Is Acre Gold a Scam?
Alex Long- Shares of Canadian-based mining company Acre Gold Ltd., which went public in March 2018 at $3.40, have been trading below that level ever since.
- Acre Gold's stock is down 75% since its IPO, and the company also underwent a significant leadership change, with founder and former CEO Kevin Sharpe resigning in July 2019.
- Acre Gold's shares are trading 75% below their IPO price of C$3.40.
Acre Gold Ltd. (ACRGF), a Canadian mining company, has been the subject of investor and analyst scrutiny in 2019. Part of the reason investors may be cautious about investing their capital in Acre Gold is because of the company's lackluster performance since the stock's initial public offering (IPO) in 2018. Acre Gold's shares are trading 75% below their IPO price of C$3.40.
Acre Gold: An Overview
Acre Gold is a blockchain mining company that is based in Canada. The company offers access to its cryptocurrency mining rigs that have been set up in data centers throughout the world. The rigs are said to be highly efficient in offering mining services for digital currencies like Bitcoin.
What Is Acre Gold?
Acre Gold is a cloud-based platform that offers gold trading solutions to its clientele. It claims to be the first tokenized gold trading platform in the world. The platform allows clients to buy and sell physical gold in kilograms or grams, trade their gold on margin, and store their gold in the platform's secure vaults. Acre Gold also offers a mining facility where users can mine gold using the company's proprietary mining rigs.
How Does Acre Gold Work?
Acre claims to have a "revolutionary" model which, according to the company, allows it to predict future gold prices and trade gold at opportune times. In other words, the company claims to be able to predict future gold prices so that they can profit from trading.
Any professional trader will tell you that it is impossible for any person, firm or company to predict future prices.
How Does Acre Gold Make Money?
Acre Gold is a multilevel marketing (MLM) company. As with most MLMs, the business model is based on recruiting new distributors and customers, who purchase products directly from Acre Gold. The business model is similar to Avon, Mary Kay, and Amway.
Criticisms of Acre Gold
Acre Gold has had its fair share of critics.
One big criticism has been that Acre Gold is overpriced. Given that the company hasn't even yet produced any gold, it's understandable that investors may feel uneasy about paying so much for a speculative investment.
Acre Gold's business model is also unusual. The company plans to use funds from investors to repay its own debt, so it doesn't actually have any gold in its possession. The company has claimed that it will sell the gold it mines. However, the company has yet to find a buyer.
Issues With Acre Gold
There are several points you can raise against Acre Gold, some of which were mentioned above. However, there are also a few unique points that are worth pointing out.
The compensation plan, which pays out 5% to 20% of personal retail volume you generate, is not very attractive. It is a fixed percentage, so it's not possible to earn significantly more as your volume increases.
The compensation plan also limits you to 125,000 PV, so it's impossible to earn more than $11,250 per month (or $144,000 per year). A far better compensation plan would be a commission-based one, such as one that pays 10% on sales greater than $100.
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The Bottom Line
Acre Gold might be a legitimate opportunity to get in on the ground floor of one of the biggest gold exploration firms with ambitious growth plans. Investors need to exercise caution, however, and invest with a company whose team they trust.
