About this #Karatbars #gold thing

Please note: this is not intended to be investment advice. For that, you should see a professional. This is intended to be a comment on hard sell and misleading information.

If you go to an event like this, for any scheme at all, it’s obvious that you should not enter into any legal obligation at the time, even if you are offered an incentive to do so. Go away, think about it, and research the offer extensively, including — especially — any warnings about or criticism of the deal. This applies to any similar scheme, not only Karatbars.

I went along with a friend to a meeting in London presented by (or on behalf of) a company called Karatbars. Karatbars sells small quantities of gold to the public, from 0.1 to 5 grams, in fancy packaging that looks like credit cards, medallions or polymer banknotes. These were presented at the meeting as an investment. In addition, the company offers a range of ‘affiliate’ schemes, in which members of the public can make money by introducing others who buy the products. My friend asked me to give feedback on what I heard, so here it is.

The main speaker had, apparently, flown from Northern Ireland specially for the meeting in south London. He was a skilled and entertaining, not to say hyperactive, speaker and clearly knew how to engage with his audience. But it’s what he said that I shall comment on. And what he said was seriously misleading, even if there was nothing that could actually be called a lie. That’s how hard sell works.

First, he went through a spiel about how gold is ‘real’ money and cash and notes (not backed up by gold*) are not ‘real’ money. This is bunkum: if anything is ‘real money’ it is the legal tender of your country. This is what you have to pay your taxes in, and if someone owes you a debt, then you are entitled to insist they pay it you in legal tender. They may offer to pay you in gold (or coal or duck feathers or tickles) but you are entitled to refuse, and they cannot insist that you take anything but the legal tender.

Second, before coming to the real sell, he tried to make out that gold is much better than cash because gold increases in value while currency depreciates. There was a lot misleading in this, and I shall come to this later.

Third, the real sell was to get you to recruit other people to sell the gold on the company’s behalf, and here again the speaker was not honest with the audience..

Now here is the question you should ask yourself: if gold is better than the legal currency, why is the company trying to sell you gold in exchange for currency? Wouldn’t it be better for it to just hang on to the gold? After all, companies exist to make profits and their bosses usually want to get rich. The company, clearly, does not believe its own message.

So, let’s look at some of the points the speaker made, and the points he (significantly) didn’t make.

The Karatbars product is small amounts of gold in fancy packaging. Reportedly, this is much more expensive per gram than sales of gold bullion. There are a number of reasons  for this. There are the higher overheads of selling small amounts (this applies to any commodity), the fancy packaging costs money, and the company’s selling methods and commission schemes will also be a big overhead. So, if you are thinking of the gold as a profitable investment, then the price of gold has to go up a lot before you even begin to think of making a profit.

It may well be that a certain amount of gold is a suitable part of an investment strategy (this is not advice, remember). But gold is used by rich people as a hedge, and its price fluctuates by huge amounts. It’s likely that you will have to wait many years before you see a profit. In the meantime you will have the cost and worry of storing it and protecting it from theft and the danger of being mislaid. At least, as the speaker, claimed, it will survive a fire — if you can find the tiny amount in the debris of your house.

The speaker implied (flicking one of Karatbars’ banknote-looking products) that you could use it to settle a purchase. No, you can’t (in general). As I pointed out they aren’t legal tender, and the small print on the item is a disclaimer that makes it clear it is not legal tender. One of the problems of using gold as cash — why it’s better to use currency — is that it is difficult to establish the price of the gold at the point of sale. The ‘spot’ prices you see online are guide prices based on large transactions of gold bullion (including settlements of debts between sovereign states), and are not a good guide to the price at which you can sell a few grams or a fraction of a gram. (I see that Karatbars has a network of businesses who will accept the gold ‘banknotes’, but it’s a reasonable guess they will not be the cheapest vendors.)

The speaker missed out a very important point. He compared the value of currency after inflation with the rise of the price of gold over (say) 30 years. But that is VERY misleading. If you have any sense you would not keep your money in a sock for 30 years, you would invest it in a scheme such as a pension fund, ISA or something similar (after, I hope, taking advice).

I am told by an independent financial adviser that at present, even in these times of low interest rates, a realistic rate of return on a stocks and shares ISA is 4% per annum (your own experience may vary). Assuming that rate over 30 years, a fund of £100 would be £324 now. Looking at the gold prices over the last 30 years, using the price at the time of writing, £100 of gold would now be worth around £280, although you would probably not get as much as that if you sold it. Remember the price of gold is likely to fluctuate daily as well as over the long term. If you sold the £100 of gold in 2012 it might have been worth about £400, but if you had bought it in 2012 and sold it at the time I’m writing this, you’d have lost about a third of the value.

That is not taking account of other factors, such as possibly having to pay tax on your gains in gold and special tax exemptions for savings in ISAs and pension funds.

So taking all the above into account, it doesn’t look likely you will get rich on investments in Karatbars gold. But they know that, that’s why they don’t just try to sell you gold, they try to recruit you as an ‘affiliate’.

Many affiliate schemes are entirely legitimate, of course, and the speaker compared the Karatbars scheme to those of companies like Amazon, where you can get commission by advertising that results in sales. No problem with that.

But the Karatbars scheme goes a lot further. Unfortunately I didn’t get a picture of the screen, but the speaker’s schtick included a calculation that showed you could be earning thousands of pounds per week from recruiting a couple of people who would each recruit a couple of people, and getting commission from the sales made by the recruits. There was, of course, some small print that the speaker didn’t draw attention to. So, if you do this, you are not simply making money from gold, but from the packages that each recruit has to buy to join the scheme (although there is apparently also an income stream from commission on the gold they buy.). This is called ‘multi-level marketing’ or ‘pyramid selling’.

But there’s a serious problem with this scheme. In order to join any of the affiliate plans, you have to pay up front for a package. In the example, the speaker supposed that in  the first week you recruit two people, and you get a share of the cost of the package each one buys. Then in the second week each of these recruits two people, in the third week each of those four recruits two (8 in total) and so on. So the scheme means in the fourth week 16 in all have to be recruited to keep up the flow. Each time this happens, you get a commission.

In the 13th week, in order to match the model the speaker showed, you have to have 18,192 people in the scheme, all paying you commission. In half a year, to continue as before, the number of people in the pyramid below you will have to be more than the entire population of the UK.

So that’s not going to work. Of course, if you are an assiduous salesperson, you may well recruit lots of people, and make a decent income for a while. But eventually, the people at the bottom of the pyramid will pay out money but fail to recoup it. The people higher up have recovered their costs but their income dries up. The people at the top are laughing all the way to the bank – and it’s your money they are laughing over, not gold.

There is another disturbing aspect to this whole thing. The speaker showed a slide with a whole lot of different affiliate schemes, which were not individually explained. I suspect (but do not know) that these are used to lure people into putting more money in when they fail to make money at first: “it’s because you didn’t invest enough first time round, buy this more expensive package and you’re sure to make a fortune”, appealing to the addiction of gamblers.

I am not saying you should not buy Karatbars, it is a decision for you to make, but I am pointing out that there is a lot you should consider before making that decision, and a salesman will not give you all that information. One claim of Karatbars is that its gold comes with a guarantee of purity, and you should verify that to your own satisfaction.

Disclaimer: I have not looked in detail at Karatbars the company or its offerings; this article is based on the sales talk of a particular salesman on one particular occasion in August 2017. I note that the presentation of the company’s products on its website makes it look as if they are novelties, collectibles, gifts or give-away items for business promotion, and you might well choose to buy them for these purposes rather than regarding them as investments. That’s up to you.

Footnote

* Up to the early 20th century, in many countries, all currency issued had to be an (empty) promise by the government to give you an equivalent amount of gold if you asked for it. Some people still think we should go back to that system. It would be pretty pointless though, because overwhelmingly most of the money in the country – what you have in your bank account or savings – is created not by the government, but by banks when they make loans.

 

Debating God: part one

Parliamentary debates are usually taken as the model for speech debates, but legislatures debate policies, not, primarily, factual issues. The answer to a debate in a legislature is ‘yes, we shall pass this legislation [or amendment]’ or ‘no, we shall not’.

The question, ‘does god exist?’, lends itself to no such yes/no answer. The two sides of such a debate are not mirror-images of each other. Theists are mostly believers in a body of scripture that conveys some supposed revelation, and given that you believe this revelation you are almost certain to answer ‘yes’.

The opposite is not true. Suppose you had never heard of any god, and someone said ‘there is a god’. A reasonable response would be, ‘I am sceptical, show me evidence’.

In actual fact, we live in a country where one religion was previously dominant and enforced over the centuries through compulsion. In earlier times, this was backed up by torture and death. More recently, relatively gentle sanctions were used, such as making church membership obligatory for marriage or university attendance.  (I cannot go into a mediaeval church now without being reminded of the brutal history of the Church, which reflects the unremitting cruelty of the Pentateuch, but I am digressing.)

For historical reasons, then, we have come to our present, relatively secular, situation through active scepticism and resistance. Nevertheless, this does not mean that non-theists necessarily answer ‘no’ to  the question ‘does god exist?’. In fact I have come across people with a whole range of positions from ‘it is possible that some kind of supreme being exists’ to ‘it’s so improbable that it is not worth wasting time thinking about it’.

What kind of god are we debating? The people who suggested this debate believe, presumably, in one of the variations on the christian god. But people have believed in thousands of different kinds of god at different times and in different places. As Richard Dawkins likes to say, we are all atheists, it’s just that he believes in one god fewer than a christian or muslim does.

On the one hand, some people argue for a kind of basic foundation of the universe or of life, which may or not be intelligent. Often this will be presented in some form that people feel requires an agnostic position. When presented with this, I will ask for some consequences in the observable world that could be used to test for the existence of such a ‘god’. If those are not forthcoming, then I shall simply consider the existence this ‘god’ not worth the effort of thinking about.

On the other hand, most religious people believe in some kind of god who makes personal demands of behaviour, reverence and belief in certain claimed facts. These religions all assert the truth of what they claim about their own god over the claims of other religions. For example, both muslims and christians believe in Jesus. But to deny that Jesus is the son of God is blasphemy to christians. To assert that Jesus is the son of God is blasphemy to muslims. As these religions contradict each other, at most only one can be true.

Therefore, if you are going to debate whether god exists, we need to know in advance exactly what claims are being made about this god.

As the organisations promoting this debate are (I suspect, a very specific sort of) christian, and there is no reason to suppose they are going to assert the validity of any rival religion, I’ll concentrate on christianity.

Although I may be agnostic about more generic kinds of god, I think christianity is false. (This, I hasten to add because it will likely be raised, does not mean that I think that what is often referred to as ‘christian morality’ is all bad.)

My reasons for rejecting christianity are many: the contradictions between christian doctrine and history and science, the internal contradictions, the very flawed moral compass, and the dubious and political ways in which the scriptures were assembled that belie the claim that they are the ‘Word of God’.

That’s a start. Would PurpleFish members like to comment?

The top of the slippery slope of woo-woo

Craig Murray, whose revelations on the sinister side of UK foreign policy I strongly commend to you, stands at the top of the slippery slope of “synchronicity”.

I find this worrying, because so much of what he says has the ring of truth because it is grounded in his own knowledge of diplomacy and diligent research, including through his contacts. Unlike most political journalism, which is based on speculation, ideology and wishful thinking.  A slide into woo-woo will inevitably devalue his work.

I have posted to his blog, rather cumbersomely:

I think the ‘order’ you are observing is the ‘availability illusion’.

We are involved – simply by default – in uncounted numbers of events, including all the people who pass us by in the course of a day, the things we see, hear and read, and so on.

Just by chance some of these things are going to be of more significance to us, in the light of our life histories, intentions and dreams. These are the things that we single out as coincidences, when in fact we experience countless coincidences every day, most of them meaningless to us.

To genuinely conclude that the ‘coincidences’ we experience are really significant, we should take into account all these background coincidences and the chances of them happening. That’s what science does.

But quacks, financial frauds, clairvoyants and politicians are well aware that we are prone to this availability illusion – one of the cognitive illusions that arise from the way our brains have evolved – and take full advantage of it.

Or, as EscalanteKid comments, rather more succinctly, on Craig’s post:

“the search after meaning is especially insidious because it always succeeds.”

Blogger’s site taken down by quacks

[BPSDB] After threats from a couple of quacks, the blog For the Sake of Science was taken down by WordPress for ‘terms of service violations’. Pharyngula has several posts on the subject.

Andreas Moritz is one of the quacks – he is clearly a vile person who exploits desperate people, and he would be up against the law in the UK in short order for falsely claiming to treat cancer. It ‘s clear that his supposed causes and treatments are bogus.

What is really nasty about people like Moritz is that they try to make people feel guilty about their cancer, and exploit that guilt to sell their worthless wares. It’s natural for people, after a disaster, whether it’s personal or something they are involved in, to feel that they just might have been able to do just a little bit more to avoid it. Moritz and his sort blatantly  play on this by suggesting, absolutely falsely, that a cancer is caused by a person having the wrong thoughts, a negative attitude, or not ‘fighting’ the cancer hard enough.

[expanded 20 Feb 2010]

Michael Hawkins has posted the ‘offending’ article on a new blog: please give him your support.

[24 Feb] For the Sake of Science has been restored.

Why should I make the data available to you

[BPSDB] In many comments on the CRU hack I’ve seen it alleged that Professor Phil Jones of the University of East Anglia Climate Research Unit denied his data to another researcher with the words, “Why should I make the data available to you, when your aim is to try and find something wrong with it?”

Whenever I’ve seen it quoted, it’s implied that  Jones made the comment in one of the emails. I finally got around to looking for it, in the file FOIA.zip I downloaded soon after the hack was made public – and it ain’t there. Not perhaps surprising, as it really doesn’t sound like the sort of thing an academic would say, except jokingly or sarcastically.

Indeed, the words are there. In August 2007, a fellow researcher warns Jones that the words are being attributed to him by someone else. In October 2009, another colleague sends Jones a copy of the text of an article in the National Review of 23 September 2009. In this Patrick Michaels quotes Warwick Hughes as alleging that Phil Jones said, “We have 25 years or so invested in the work. Why should I make the data available to you, when your aim is to try and find something wrong with it?”.

So it doesn’t appear to be evidence that Jones actually wrote it.  Given the unreliability and political commitment of all the links in this chain, and that this was one of the main pieces of evidence for the supposed ‘conspiracy’, I think there is even less evidence of wrong-doing.

Conspiracy theories have a tendency to spawn new conspiracies: here’s a climate ‘sceptic’ who thinks the CRU staff may have leaked the emails themselves to make ‘sceptics’ look stupid. If so, they’ve succeeded.

Words: Correction, Compensation, Adjustment, Proxy, Trick

[BPSDB] Years ago, when I was a researcher, I used a technique called ‘infrared spectroscopy’ a lot.  It involves passing infrared radiation through a sample of a substance, then splitting the infrared radiation up into its various frequencies (a spectrum) and measuring which frequencies are absorbed by the substance. Most substances (though not all) absorb IR radiation.

The resulting pattern of peaks, called bands, can be used in analytical chemistry to identify compounds, if their IR spectra are known. Under favourable conditions, such as the vapours at low pressure I often worked with, you can get information that will help (along with other techniques) to discover the actual shapes of the molecules, and even to discover facts about the internal electronic structure.

So, in theory, all you do is pass the IR through the sample and record the spectrum, right? No. Between the lamp and the sample are other things that absorb IR. These could include the solvent (if you’ve had to dissolve the sample), but, in particular, there is carbon dioxide, which is a component of air that strongly absorbs IR. So your spectrum includes bands from the interfering substances, which will complicate matters and likely obscure details of the spectrum you want to see.

But there is a clever trick (that word came immediately to my mind writing this, in the sense of a clever thing to do). That is, you split the IR beam into two, and pass one half through the sample and the other through a path of the same length containing all the things (air, solvent, etc.) except the sample itself. Then you can electronically subtract the signal from the reference beam (the one without sample) from the signal from the sample beam. And you are left with the signal that comes from the sample alone. Clever, eh?

This is called correction or compensation. There is nothing dishonest about it. The result is a genuine spectrum. If anyone is being cheated, it is nature being tricked into giving up her secrets, as without the compensation or correction you would have much less, if any, information about the sample spectrum.

I mention this, as hordes of global warming ‘sceptics’ have been crying ‘fraud’ simply through seeing words like ‘correction’, ‘adjustment’ and even ‘trick’ in some otherwise unremarkable stolen emails containing informal correspondence between climate scientists. These words do not in themselves imply anything nefarious. Now there may have been improper behaviour on the part of the scientists, but that would require some contexts for these words, providing some actual evidence. But no evidence for serious wrong-doing (apart, apparently, from getting irritated with ignorant harassment) has been presented.

Corrections are not limited to the lab. Whenever you press the ‘tare’ button on a set of kitchen scales, you are making a correction, by subtracting the weight of the bowl from the flour you are weighing out. Without that correction you will have a less satisfactory cake. Corrections, or compensations, or adjustments, are an essential part of the tricks needed to extract real data from the raw data of the real world.

In science, most things are not measurable directly. Temperature is one of them. When you measure a temperature, you are actually measuring an electric current that changes numbers on a display or moves a needle on a dial. Or you are measuring the expansion of a liquid (alcohol or mercury) along a tube. Neither method measures temperature directly, which is, in fact, impossible. What you are measuring is a proxy for temperature: another measurable quantity that is related to temperature in a way that is known from theory and tested by practice. But the manufacturer still has to make corrections to ensure that the fixed points of the measuring device correspond to the fixed points of the standard temperature scale. Building these corrections in is called calibration.

Actual measurements of temperature, using thermometers, go back only a short time, at most a couple of centuries in relatively few places. That means that scientists trying to study temperature way back in history or beyond have to use proxies – whatever they can find, wherever they can find them. The proxies include annual tree-ring growth, ratios of isotopes of oxygen in ancient snow, and the patterns of annual deposition in lakes (varves). These may not vary in a straight line relationship with temperature. Also, nature may inconsiderately have placed the proxies in different places at different times, such as trees growing at different heights.

To try to make these separate items match up, you need to calibrate, or adjust, the data, so they represent the temperatures correctly. For example, you may need to allow for trees growing at different rates at different heights. You can imagine that a great part of research is given over to debate about these corrections. But there is nothing essentially dishonest about doing this. If you find that numerous different proxies, when compared over the same period of time, agree pretty well, then you can have reasonable confidence that the proxies are measuring the same thing. So it is with the so-called ‘hockey-stick’ graphs.