Goldline, Glenn Beck, & The California Investigation

Last week, ABC’s investigative reporter Brian Ross broke the story on Nightline that the city attorney of Santa Monica, Ca., in conjunction with the Los Angeles District Attorney's office, are conducting a joint investigation into the business practices of Goldline International.  The Santa Monica based Goldline is the subject of more than 100 complaints, according to public reports. The story garnered substantial attention since broadcasters Glenn Beck, Mike Huckabee, Fred Thompson and other high profile conservatives are paid endorsers of the firm.  If the California investigation was not enough, Rep. Anthony Weiner (D-N.Y.) plans to conduct his own investigation as well.

A little background is needed here to lay the foundation on why the problem of gold coin dealers continues to be an issue year after year. Unlike most investment firms, gold coin dealers do not require any licensing and are very sparsely regulated.  What makes matters worse is that the general public has no point of reference to rely on to determine the value of a coin they may be considering investing in. 

The complaints against Goldline seem to revolve around an alleged bait and switch tactic.  The complaint is that individuals interested in purchasing gold were pressured into buying antique gold coins instead.  Gold dealers offer basically two types of investments; gold bars (and bullion) and so-called antique gold coins.  The value of an antique gold coin is largely its numismatic (or collectors value) and not based as much on its gold content.  The problem is, that dealers will charge a premium of 50% or more of the actual wholesale value of the coin.  Not to get too complicated here, but I should point out that there are some gold coins that have well established values and are considered as legitimate of an investment as gold bars (also known as bullion).  These coins would include the Canadian Maple Leaf, South African Krugerrand, and American Eagle.  The value of a gold bullion coin is based almost entirely on its gold content and not on any intangible collectible value.  The most efficient way to buy physical gold would be to purchase gold bars or bullion, not antique gold coins.

Other Sensible Ways To Invest In Gold: – Stocks Of Gold Mining Companies – Mutual Funds That Own Stock In Gold Mining Companies – Exchange Traded Funds, Some Of Which Actually Purchase Physical Gold (such as symbol GLD)

 *** Read the entire article on Jim's Christian Financial Advice Blog.