Recently I had been asked about a company called Karatbars International and if this company’s offering was something to be considered as a potential investment. Prior to this conversation I had not heard of Karatbars so I could not make an informed recommendation. Since then, I had taken some time to give Karatbars a look and summarized my findings within a single page document.
I thought my findings and summary might prove useful to others as well, so I have provided the contents within this article. I have divided the following summary into Positives, Concerns, Notes, Recommendation, and References. Positives list what I deem to be the highlights of Karatbars, Concerns are areas that I view of potential concern, Recommendation provides my overall recommendation, and References are the resources I used to formulate my opinion.
If you have not heard of Karatbars it is a MLM (multi-level marketing) offering. The mechanics of the MLM structure appear to be similar to other MLMs, with the exception that this MLM offers a durable (non-consumable) product in the form of small retail quantities of gold embedded within a debit card.
-Strong marketing and polished image
-Gold based product
-Debt free company(1)
-Karatbars produced only by LBMA good delivery list refineries
-Marketing feels a bit too pulled together and polished. This is sometimes indicative of compensating for an inadequate product.
-MLM/pyramid type structure – Focus on selling the business opportunity as opposed to the product. For example, within a twelve minute presentation, three minutes were spent on the actual Karatbars product and nine minutes on the affiliate program.
-Somewhat complex business model. Although this is easier to understand than some MLM type businesses, it still requires some explanation and is not strictly based on a simple exchange of value. The business model is not intuitive and requires deep thought.
-Karatbars gold is in a non-traditional format. This may be a potential turn-off for some people (especially goldbugs) when attempting to sell or redeem with individuals not associated with the program.
-Poor web reputation. When searching KaratBars, Google suggested “Karatbars scam” as a top recommended search.
-Company states that they are an e-commerce company, but this appears suspect. Typical e-commerce companies are transactional by individual consumers. The Karatbars International website is in an information, splash page format and purchases must be made through an affiliate.
-Foreign-based – May not receive the same regulatory protection against pyramid type models.
-Unanswered questions: How do I exchange Karatbars and how much will I receive for each bar? Will the company buyback purchased Karatbars?
-Complex payout structure – 75 grams of gold must be sold across two legs (50/25) in order to receive payout ranging from $12 to $96 depending upon level and exchange rate. What is the average time for a Karatbars affiliate to receive a payout?
-Complex team building required – It may be difficult to build two coherent teams (one for each leg).
-Product might be overpriced. The following is an excerpt from Facts About Internet Marketing: “Today, February 15, 2015 the spot price for ONE gram 999 fine gold is $39.50. Karatbars adjusted gold value is $65. I am sure this is not a good deal. And don’t forget, you will have to pay shipping cost as well.” Another source, Hottest MLM Companies echoed this price concern: “The truth is they are selling their Gold Bars roughly 33% more than market value. Their Gold Cost: 1 Gram (99.99% pure) $60 + Shipping which is another $23.90. Total Cost to your door: $83.90 per gram (Now if you buy more, you get a shipping price break). Okay, I went on another reputable site called JM Bullion check this out: Cost of Gold: 1 Gram $53.50 (99.99% Pure) with FREE shipping. So in this example, you are paying $30 more for the same 1 gram 99.99% pure Gold.”
Based on the company’s own statement. Karatbars International appears to be a privately held company, and as a result company financials are not publicly available.
Overall I would not recommend Karatbars as a long term investment as the listed concerns far outweigh the positive aspects of the product and business. This is not to say that one cannot create income with Karatbars, but the focus would be on recruiting and team building as opposed to holding the product as a long term store of value.
1. Facts About Internet Marketing: http://factsaboutinternetmarketing.com/karatbars-international-scam-review-not-all-that-glitters-is-gold
2. Hottest MLM Companies: http://hotmlmcompanies.com/karatbars-international-review/
3. Karatbars International: http://thevalueofgold.com