1 troy ounce of pure gold and 2.83g of copper giving it a total weight of 33.93g. It carries a fineness of 916 and is 22 karat gold.

    Let me also point out that you have compared a 1oz Krugerrand at 31.10g or 1 troy ounce against 28.34g worth of Karatbars. 28.34g is once ounce, however all gold is weighed using troy ounces, which is 31.10g. So your calculations are 2.76g out.

    By comparison the Australian Nugget is a gold coin that is 31.10g or 1 troy ounce of pure gold and carries a 999.9 fineness and is 24 karat gold. Gold coins carry a premium over the spot price of gold and that premium depends upon the age, rarity, condition and type of coin.

    To compare the 1oz Krugerrand with the 1oz Australian Nugget 24 carat gold coin.
    Firstly the 1oz Krugerrand weighs a total of 33.93g of which 31.10g is pure gold. The Nugget is 31.10g of pure gold.
    A 1oz Krugerrand costs around £809.50 at the current market price.
    A 1oz Australian Nugget costs around £815.00 at the current market price.

    Now let us compare the smaller denominations which carry a higher premium over the spot price of gold.

    Krugerrand
    1/2oz is 15.55g of pure gold priced at £477 x 2 = £954/oz
    1/4oz is 7.776g of pure gold priced at £220 x 4 = £880/oz
    1/10oz is 3.11g of pure gold priced at £92 x 10 = £920/oz

    Australian Nugget
    1/2oz is 15.55 of pure gold priced at £458 x 2 = £916/oz
    1/4oz is 7.77g of pure gold priced at £239 x 4 = £956/oz
    1/10oz is 3.11g of pure gold priced at £103 x 10 = £1030/oz
    1/20oz is 1.55g of pure gold priced at £58 x 20 = £1160/oz

    So you can see that the prices differ between each coin and its denomination.

    As gold coins and bars carry different prices over the spot price they are not a comparable product.
    Now I will compare similar products. Baird & Co have two cards, the first holds 20 x 1g gold bars and costs £548, which is £27.40 per gram and 11.2% above the spot price of gold, which as I am writing this is £24.32 per gram at the 12 September COMEX Close.

    The 10 x 1g gold bars costs £276.75, which is £27.67 per gram and over 12.1% above the spot price of gold.

    The 2.5g bar of 999.9 24k gold is the smallest denomination that Baird & Co offer, priced at £70.25, which is £28.10 per gram and 13.4% above the spot price of gold.

    The 5g bar of 999.9 24k gold costs £134.25, which is £26.85 per gram and 9.4% above the spot price of gold.

    When comparing Baird & Co to Chards, as these are two suppliers you have mentioned.
    Chards sell the 1g bar of 999.9 24k gold is priced at £31.00, which is 21.5% above the spot price of gold.

    Chards 5g bar of 999.9 24k gold is priced at £149.00, which is £29.80 per gram and 18.4% above the spot price of gold.

    It is important to understand that Baird & Co are refiners, as such they can offer gold at a lower premium. Other dealers like Chards purchase gold from the open market and refineries, paying a wholesale price. They make their money by selling gold for a higher premium over the spot price and repurchase gold for a price lower than the spot price of gold.

    Karatbars also buys their gold from a refinery in Turkey, ATAkulche who is the first in Turkey to be listed on the LBMA or London Bullion Market Association, Good Delivery List.

    Unlike Baird & Co and Chards, Karatbars repurchases their gold products at a price that is higher than the spot price of gold.

    Lastly let us look at what Karatbars offers.
    5g bar of 999.9 24k gold is priced at £152.37, which is £30.47 per gram and 20.1% above the spot price of gold.

    If you use one of the bonus cards, you receive a 3% discount on all gold purchases for 1 year. This reduced the cost of a 5g bar of 999.9 24k gold to £147.79, which is £29.55 per gram and 17.7% above the spot price of gold. Further discounts are available and affiliates can earn free gold bars.

    2.5g bar of 999.9 24k gold is priced at £85.51, which is £34.20 per gram and 28.9% above the spot price of gold. Again with the bonus card, the 3% discount reduces the price to £82.94, which is £33.17 per gram and 26.6% above the spot price of gold.

    Finally the 1g bar of 999.9 24k gold is priced at £38.55 or £37.39 with a 3% discount, which is 35% above the spot price of gold.

    Why should I spend my money on Karatbars?

    Here is a little example, I will use the 5g bar of gold as it is the best value for money and anyone looking to get the best money/gold conversion, it is what I would recommend.

    In this example 3 people buy a 5g bar of gold.

    Person A, purchases their gold from Baird & Co.
    Person B, purchases their gold from Chards.
    Person C, purchases their gold from Karatbars International.

    Person A paid £134.25
    Person B paid £149.79
    Person C paid £147.79

    They all decide to sell their gold.
    (Baird & Co buys back gold for £23.64 per gram which is 2.5% under the spot price. This is an approximate percentage and based on their Gold Savers repurchase price, so they may charge a higher percentage than this.
    Chards pay 85% of the value of pure gold, per gram that works out as £20.62.
    Karatbars pay £26.18 per gram, which is higher than the spot price of £24.32, a difference of £1.86)

    Person A sells their gold at the Baird & Co buy back price of £118.20
    Person B sells their gold at the Chards buy back price of £103.36
    Person C sells their gold at the Karatbars buy back price of £130.90

    Person B made the biggest loss of £46.43
    Person C made the second biggest loss of £16.89
    Person A made the lowest loss of £16.05

    Bairds & Co is the cheapest by 84p, if only the 3% discount is used. Karatbars would be the cheapest if a 15 Euro discount was applied. They are also a refiner so they can sell at a lower premium.

    In this basic example for a 5g bar of gold, we can see that Karatbars has the second cheapest price and the highest repurchase price. How can you justify labeling Karatbars as selling gold at inflated prices?

    The 1g and 2.5g gold bars that are sold by Karatbars are not comparable to pure investment gold, as they are more versatile and can be utilised in a number of ways. You snub Karatbars International for the way it presents its gold, however small denominations of gold are presented in similar ways, as can be seen in the Baird & Co picture of a 20 x 1g gold wafer, listed on their site.

    Karatbars gold products are for security and not investment, they have a very versatile product that is globally recognised and trusted. Their gold is easily sold around the world. As the cards are customisable, companies can use these cards for marketing, customer loyalty rewards, gifts, celebrating commemorative occasions, as a discount voucher for services and an alternative to fiat currency.

    • Tom Wake says:

      Hi Alex, thanks for your comment. I’m glad we’re both agreed that ‘Karatbars gold products are… not [for] investment’ (as you say in your last paragraph). This is exactly what I’m saying and something I want readers to be fully aware of.

  2. Bill Rainier says:

    Thanks Alex. It’s helpful to read statements that are based on fact, not on emotions.

  3. Andy says:

    Alex, Karatbars allows the common family to invest in AFFORDABLE GOLD amounts. STOP comparing ounce to grams. Sure, the math is there, but us LOWER income familys do deserve a chance at owning GOLD! Don’t we?????

    • Tom Wake says:

      Thanks for the comment Andy.

      Absolutely, but to my mind it’s even more important that lower income families get a good, competitive rate for gold (should they wish to invest) and not buy at a vastly inflated rate.

  4. Carol Jones says:

    Your last comment to Alex stating your objective was to make readers aware that “Karatbars gold products are not for investment” sounded uninformed. You should have said “GOLD products are not for investment”. It doesn’t matter who they are purchased from. Karatbars sells 1g, 2.5g, and 5g gold at similar prices to other companies … like JM Bullion etc. Check it out! Did you not take a look at other ecommerce precious metals companies and what they sell 1g, 2.5g and 5g gold bullion at?
    Financial advisors like Mike Maloney (author of the#1 best selling book “Guide to Investing in Gold & Silver”, Robert Kiyosaki (Rich Dad, Poor Dad) and other financial advisors and investors all refer to purchasing gold and precious metals as a hedge, not an investment, and suggest you have 10% – 20% of your portfolio in precious metals (as hedgemony).
    Also you referred to Karatbars as an mlm. I think you meant “network marketing”. Interestingly, Robert Kiyosaki endorses network marketing, and Donald Trump has his own network marketing company. You may want to rethink your review.

    • Tom Wake says:

      Hi Carol,

      Thanks for leaving a comment.

      As explained in the article, I’m specifically referring to the rate offered by Karatbars (for their gold). Investing in gold via Karatbars is, in my opinion, a poor investment opportunity – not gold in general.

      Also I did mean MLM (not Network Marketing).

  5. Carol Jones says:

    Also notable: regarding your comment ” NOT tiny slivers of gold tacked onto plastic cards (funnily enough).” ….. well, funnily enough, many gold companies sell smaller weights of bullion in “cards”. Solid gold bullion is very “soft”. Again, you may want to google buying 1 gram of gold and look at the packaging. It is typical… you are hilariously uninformed.

    • Tyler says:

      Carol,
      You are “hilariously” loyal and bias towards an obvious scam know as KaratBars. This scam will fade away just like all the others I have come across or been approached to join in the past.

  6. I purchased the Silver Package so that I would be able to possibly earn some extra income by promoting Karratbars in my websites. It’s already been over three months and for one reason or another I still haven’t received my purchased Silver Package that is already paid for over $380.00. I was told that this was because I have not yet up loaded my KYC documents. Since the file that I have been sending them for the KYC requirements were not approved. I must have attempted to upload those two documents ten times and in each and every time the documents were uploaded they were all denied approval. So even up to date I still have not received my purchased Silver Package.

  7. Thomas says:

    Tyler, you almost had me convinced that Karatbars might not be for me and my family; but after reviewing Alex’s detailed information, I will now redouble my efforts to share the Karatbar opportunity! Once I decided that exchanging some of my paper money for GOLD was prudent, I just needed to decide where to buy the GOLD. Studying these posts have convinced me that Karatbars is indeed competitive, and should be considered when GOLD purchases are to be made. Thank you for your NEGATIVE review. But your “Lemons” will be used to make my “Lemonade”.

  8. Tess says:

    Ernest, when you upload KYC documents, make sure it’s a document that’s stated. I am very skeptic and have knocked all businesses down (thus why I am looking for reviews), but because my father swears by this – I decided to try it out. My KYC docs were approved last week following the exact instructions using my utility bill and id card. Before I tell anyone of this business, I would like to see it for myself (I’d rather be certain that this thing works than to feel sorry for inviting someone in and it not working at all). I should be receiving my gold package stuff sometime today so my father would probably would explain a little more on what I just got myself in to haha

  9. Gary says:

    Karatbars International happens to be very particular about KYC documents. It took several different uploads of my proof of address, but it eventually got accepted.

  10. Tom says:

    These comments are ridiculous – so obviously paid-for content by Karatbars advocates. I’ve looked into this as well, albeit briefly. Karatbars is a ponzi scheme; this article is on point.

    • Tom Wake says:

      Thanks for the comment, Yep, the article seems to have attracted their army of affiliates. I’ve kept their comments live because they’re so ridiculous they do a better job of warning people off Karatbars than anything I could have written.

  11. Ian says:

    Tom Wake and Tom…

    If you think it’s a scam…I still get paid.If you think it’s too good to be true…I still get paid…If you Join me…we all get paid.If you don’t join me….I STILL GET PAID.

    Been in the business for about a month now and I have received my gold,Made my package amount back x2 and awaiting this Friday to get paid some more EUROS.All i want to say to you is don’t knock something until you’ve tried it and experienced the “negative”!!

    Please read the part where i mentioned that i made my package back x2….

    I am in South Africa so i don’t need to tell you how happy i am getting paid in EUROS.

    Have a great day.

    • Tom Wake says:

      Hi Ian, thanks for the comment. I appreciate your honesty. You’re absolutely right, some members will make money by recommending this scheme to others. However the MLM element to this is not something I am at all comfortable with, or willing to endorse because of the underlying product. As a vehicle for buying gold readers will get far better value elsewhere.

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