Thursday, May 20, 2010

The Prices "Goldline" Charges For Gold On TV

Have you seen those TV commercials for companies like "Goldline" that encourage you to buy gold from them?  It feels like I've seen hundreds of these ads over the last year or so, especially on cable channels like History Channel and Discovery Channel. If you've managed to miss them, you can watch one HERE

In the old days, these types of commercials emphasized the collectable nature and craftsmanship of the gold coins they were selling.  But they've dropped that entirely now, instead emphasizing that gold is a commodity, a hedge against inflation and a 'safe haven' investment in turbulent economic times. ("Gold is a trusted asset that I can see and touch. Unlike the Dollar, the Government can't print more gold.")

Since gold is a commodity that can be bought and sold efficiently on regulated markets, I couldn't figure out how they could sell gold at competitive, market prices if they had to pay for all that television advertising, as well as endorsements from celebrity pitchmen like Glenn Beck. It turns out that they don't.  As this 2 minute piece from MSNBC's Dylan Ratigan Show explains, Goldline actually sells gold at a 90% -200% mark-up to the melt value.

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