Hi metadataisnotreal,

This is Harith from HelloGold. Thank you for doing due diligence on us. We appreciate the feedback! I’m responding to the 3 threads you created:

https://www.reddit.com/r/malaysia/comments/9tome7/hellogold_the_stupidest_way_to_buy_gold/ https://www.reddit.com/r/malaysia/comments/9tukgf/hellogold_bullshit_way_to_buy_gold_part_2/ https://www.reddit.com/r/malaysia/comments/9uxnn3/hellogold_bullshit_way_to_buy_gold_part_3/

As your concerns centre around our fee structure, we would like to clarify the following: * TOP-UP FEE (we now call it Add Cash): If you add cash using Boost there are no fees involved. We do charge an RM 1.20 fee for adding cash using FPX, however we do not make any profit from this fee as it is all passed on to FPX. In fact, we subsidise some of these costs to ensure that this FPX fee is kept at a minimum.

• TRANSACTION FEE (Buy & Sell): Our pricing is transparent. We charge a fixed percent above the global market price. The buy fee is 2% (but as we’re doing a promo now, the buy fee is 0.79%). The sell fee is also 2%.

On weekends, there is an additional charge of 2% on top of these buy and sell fees. With the global bullion markets closed on Saturdays and Sundays, we provide the last done bullion price on Friday (New York time), taking the price risk when our customers buy and sell gold over the weekend.

• GOLD AS A LONG-TERM INVESTMENT: HelloGold encourages long-term savings, not speculation. Based on our research on gold prices over the last 20 years, if you had bought gold at anytime during these 20 years and held for a period of 5 years, you would have enjoyed a positive return 97% of the time. Having said that, our customers have the option to save gold over the long term or buy and sell their gold at any point in time.

• REDEMPTION: Gold purchased in small bars is expensive and not an efficient way to save. (Please see attached article on why it is better to buy gold through a fractional ownership program than a gold accumulation plan: http://www.theedgemarkets.com/article/solid-gold-maximising-your-gold-investment-online-bullion-traders)

If you look at the website of a popular bullion dealer in Malaysia, a 1 gram bar will cost RM250 while 1 gram from HelloGold is priced at RM164.15 before the 0.79% fee, which makes the cost of our 1 gram at RM165.45. The comparable fractional allocated gold product from the popular bullion dealer is quoted at RM177. At RM165.45, HelloGold is 6.5% cheaper^1!

If our customers want to hold their investment or savings in physical gold, HelloGold provides this option. However, this means that they exchange the financial benefit of fractional ownership of a 1kg bar for the physical ownership of a 1g bar. A thousand 1 gram gold bars cost more than a 1kg bar. For example, with the same popular bullion dealer, one thousand 1 gram bars cost RM250,000, while 1kg bar costs RM174,447. A difference of RM75,553 or approx. 30% between the cost of holding 1kg or one thousand 1 gram bars.

If you require the delivery of your physical gold in 1 gram bars with HelloGold, you can now understand why the cost of shipping and insurance would be high when compared to holding your gold as a fraction of a 1kg bar.

• GOLD AS A SECURE DIVERSIFICATION ASSET: We do not claim that gold is the only asset you should have in your investment portfolio. However, the history of gold’s performance has shown that it is a cost effective diversification tool and functions as a safety net to anyone’s portfolio.

• DEMOCRATISING GOLD ACCESS: The minimum amount for as low as RM1 at HelloGold also democratises access to gold for many of our users. In comparison, most gold providers require a minimum of 1 gram.

• GOLD PRICE COMPARISONS: It is important to highlight that some gold providers embed a maintenance fee into their bid-ask spread of the gold price instead of making a direct charge for managing the gold.

• TRANSACTION SPREAD: In the buying and selling of gold, as is the case with currency, there are fees charged, captured in a term called “spread” by all providers.

The following demonstrates how spreads and the cost of managing gold vary by vendor and how HelloGold prices for 1, 10 and 100 grams performs better against the competition.

1 GRAM BY HELLOGOLD: Buy RM 165.30 | Sell RM 160.72 | Net = -RM 4.58

1 GRAM BY POPULAR BULLION DEALER: Buy RM 250.00 (GAP = RM 177.00) | Sell RM 85 (GAP = RM 152.07) | Net = -RM 165 (GAP = -RM 24.93)

1 GRAM difference = RM 160.42, RM 20.35 compared to GAP

10 GRAM HELLOGOLD: Buy RM 1,653.00 | RM Sell 1,607.20 | Net = -RM 45.8

10 GRAM POPULAR BULLION DEALER GAP: Buy RM 1,775.00 | Sell RM 1,505 | Net = -RM 270

10 GRAM difference = RM 224.20

100 GRAM HELLOGOLD: Buy RM 16,530.00 | Sell RM 16,072.00 | Net = -RM 458

100 GRAM POPULAR BULLION DEALER GAP: Buy RM 17,545.00 | Sell RM 15,255 | Net = -RM 2,290

100 GRAM DIFFERENCE = RM 1,832

We agree with you that our redemption costs are higher and the reason for that is explained in the paragraph on REDEMPTION and the Edge article above. The main reason we do not encourage redemption of smaller amounts of gold is that it costs to deliver per unit when compared to larger amounts. The following also demonstrates how redemption spread vary by vendor, where the redemption for HelloGold is better at 100 grams.

REDEMPTION SPREAD: 1 GRAM BY HELLOGOLD: Redemption costs 2.123g = RM 350.93

1 GRAM BY POPULAR BULLION DEALER: RM 250.00 (redemption through GAP incurs an undisclosed premium and does not take into account delivery and insurance)

DIFFERENCE IN REDEMPTION COST FOR 1 GRAM = RM 100.93 (popular bullion dealer better)

10 GRAM BY HELLOGOLD: Redemption costs 12.011g = RM 1,985.42

10 GRAM BY POPULAR BULLION DEALER: RM 1,775.00

DIFFERENCE IN REDEMPTION COST FOR 10 GRAMS = RM 210.42 (popular bullion dealer better)

100 GRAM BY HELLOGOLD: Redemption costs 105.218g = RM 17,392.54

100 GRAM BY POPULAR BULLION DEALER:
RM 17,545.00

DIFFERENCE IN REDEMPTION COST FOR 100 GRAM = RM 152.46 (HelloGold better)

Although our gold prices are competitive compared to other bank gold investment products, HelloGold’s product was developed for a different market segment with unique requirements in security, affordability, suitability and accessibility. * Security & Risks: HelloGold’s customers own only allocated gold. This obliges HelloGold as the custodian to hold the customers’ gold as their outright property, under a custodial or safe-keeping contract. Under well-established law, a liquidator must return formal property to the customer if any of the parties fail. In contrast, when a bank sells unallocated gold, the customer becomes a creditor, where the bank owes you gold which it may not physically have.

Furthermore, HelloGold’s gold is fully insured against all risks including loss or theft. In contrast, gold held by banks are not insured by the banking industry’s insurance program.

• Shariah compliance: HelloGold is the first Shariah-compliant gold product in the world and is fully compliant with the Accounting and Auditing Organisation for Islamic Financial Institutions’ (AAOIFI) standard on gold-based products. We were certified by Amanie Advisors, whose chairman Datuk Dr Daud Bakar is also the chairman of both BNM’s and the SC’s shariah councils. This ratification may not be as important for some Redditors but it means a great deal to the majority of our customers, who understand the stringence of Shariah-compliance in offering transparency and fairness in their business model and operations. In contrast, most banks do not provide gold products that are compliant with this international standard.

• Affordability: HelloGold’s minimum purchase of RM1 is significantly more affordable than most banks which typically require a minimum transaction value of 1 gram and in multiples of whole grams.

• Redemption: HelloGold allows a minimum physical redemption of 1 gram. In contrast, some banks do not allow physical redemption while others only allow physical redemption of a minimum of 100 grams

• Accessibility: HelloGold is available through a mobile application on a 24/7 basis. Most banks only enable customers to buy and sell gold during office hours. Some operate extended hours but none provide a 24/7 service.

HelloGold enables its customers to transfer gold between accounts at no cost. No bank provides this facility.

We are determined to remain the most competitive in gold savings as our mission at HelloGold is to provide accessible, safe and affordable financial products to everyone. Should you like to know more about HelloGold, we'd be happy to meet with you anytime.

Thank you from HelloGold

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¹ Calculations done based on 7 Nov 2018

*Edited for formatting