Goldline did sell bullion - they charged a 5% markup. I assume if they encountered a firm investor, they would jerk him around a little just in case, then move on to the next rube.
I don’t see it as bait and switch though, since their marks presumably only had a vague idea of the differences between coins and bullion. To see the pattern of the scam, click the info-graphic on this page. It involves steering clients to Franc French Roosters who would take an immediate 42% loss at time of purchase.
(Sean Hannity: “Goldline now is the only gold company I personally recommend to you.")
Gold is a zero beta investment. Those who lack the wherewithal to understand that claim shouldn’t be buying gold IMO. Interestingly, gold isn’t a negative beta investment: if the stock market plummets, that doesn’t imply that gold will do well. While gold’s movements are uncorrelated with the stock market, they are not negatively correlated.
You know what also has low beta? Cash. Another example? Foreign bank accounts. Unlike gold, they both pay interest, at least when the relevant economies are not in a liquidity trap.
Dr. Deth’s links are helpful in this regard as are previous SDMB discussions. I figure there are some scenarios where a pocketful of gold coins could help. But identifying them is hard. It’s easy to imagine one country or another going belly up, but in that case you want a foreign bank account. Bad government officials can relieve you of your gold at the border after all. If electronic payment systems crash worldwide, then what you really want are bullets, radiation detectors and canned goods. Or if the situation is less dire, I’ll quote the economist Noah Smith: [INDENT]OK, but what about a calamity so huge that electronic networks collapsed? In that case, wouldn’t we have to go back to using physical money?
Maybe, but it wouldn’t be gold. In the days when people carried around gold doubloons and whatnot as money, you had a global political system characterized by pockets of stability (the Spanish Empire, or the Chinese Empire, or whatever) scattered among large areas of anarchy. Those stable centers minted and gave out the gold coins. But in the event of a massive modern global catastrophe that brought widespread anarchy, the gold bars buried in your backyard would not be swappable for eggs or butter at the corner store. You’d need some big organization to turn the gold bars into coins of standard weights and purity. And that big organization is not going to do that for you as a free service. More likely, that big organization will simply kill you and take your gold bars, Dungeons and Dragons style.
In other words, I think 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.
So when does gold actually pay off? … [/INDENT] Click the link to find out!
As my link shows, I also have bullets and canned goods.
For some reason, a radiation detector didn’t cross my mind. I was picturing some sort of regional disaster, such as Hurricane David hitting the Dominican Republic in 1979 produced – not a total breakdown of society, where the living envy the dead, but an extended period of no utilities and a partial, temporary breakdown of civil order. Katrina in New Orleans would be another example.
I’m happy with my outcome: I bought the coins, sold a few of them several years later for more money than the entire lot cost me, and retain some now as part of an emergency kit I hope to never have to use. It’s hard to see how my actions have hurt me.
There are a lot of myths about gold. Its long run returns are exaggerated. It isn’t an especially great inflation hedge. It is uncorrelated with the stock market (good!) but not negatively correlated (awwwww!). You could compare it to a currency that doesn’t pay interest. You can make money at it, just as you can make money with pork bellies.
Goldline has an extensive advertising campaign and very high markups. They steer their customers towards products with the highest markups, often as high as 42%. Right wing pundits are happy to sell out their audience by pushing them towards this terrible investment outlet. Knowledgeable investors would never pay a 5% commission when they can obtain something less than 1%. Never mind 42%.
Ok, I read your link. I don’t know how much of a survival hobbyist you are. This matters because gold coins are attractive just as hand axes and rope climbing equipment have a certain aesthetic. Set those considerations aside. (They are not trivial IMHO.)
It’s difficult to generate a 21st century scenario where gold coins can be slotted in as a sensible survival tool. But we can try. Gold is susceptible to being stolen (like cash, less like traveler’s checks). Gold is not a medium of exchange anywhere in the world - at best it’s a tool for barter. Offer a gold coin to a manager at Best Buy or Home Depot and you will receive blank stares. The best you could do is track down someone willing to buy low and sell high - maybe a street food vendor.
If you had a regional disaster combined with sudden hyperinflation, then alternate currencies might help. That would be the US dollar in most of the world. Or sometimes the Euro. For the US, I suppose a reversion to precious models could happen. But while I can imagine extreme hyperinflation in the US (prob <<1%, next 10 years) and a regional disaster (prob >5%, next 10 years), it is highly unlikely that the former would follow the latter in quick succession.
I understand that light bulbs were once a medium of exchange in a certain third world country (no cite). Cigarettes are used as such in prison. I’m guessing some sort of mind altering substance would become the alternative currency of choice if the zombies ever landed.
That’s fine, but if you are a rationalist it’s not good enough.
Bear in mind slide 2 of this presentation on decision theory (!PDF!): [INDENT][ul]
[li]A good decision may occasionally result in an unexpected outcome; it is still a good decision if made properly.[/li][li]A bad decision may occasionally result in a good outcome if you are lucky; it is still a bad decision. [/ul] [/INDENT] As an aside, many posters at this message board will grasp such principles. But quite a few will not, at least in the Pit. [/li]At the same time, empirical experience is a necessary component of quality decision making. It’s just not sufficient. For example, good decisions, “Consider all available data and possible alternatives.”
ETA: Props, kudos and h/t on your disaster preparedness though.
