I was surfing the net and came across an article regarding Gold and Silver Network Marketing Companies and thought I would share it...Be Careful out there!!
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Gold and Silver Programs~
This has to be the most doomed to fail type of MLM program that has ever existed. Since I've been involved with MLM I've seen dozens and dozens of gold and silver (G&S) programs start up-and go away. Over and over and over. And usually for the exact same reasons.
Over and over and over...
There are three primary reasons why these programs fail, and why they will always fail:
1. - Gold is a commodity. It is an investment that increases in value. To sell it based on that premise requires a securities license. Without one you are in violation of laws set forth by the SEC. G&S programs simply have no way of preventing their distributors from "speculating." Even if the company itself makes no promise of a future gain in value of the gold or silver, their 10,000 unlicensed, independent agents out there inevitably will.
As it is, I've rarely seen this angle avoided by even the companies. Yes, they themselves usually hype the investment value of their "product." They may not come right out and say it will be worth more in the future, but many of them do say it was worth less in the past. The SEC doesn't play semantic games like that.
The investment angle also places the entire MLM industry in jeopardy as well. There is already a fear that the SEC would like to regulate all MLM opportunities as investments. There is an ongoing push throughout the industry to separate the terms investment and Network Marketingas far apart as possible. G&S programs slam them both together.
2. - Most G&S programs have a system that involves the exchange of cash and commissions being paid before a tangible product is actually received. Whether it be a voucher system, a layaway system, a down payment, or whatever, many of them allow you to submit funds and in some manner build towards the actual pruchase of gold or silver coins, In the meantime though, commissions are being paid out of those funds received and a product isn't being delivered.
3. - The price of gold is the price of gold. The most anyone can get for it is whatever the going rate is. This doesn't leave much room for markup. So how do you suppose G&S programs payout 50% or more in commissions? Evidently, many federal and state regulators assume it's coming out of the next participants initial down payment.
So, number one involves securities violations, number two violates pyramid statutes, and number three would likely be classified as a Ponzi scheme!
Is it any wonder G&S programs rarely last more than 2 years?
Gold and silver programs? Practically every one that starts up is shut down for the exact same reasons as those in the past. These operators must know going in that they'll likely be history in a year or two. But then it doesn't take much longer than that for a million bucks to stack up in the bank. And, of course when the axe falls they can always blame the federal or state agency that dealt the fatal blow. "Hey it wasn't our fault!," they can exclaim. "We wanted to keep paying you your commissions, but those dirty government regulators made us stop." These shysters actually end up as martyrs. And, as they feign resistance to the regulatory attacks. their victims consider them heroes!
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