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[Silphonica]

Talking to a chinese friend, she says her bank gives her a bonus if she invests her own money in gold, the bank pays for this from their own pocket.

In my head it sounds like the bank benefits from her(and the hundreds of other workers) investment and pays her bonus from some of that investment, but to me that sounds like the bank is using its workers to manipulate the market.

I don't understand enough about finance though.

 

[Zaraki_Kenpachi]

Talking to a chinese friend, she says her bank gives her a bonus if she invests her own money in gold, the bank pays for this from their own pocket.

In my head it sounds like the bank benefits from her(and the hundreds of other workers) investment and pays her bonus from some of that investment, but to me that sounds like the bank is using its workers to manipulate the market.

I don't understand enough about finance though.

I honestly don't understand what you're saying. How is the bank benefitting off of her and using that money to pay her? And laws vary heavily by country. I'm assuming most of finance GAF doesn't know Chinese law. Doesn't seem that odd though, other places give you money for using their services and other stuff.

 

[ersocaster]

I honestly don't understand what you're saying. How is the bank benefitting off of her and using that money to pay her? And laws vary heavily by country. I'm assuming most of finance GAF doesn't know Chinese law. Doesn't seem that odd though, other places give you money for using their services and other stuff.

I think this is what he is describing:

Bank has huge investment in gold.
Bank talks employees into investing in gold (bank has maybe thousands of employees, who knows).
Employees investing in gold raises the price of gold.
Bank profits, gives employee bonus.

That was my takeaway. Not sure about its legal implications though.

 

[Silphonica]

I honestly don't understand what you're saying. How is the bank benefitting off of her and using that money to pay her? And laws vary heavily by country. I'm assuming most of finance GAF doesn't know Chinese law. Doesn't seem that odd though, other places give you money for using their services and other stuff.

If they raise the price of gold, they can sell it and thus make a profit? I mean Getting hundreds (probably thousands) of people to buy gold would surely raise the price.

 

[OminoMichelin]

If they raise the price of gold, they can sell it and thus make a profit? I mean Getting hundreds (probably thousands) of people to buy gold would surely raise the price.

That's probably market manipulation, which is illegal almost everywhere.

 

[demosthenes]

Not illegal as far as I'm aware but it's how thousands of Enron employees lost their entire retirement savings.

 

[Zaraki_Kenpachi]

If they raise the price of gold, they can sell it and thus make a profit? I mean Getting hundreds (probably thousands) of people to buy gold would surely raise the price.

What bank is this? I doubt this single bank can convince enough customers that the global price of gold will shift to anything significant. Do you know if the bank is even holding gold?

 

[GatorBait]

Talking to a chinese friend, she says her bank gives her a bonus if she invests her own money in gold, the bank pays for this from their own pocket.

In my head it sounds like the bank benefits from her(and the hundreds of other workers) investment and pays her bonus from some of that investment, but to me that sounds like the bank is using its workers to manipulate the market.

I don't understand enough about finance though.

I feel like you may be missing information of some sort. I seriously doubt the end game from the bank's point of view is any kind of market manipulation because the volume of purchases from their employees wouldn't move the market enough for the bank to profit and give out a "bonus" to the employees based on their investment.

I'd wager a guess that the system the bank has going is similar to perhaps an employee stock purchase program in the U.S., but commodity-based, for whatever reason. Employee invests $X into gold and the bank will match or discount the purchase by X%?

 

[embalm]

At a glance, I think this is just a foreign practice to do something a lot of US employers do as well. It would be very hard for a single company to really affect the gold price, but for employees it's not a terrible investment, although there are much better ones.

In the States, lots of companies give reduced cost stock options to employees. This would be much more susceptible to price raising and selling than something like gold, but it's illegal and easy to catch.

In the States, almost anyone with a 401k gets a "bonus" for investing as decided by their employer match percentage. I'm sure some employers offer mutual funds for their employees that include the company they work for also.


So it's probably nothing except a tool to get the common employee thinking about the future.

 

[Neo C.]

If they raise the price of gold, they can sell it and thus make a profit? I mean Getting hundreds (probably thousands) of people to buy gold would surely raise the price.

Some companies give stocks to their employees as bonus. As far as I know, this is legal.

Edit: beaten.

 

[FreezeSSC]

Isn't the price of gold falling? Maybe they're trying to offload their holdings onto their employee's.

 

[Zaraki_Kenpachi]

Isn't the price of gold falling? Maybe they're trying to offload their holdings onto their employee's.

That's illegal, so no they can't do that.

 

[Kill3r7]

IMO, it is slightly different than getting stock options or buying at a preferred rate because she's not buying company stock but rather investing in a targeted "stock" (gold). That said, it sounds very similar to a 401(K) contribution matching.

 

[onken]

Isn't the price of gold falling? Maybe they're trying to offload their holdings onto their employee's.

Maybe theyr'e buying book's and dvd's and cd's?

 

[terrisus]

At a glance, I think this is just a foreign practice to do something a lot of US employers do as well. It would be very hard for a single company to really affect the gold price, but for employees it's not a terrible investment, although there are much better ones.

In the States, lots of companies give reduced cost stock options to employees. This would be much more susceptible to price raising and selling than something like gold, but it's illegal and easy to catch.

In the States, almost anyone with a 401k gets a "bonus" for investing as decided by their employer match percentage. I'm sure some employers offer mutual funds for their employees that include the company they work for also.


So it's probably nothing except a tool to get the common employee thinking about the future.

IMO, it is slightly different than getting stock options or buying at a preferred rate because she's not buying company stock but rather investing in a targeted "stock" (gold). That said, it sounds very similar to a 401(K) contribution matching.

Pretty much these.

I don't see how it would be any issue, when employee stock purchase plans and such are well-established as being fine.

Isn't the price of gold falling? Maybe they're trying to offload their holdings onto their employee's.

Maybe theyr'e buying book's and dvd's and cd's?

And apostrophe's

 

[Silphonica]

Cheers for the replies, finance is something I know very little about, I think it just sounded dodgy to me because I don't know why the bank would benefit from their employees investing in gold.

 

[Ether_Snake]

Even with thousands of employees it would have no impact on the price of gold.

I'm thinking the bank is selling them some sort of ETF they have with high management fees.

It's not very different than a bank having employee-only mortgage rates, but I'm pretty sure it's always a trap. It's legal though, there's few laws protecting people from bad financial advice.

 

[Silphonica]

stock market? Really?

Yeah I know gold is not stock and are commodities, but i dont know the name of the market for that so I went with the most recognisable trading market name.

 

[RumblingRosco]

If they raise the price of gold, they can sell it and thus make a profit? I mean Getting hundreds (probably thousands) of people to buy gold would surely raise the price.

Even with thousands of employees it would have no impact on the price of gold.

I'm thinking the bank is selling them some sort of ETF they have with high management fees.

It's not very different than a bank having employee-only mortgage rates, but I'm pretty sure it's always a trap. It's legal though, there's few laws protecting people from bad financial advice.

I'd say this is correct. The bank would need to be insanely massive to really have any influence on the price of gold. I mean, I'm talking bigger than any single bank in existence.

 

[Zeppu]

One time I bought a gold necklace and the prize of gold doubled instantly.

--

Seriously though, apart from the fact that the employees of a single bank won't make any difference in the price of gold, there is nothing illegal happening there. The Bank has incentives for their employees to save. Gold is relatively stable in terms of value so the bank can re-invest the money they make from the sale of the gold as they would do in any other hedge fund. Getting/incetivizing people to invest in your commodities/equities is not illegal unless you're over inflating a valueless equity with false claims or if you dump the stock before some negative corporate news.

 

[Ether_Snake]

One time I bought a gold necklace and the prize of gold doubled instantly.

--

Seriously though, apart from the fact that the employees of a single bank won't make any difference in the price of gold, there is nothing illegal happening there. The Bank has incentives for their employees to save. Gold is relatively stable in terms of value so the bank can re-invest the money they make from the sale of the gold as they would do in any other hedge fund. Getting/incetivizing people to invest in your commodities/equities is not illegal unless you're over inflating a valueless equity with false claims or if you dump the stock before some negative corporate news.

Well gold is really not stable, it has been falling steadily for years (almost 40% down since its peak in 2011) and is probably going to keep on falling. In Asia, especially in emerging middle-classes like in China, people believe gold is special, so they get fooled into hoarding it over investing into a more balanced portfolio because they don't understand how finances work or don't trust the financial institutions. So it's not surprising that where a bank would offer its employees special mortgage rates in the US, in China a bank would instead offer some gold ETF or whatever. Same crap.

 

[The Albatross]

That it's a commodity makes it odd, because no single bank -- especially an international bank in China -- has enough gold deposits to make a shift in the global price of that commodity, even a temporary shift. Also, it's bizarre that a legitimate investment group would encourage people to invest in a commodity like Gold.

Employers have regularly encouraged employees to invest their retirement benefits into stock in the company and usually they're encouraged to do so by a lucrative retirement benefit... For instance, an additional 100% company match or something to that effect. This is not illegal, though after the Enron scandal in the late 1990s it became less popular. Often times, though, bonuses are still paid out in company stock and this is common. As long as the company is run in an ethical, transparent way, this typically works to the benefit of employees. Enron was run in an unethical and illegal way, and people went to jail for it, which was obviously very detrimental to employees.

 

[FreezeSSC]

Maybe theyr'e buying book's and dvd's and cd's?

I'm sorry. I'm on my cellphone and for some reason it shows up in my auto correct that way, I apologize if I've broken a rule.