Tuesday, November 21, 2017

An Honest Look At USI TECH

Disclosure: Most articles which publish 'reviews' of a MLM scheme are in fact not honest, but rather a sales pitch dressed up as an independent article. This is not the case here. You will not find any referral links (hidden or otherwise) to USI TECH in this post.

I have no problem with people advertising a service or product that they don't own and taking a cut, referral fee/bonus or affiliate commission when a genuine product is being sold and the process is fair and transparent. This is typical in the sales industry.

There are some multi-level marketing (MLM) sales systems which take this a step further and allow you to not only take a single cut of a products sale, but also allow you to bring in other participants where you would take a small cut of their sales too and of those they recruit (typically receiving a smaller share with each level down the chain).

At this point such a sales system can start to become risky and detrimental to the end buyer. The more people who are receiving a cut, the more profit you need to pad into the price. So chances are the end buyer is not receiving a very good deal if the cost of the product they purchase is paying a commission to a number of parties further up the chain (see image above). Also the end buyer is often recruited into the structure to try and sell the product themselves. It is not very different to a pyramid scheme, however there is a product or service involved even if it doesn't represent good value.

Have you heard of cryptocurrencies (referred to from here on as cryptos)?

Cryptos already have a number of very real risks for investors:
  • Their performance can be very volatile with regular 30%+ falls.
  • Exchanges have collapsed taking investor funds with them.
  • Code has gone wrong making it impossible to sell cryptos in a wallet.
  • If you forget your private key the value is lost forever.
  • Many of them are poorly coded or offer no real advantage over their peers.
And this is barely scratching the surface of the risks involved with buying or owning them (though I do believe the technology will be used in everyday life down the track, so there are reasons to speculatively own some).
Now imagine an MLM sales system was applied over the top of this highly speculative financial sector (cryptos). There are a number of 'opportunities' popping up in this space (another example is BitConnect), including one that seems to be increasingly popular in Australia, USI TECH. I have now been approached by at least half a dozen individuals to check this out and thought I'd take an opportunity to share some research I have done and my thoughts. I also welcome your comments below if there is anything I have missed or misrepresented (I am only using publicly available information).

What does USI TECH offer? Earlier in the year and last year they were selling a software package for automatic FX trading, but in March 2017 started offering 'Bitcoin Packages'. Effectively my understanding is that you transfer 50 Euro worth of Bitcoin (the first crypto) to their system and then they start trading it on your behalf. The claim is that their trading can return 140% return on capital at ~1% per day (advert spotted at a supermarket):

Typically such a return would be indicative that it is a HYIP (high-yield investment program), basically a type of ponzi scheme.

It is very unlikely they will be able to return such a consistent figure over the long term. There is no magic automatic trading system that can make you a fortune like this.
"There seems to be a never ending stream of investing scams that are rolling out these days. Automated investing combined with FOREX seems to be the sweet spot. Add a dash of Bitcoin and the story is complete. Take something that few people understand and automate it. What could possibly go wrong?" USI-Tech Scam? Yes It Is In My Opinion! - Ethan-Vanderbuilt
In fact, Bitcoin has actually risen 6 fold since they launched their Bitcoin packages, so chances are you would have outperformed their system simply by buying and holding Bitcoin directly (at least over the last 9 months).

USI TECH attracts people to this platform not only through the return, but also by offering very attractive commissions to those who want to sell these Bitcoin packages (and a recently announced 'token') to others through their referral system.

The token they are selling is dubious at best. They intend on turning the token into an ICO (initial coin offering) in the future. They have dubbed it TechCoin (Code: UTC), despite there already being a crypto by that name and another using that code.

Typically when an ICO launches they will release a whitepaper beforehand, which will detail how they intend on spending the funds, why their particular brand of crypto is superior or what it is for. To date there has been no whitepaper released publicly by USI TECH. I read they were going to release it after 500 million of their tokens are sold... why wait? Why would anyone buy this token without understanding any value it provides or what it will ultimately be used for?

The way they have structured the token sale is to incentivise both a large purchase by the buyer as well as for the referrer to push for large sales as they receive higher commissions.

The largest package you see above is Diamond for a cost of 10 Bitcoins (roughly A$109,000 at today's price).

USI TECH is suggesting they have a lot of other activity going on in the background such as the purchase (or hire?) of crypto mining rigs that are generating them income and the patenting of a machine that is supposed to reduce their mining costs substantially, but scratch under the surface and this looks like absolute nonsense (via Scam Hilarity: Suspect ponzi claims to be mining bitcoin w/ perpetual motion engine):

Being presented by people who simply don't have the qualifications or public history to confirm they know what they are talking about.

Further red flags appear with the business being based out of Dubai:
"A PO Box corporate address in Dubai is provided by USI-Tech. However beyond laundering investor funds, it’s doubtful USI-Tech has any physical operations in Dubai." - USI-Tech Review 2.0: Forex auto-trading dropped for bitcoin Ponzi
They also have some questionable people involved, for example one of the founders:
"Jao Severino (JOÃO FILIPE FERNANDES SEVERINO) has been barred from financial activity in Portugal because he was involved with another scam called AMC INVEST. AMC Invest offered 10% interest per month on investments and it ended up scamming hundreds of people before it was taken down by the authorities. People were arrested for this scam."
To wrap up:

* As far as I can tell the people involved don't have the appropriate experience (e.g. equipment rental manager presenting ‘revolutionary power technologies’) or have been involved in HYIP/pyramid schemes in the past.

* They have made outrageous claims about the technology they own... think about it, if they really had a machine patented to reduce the cost of electricity for crypto mining as they've described, why would they waste their time with doing so when it would have real world applications that could be worth a lot more.

* They're selling tokens which will eventually be exchanged for coins.. so they say. Which exchange is going to accept them? What real value will these coins provide? How does it differ to other crypto out there? Which reputable crypto specialists do they have designing the coin? Where is the whitepaper?

* They are promising returns that simply can't be replicated over the long term. My expectation is that they are paying out any current returns from new investors' money or from money collected from selling the tokens and from their mining rigs. They are probably relying on a lot of investors "reinvesting" their returns. These schemes (HYIP) can operate as long as they have enough new money coming in to cover any money going out. If the incoming money stops/slows, it will eventually collapse.

* The smallest Bitcoin packages are not that expensive, but this TechCoin is trying to bring in investments of tens of thousands of dollars through the way they have structured the bonuses.

Some further questions to ask USI-Tech if you are considering an investment in their scheme:

Why are they using this patented power technology for such a low potential opportunity, why not just sell it for billions of dollars if it works as they describe?

Why can't they release the whitepaper for the ICO before launch like any reputable crypto operation?

What are the names of the crypto specialists working on TechCoin and how can they be contacted?

When can we expect an external audit of the trading they are doing?

USI TECH is likely to go the way of the last ponzi I covered on this site, Royal Silver Company. Buyer beware.


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Monday, April 3, 2017

Perth Mint 2017 1oz Silver Swan (Mintage: 25,000)

If you are looking to buy some silver, here is a new coin for your consideration. I received an email this morning from Bullion Money, which read:
We're excited to unveil an exclusive product within Australia, The 1 oz Swan Silver coin minted by Perth Mint Australia. A maximum mintage of only 25,000 coins with a fraction of this quantity available in Australia. The Coin features a new swan design on the obverse with the queens head on the reverse similar to other Perth Mint legal tender coins.  Get yours now before they are all gone!
The very low mintage on this coin caught my eye. Low mintage Perth Mint silver bullion coins often attract a premium over the medium to long term, sometimes even over the short term. A great example was the 2014 1oz Silver Australian Wedge-Tailed Eagle Coin. I wrote about these on release when they were only $7 over spot and recommended them as a coin to buy, they quickly sold out. Spot price of silver fell lower in the months that followed, but the value of these coins rose with demand. Today spot price is around the same as when this coin went on sale, but the coin sells (on ebay) for around $50-70, a premium of around $27-47 over spot.

This new 'Silver Swan' coin has half the mintage of the above mentioned coin. It has an iconic bird which has featured in the Perth Mint logo. APMEX write:
The Swan is an iconic species that is so synonymous with the Perth Mint itself that it even appears in the Mint’s logo. The Perth Mint’s operations are situated in the heart of Perth, the capital and largest city of Western Australia. Founded in 1829 on the shores of the Swan River, the original colony in the territory was in fact called Swan River Colony, the location of which is now Perth.
Bullion Money's product page mentioned this will have a varying design (unlike the Wedge-Tailed Eagle which has seen some years repeating a design):
New from the Perth Mint is this limited mintage Silver bullion coin with a unique Swan design! The Silver Swan coin has a limited mintage of 25,000 coins made of .9999 fine Silver. This coin is the first in what's expected to be an annual series of 1 oz limited mintage Silver Swan bullion coins with designs varying each year, much like the heralded Koala and Kookaburra coin series from Perth.
In summary the Perth Mint 2017 1oz Silver Swan Coins:
  • Have a (VERY) low mintage (for a bullion coin)
  • Sport an aesthetically pleasing design (swan, iconic to Perth Mint)
  • Are housed in individual capsules
  • Have a quality finish
  • Are produced by world renowned Perth Mint 
  • Come with legal tender status
  • And are priced as bullion coins on release
I don't expect these coins to last the week at Bullion Money (if a day or two) and I put my money where my mouth is, having placed a substantial order for the coins. If you are interested, then you can purchase the coin (in Australia) at Bullion Money on this page.

Image Courtesy of Bullion Money on Instagram
Note: Bullion Money is a site sponsor, however adverts are funded through a fixed monthly sponsorship, not pay per click or for writing sponsored content. The above post was written immediately following receipt of their email notification (received by all customers) and having purchased some of the coins for myself, seeing them as a worthwhile investment.

[Edit] At the time of posting this article (and making a purchase) the coins were available for spot +$7 for 100+ coins at Bullion Money. Prices appear to have been revised throughout the day.


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Tuesday, March 7, 2017

ASX Silver Stocks: Moreton Resources (MRV)

Please note the disclaimer at the bottom of this site: The content on this blog is the opinion of the author only and should not be taken as investment advice.

It has probably been 6 years since I've written about silver exploration and mining companies. As I wrote mid last year ('Bull Market in Australian Gold Mining Shares')...
I was a very active speculator in gold and silver explorers and miners over 2009 to 2011. I made a small fortune, then lost a good portion of my profits in the downturn that followed.
Many of the obscene gains I made on the way up were in the speculative silver plays on the ASX (I took profit on CCU at 10-15x what I paid for most of the shares held) of which there are typically very few. Most silver is mined as a byproduct of lead, zinc, copper and gold, making projects that focus on silver somewhat a rarity. In 2010 there were really only 3 'pure' silver plays on the ASX (being Silver Mines [SVL], Cobar Consolidated Resources [CCU] and Alycoyne Resources [AYN]) and their share prices all rose to multiples of that in the 2010 post into early 2011 (before their downfall). Today only one of those companies is still in operation (SVL), the other two (CCU & AYN) went into administration during the bear market in silver, both failing to run a profitable mining operation as the price of silver cratered. Such is the risk of a resource company so heavily exposed to a single (volatile) metal.

Today, SVL has a higher market cap than in 2010 and owns additional silver projects such as Bowdens, which it acquired from Kingsgate Consolidated (KCN), however any long term shareholders have been taken on quite an awful ride, including a 100 to 1 share consolidation in mid 2016.

Recently I decided to take a look at what silver companies were currently listed on the ASX given my expectation that we are seeing the beginnings of a new cyclical bull market in precious metals. I used my Gold Nerds subscription to narrow down to those companies which had an (estimated) 50% or greater interest in silver related projects. Here is the list (note: some of the data may have changed since I sorted this list around 2 months ago, though share price should be current as of March 6th):

Click Table to Enlarge
With such a limited selection of silver related resource companies it is difficult to approach the list with the same thoroughness as discussed in a post from last year, A Common Sense Approach to Picking Gold Miners. Anyone looking to put a serious amount of capital into silver related stocks would probably do well to investigate options on global stock exchanges.

However, as I was only looking to speculate with a small amount of capital I decided to look through those options on the ASX.

I was looking for a company with multibagger potential, the possibility that it could increase multiple fold from it's current share price. Typically this is easiest for those companies with a low market cap, so the bottom half of the list (sorted by market capitlalisation) is where I started. I also wanted a company with a reasonable sized (silver) resource already defined, this narrowed down the selection further knocking the smallest company (Malachite Resources, MAR) off the list. Preferring a company with a primary focus on Australian projects knocked Santana Minerals (SMI) off the consideration list. This left me with Argent Minerals (ARD), White Rock Minerals (WRM) and Moreton Resources (MRV).

The one that caught my eye and resulted in a small purchase (at .004) recently was Moreton Resources (MRV).

Moreton Resources is the smallest market cap of the three at the recent share price of .004 (around $8.5 million). It had around $1.2M in cash at the end of last quarter, which may last them to around the middle of the year.

At present it poses a fairly risky prospect as it is as it is awaiting a decision by the Administrative Appeals Tribunal (AAT), ruling on whether research and development claims made in past years (2012 - 2014) were legitimate. If found not to be, I expect Moreton Resources to be in the hole around $8 million (or a portion of) to the ATO.

As a company with a market cap around the same size as the potential liability, this decision could make or break the company. That is the risk. However, I found it interesting that in the recent rights issue, when attempting to raise $1.2-$1.5M, one of the Directors (Tony Feitelson) put up $685k. He has had an association with the company since 2013 and became a Non-Executive Director in 2016. Feitelson and another Director Valeri Melik-Babakhanov have also recently made on-market purchases (albeit small) at the rights issue price of .004. There is clearly some confidence from management in the veracity of their claims.

I think that at .004 some of the downside to a decision against Moreton Resources would be priced in (if they are able to raise the capital to dig themselves out from under such a large liability). If the AAT decision goes in their favour I think there is a lot of potential upside over the next 12-24 months, including a potential spike in price following the announcement.

It was only last year that Moreton Resources picked up a portfolio of tenements (that include their silver resource) from Alcyone Resources (AYN), referred to as their "Granite Belt Project". The project includes a "Maiden JORC", which was confirmed by the company after a review of the resource model (adjusting for depletion from recent production) late last year.

19 Sep 2016: Twin Hills resource: 13.7 Moz silver @ 51.0 g/t and 21 koz gold @ 0.08 g/t

5 Oct 2016: Mt Gunyan resource: 6.5 Moz silver @ 55.1 g/t and 7 koz gold @ 0.06 g/t

Click Image to Enlarge
Alcyone Resources Limited went into voluntary administration in late 2013, having previously held a market capitalisation of around $150-$160 Million in 2011, although the assets purchased by Moreton Resources do not include the mining lease approvals or plant from the mining operations. The same project was previously owned by Macmin Silver (MMN) who went into administration during 2008, being unable to raise capital during the GFC at a critical time.
Junior silver miner Macmin Silver Ltd has been placed in administration.
The company said its flagship Twin Hills mine in south-east Queensland used more working capital than expected and it could not raise further funds because of the global credit crisis.

Prior to it's troubles I understand that Macmin Silver also had a market cap of more than $100 Million. So this silver project has been a bit of a 'hot potato' so to speak, being passed from one company to the next, being revalued higher by the market as the price of silver rallied and then ultimately leading to the companies demise with a major leg down in the price of silver.

My interest in having a little exposure to such an company and it's project is due to my expectation of a continuing bull market in silver. Should Moreton Resources make it through the short term risks posed by the AAT decision and silver continues to trend higher, there is the potential that this project and the company overseeing it is revalued higher, potentially to the tune of $100 Million (though expect we would see significant dilution to existing shareholders before reaching that sort of market capitalisation). This is also without assigning any value to Moreton Resources other assets such as their coal projects (which are of less interest to me, but could also add substantial future value).

Those interested in the company and project, but who have a low risk tolerance, would do best to wait on the sidelines until a decision is handed down by the AAT (there is currently no fixed time for this decision). However, personally I felt the potential reward outweighed the risks provided position size was kept small. I may buy more if the AAT rules in favour of Moreton Resources in the outstanding matter.


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