Thursday, March 2, 2017

Is Karatbars just another gold bars scam? (review)

What’s the sales pitch this time?

“Choose certain gold in uncertain times.”

Of course, this is MLM, so it’s not so much about investing in gold so much as it’s about selling the opportunity to sell the opportunity to invest in gold.

Recruitment, recruitment, recruitment. But they do it well.

Have I been involved?

This video explains everything:

Make sense? Either way, here’s the full review on Karatbars.


Karatbars was founded in 2011, and is headquartered in Stuttgart, Germany. In the past 6 years, they’ve expanded to do business in over 119 countries. Their goal is to expand to worldwide availability, and they seem to be on track.

They’re a private corporation, so they don’t release their profit information.

The company was founded by Harald Seiz, who’s been working in the financial industry since wayyy back in the 80s. He was involved in real estate, insurance, and finance before moving into the precious metals industry in 2008.

Of course, you haven’t really made it in MLM until you’ve butted heads with the government a few times. The AMF, Canada’s financial regulatory body for the government of Quebec, issued a warning against Karatbars during “fraud prevention month” as follows:

“Affiliates are lured by the possibility of earning large payouts, in particular through a percentage of amounts collected from the Karatbars plans and gold products purchased by referrals.

The AMF reminds investors of the risks involved when investing in companies such as Karatbars that are not reporting issuers and do not hold AMF registration or authorization. Quebeckers should therefore be cautious with product offerings from Karatbars since they might incur losses that are not covered by the financial services compensation fund or deposit insurance.

The AMF is closely monitoring this matter and will take any measures deemed necessary in the event of violations under the laws it administers.” [1]

How much does Karatbars cost?
It’s actually completely free to join Karatbars, but huge portions of the compensation plan are reserved only for affiliates who purchase a starter packages. Their prices are as follows:

Bronze: 239 EUR

Silver: 595 EUR

Gold: 1595 EUR


Karatbars sells small quantities of 24k, 999.9 gold bullion that come in the following denominations:

  • One gram
  • 5 grams
  • 5 grams

So, you don’t need to be rolling in fat stacks to invest in gold, because they actually sell very small denominations. So small that they have to be sealed into a plastic card that looks like a credit card so you don’t lose them.

They claim that their gold products provide the highest safety standard in the world by embedding “DNA” into the gold, showing their authenticity under a black light.

They also claim that their gold bars are “high quality workmanship and quality” and that all their producers and suppliers are listed on the London Boullion Assossiation Market. However, their website fails to mention who, specifically, supplies and produces their gold bars, aside from saying “Our partners are well chosen. Especially the gold refinery are one of the best in the world.”

You can buy the cards in a bunch of different designs, from patriotic themes to sports teams to “Happy Birthday” and “Happy Valentine’s Day” cards. I don’t know about you, but I would definitely rather get a chunk of pure, solid gold for V-Day than some drugstore chocolates and a rose.

Whenever you want to exchange your gold back for currency, you can do so with Karatbars at their “daily guaranteed buyback price”, or at any registered K-Exchange center.

When it comes to their pricing and exchange rates – well, that’s when it gets shady. More on that later.


The Karatbars compensation plan is huge and very unnecessarily complicated.

There are 12 affiliate ranks in the Karatbars plan.

Package commission is paid to affiliates each time they sell a new package to an affiliate they recruited, as follows:

Silver package commission: 60 EUR

Bronze package commission: 150 EUR

Gold package commission: 300 EUR

Unilevel commission offer affiliates a percentage of the money spent by the affiliates below them and depend entirely on rank. The lowest rank, Distributor, doesn’t qualify for unilevel commission. After that, affiliates can make anywhere from 0.5%-5.5% in unilevel commission depending on their rank, increasing by 0.5% with each rank increase.

Binary commission offers affiliates commission on money spent by their downline in a binary format, paid out generationally. Once an affiliate’s team achieves 50 units in sales on one leg and 25 units on the other leg (the Bronze package, for example, is 50 units), they make:

  • 40 EUR if the highest package purchased in their downline is Silver
  • 60 EUR if the highest package purchased in their downline is Bronze
  • 80 EUR if the highest package purchased in their downline is Gold

These are the main forms of payout in the Karatbars compensation plan, but there are a variety of poorly explained bonuses as well. These include a Worldwide Turnover Bonus, a Gold Pool, and Karatbars Incentives.


Gold is a solid investment (ha, pun intended).

According to Investopedia, it does a great job of maintaining its value over time, especially when the U.S. Dollar crashes (like it did in 2008), it is one of the best ways to protect against inflation, it’s virtually immune to political problems, and demand for gold is only going to increase. [2]

Karatbars makes gold investment accessible to just about everyone by offering gold bars in very small denominations. Whereas most people start at an ounce, you can buy as little as one gram of gold from Karatbars.

However, the Karatbars rate for one gram of 24K gold is around 60 EUR or $66 USD. The actual market rate for 24K gold right now? Closer to $40 USD per gram. [3]

Karatbars is tacking on an extra 50% to their gold prices. In other words, there is literally no reason to buy gold from Karatbars as a regular customer. The only reason to purchase gold from Karatbars is to partake in their affiliate program.

The problem here is that Karatbars doesn’t have a solid product. They have a smokescreen that’s hiding the fact that Karatbars is nothing more than an affiliate scheme where new recruits pass money up to the founders who let a percentage of that profit trickle down into the hands of older affiliates.

This puts it on the edge of becoming a pyramid scheme, and I can see why the Canadian AMF issued a warning about them.

But if you like automated ways to build passive income, there are better ways.

(and you can trash those old MLM habits, too)


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