As I reported in 2013 I sold some of the gold in 2011, because the price was so high I could cover my entire stash of fifteen’s original cost, and turn a happy profit, by selling five.
For the purposes described therein, I hope you can see that shares of Apple or AT&T would not have been a viable substitute for me.
They sold American Eagles and French Roosters and other common, recent-vintage gold coins as rare and numismatically valuable collectibles.
For example, at one point in 2010 the 1/4-ounce Eagle had a melt value of $285 and was readily available from bullion dealers in the $315-325 range. Goldline was selling them for $800.
I suspect you didn’t understand what I meant by ‘the purposes described therein.’
You made the suggestion that stocks would outperform gold. While not disagreeing with the general statement, I pointed out that my specific use-case for owning the gold was not one where stocks would have been a viable substitute.
And why in the world were people buying them at that price? The daily spot price in 1980 might have required research that might have dissuaded some people; in 2010 it was only as far away as the nearest search engine. Why were people willing to pay Goldline such a dramatic markup?
Is there a cite for this somewhere that I can read? I feel like I came in to the last ten minutes of the movie and am annoying everyone by asking why the guy is killing the other guy. The only thing I find in a quick Google search is some kind of a bait and switch where they get people to call them based on bullion and then switch them to buy numismatic coins.
Because they were elderly and/or stupid. And because Goldline (allegedly) misrepresented that they were actually buying bullion coins, or that the coins they were buying were easily saleable.
OK, is there a link to something I can read in detail here?
Goldline couldn’t misrepresent that bullion coins were easily re-sellable – they ARE easily re-sellable. And if Goldline misrepresented that numismatic coins were bullion, how is anyone hurt? An ounce is an ounce.
It’s also worth noting that the posters here citing gold’s volatility as a reason not to invest don’t understand anything about portfolio theory.
Gold returns are very weakly correlated with stock and bond returns. So even though gold has much higher volatility, adding a small percentage can actually decrease the volatility of your portfolio.
Yeah, soldier pay? Sorry that aint cutting it, especially as theres only two price points and how much is cost to pay a legionary is questionable due to the amount of slaves, loot and land he was expected to gain. And as I learned the Roman currency was so afflicted with inflation and revaluation that trying to figure it in “oz of gold” is very difficult.
The spiel ran: because Obama was intent on destroying the American economy, you needed gold. But not just any gold, because Obama would follow FDR/1933 and simply seize gold bars or other bullion. You needed COLLECTIBLE coins, and those of course cost more than spot price. That dramatic markup was insurance that your coins would be exempt from seizure as “having a recognized special value to collectors of rare and unusual coins.”
Of course, “special value” and “rare and unusual coins” weren’t defined in 1933, and even if they were, there’s no guarantee a future seizure would use the same definitions or have the same exemptions. Nor do reputable dealers sell Eagles and Roosters as anything particularly rare or special in the first place, and Goldline, et al., were not selling graded coins.
Anthony Weiner had a long-running feud with Goldline; in quick googling, I can’t find a copy of Weiner’s report online anymore, but see news stories about it such as Politico.
The Golden Dilemma
Claude B. Erb, CFA, and Campbell R. Harvey
*In “normal” times, gold does not seem to be a
good hedge against realized or unexpected shortrun
inflation. Gold may very well be a long-run
inflation hedge. The long run, however, may be
longer than an investor’s investment time horizon
or life span. *…*We found little evidence that gold has been
an effective hedge against unexpected inflation,
whether measured in the short term or the long
term. The gold-as-a-currency-hedge argument
does not seem to be supported by the data. *
Under Emperor Augustus, who reigned from
27 BC to AD 14, a Roman legionary was paid about
2.31 ounces of gold a year (225 denarii) and a centurion
was paid about 38.58 ounces of gold a year, or
3,750 denarii.20 Converted to U.S. dollars, the pay
of a Roman legionary was about 20% of that of a
modern-day private in the U.S. Army and the pay
of a centurion was about 30% greater than the pay
of a captain in the U.S. Army
That quote from the NYT combines the pay of the centurion and the legionary to come up with a conclusion not supported in the original paper.
here’s an interesting cite:
that big organization will simply kill you and take your gold bars, Dungeons and Dragons style…. Gold is never coming back as a medium of exchange, under any circumstances. It is no more likely than a return of the Holy Roman Empire. Say goodbye forever to gold money.
Gold is like a credit default swap backed by an insolvent counterparty–it has no hope of actually being redeemed, but you can keep it around forever, and it goes up in price whenever people get scared…. Gold pays off when there is an outbreak of goldbug-ism. Gold is a bet that there will be more goldbugs in the future than there are now. And since the “gold will be money again” story is very deep and powerful, based as it is on thousands of years of (no longer applicable) historical experience, it is highly likely that goldbug-ism will break out again someday…*
I’ll try to dig up my old cites later, but essentially you would call Goldline and be connected with a boiler room operation that would steer people towards overpriced gold coins. Why did people buy coffee, diamonds or Florida real estate on the basis of a cold call to their house back in the 1970s? Similar answer. Lack of due diligence and lack of knowledge of the necessity of practicing duel diligence. Plus affinity fraud as described by slask2k. It’s rather unfortunate.
Full disclosure: I have purchased precious metals in the past for reasons indicated in Bricker’s post 101. I am not convinced this was a wise decision (eg foreign cash investments seem like a better bet, depending upon the type of economic collapse). But I believe I grasp the attraction. I stress though that there is a lot of misconception regarding gold bullion, some of it egregious.
Actually today you can get two pretty decent suits.
But as leahcim sez:
… *there is a lot of wiggle room hidden in the words “nice” and “quality” since meals and suits come in a very wide range of prices. In fact I have seen these examples used by gold bugs to show that gold really does maintain its value over time, just by changing the price point at which a meal becomes “nice” and a suit becomes “quality”.
*
So the complaint against them was more “bait and switch” than fraud? If they encountered a firm investor who said, “I just want bullion coin, and I’ll pay you 1% over spot,” do they hang up or sell him the coins he wants?
These days, with various law enforcement types having sniffed around and injunctions imposed and refunds ordered, I don’t know.
In the bad old days (i.e., five or six years ago), Goldline would hang up if they couldn’t convince the investor to switch to what Goldline wanted to sell. When you have customers willing to pay 50% or more over spot for Roosters, why would you ever sell any for one percent over?
The Santa Monica City Attorney’s Office, in Goldline’s hometown, at one point filed criminal charges (including theft by false pretenses) against various officers and employees, although those charges were dismissed as part of an agreed order requiring $4.5 million in refunds, changes to invoices and purchase confirmation practices, a court-appointed monitor, etc. See Coin Week.