Glenn Beck's favorite gold company was dragged to Capitol Hill Thursday to answer questions regarding its marketing and sales practices. Goldline, the omnipresent pusher of gold coins in radio and TV ads (and for whom Beck was a paid spokesman), is under fire from Rep. Anthony Weiner for scamming its customers.
Weiner, author of the proposed Precious Coins and Bullion Disclosure Act, said Goldline and the TV gold-selling industry prey on investors by persuading them to buy gold coins at markups well above the precious metal's market value. "We're talking about a classic consumer issue," Weiner said at a House subcommittee hearing. "The television gold industry, led by [Goldmine], is built on lies, fear and rip-offs."
DIY Due Diligence
Scott Carter, executive vice president of Goldline International, defended his company's disclosure practices as the best in the industry and said clients can easily conduct their "own due diligence among thousands of precious metals dealers."
Weiner has been after the as-seen-on-TV gold-retailing industry since May. The Democratic congressman from Queens, N.Y. unveiled his proposed legislation last week, and it received its first public hearing Thursday by the House Subcommittee on Commerce, Trade and Consumer Protection.
Dr. Julius Bazan, a neurologist from Long Island, N.Y., told the hearing that a Goldline salesman pressured him into buying $140,000 in gold coins. "I wanted bullion but he said that's not a good investment because in the 1930s the government confiscated all the gold bullion," Bazan said.
When the price of gold failed to move after six months and Bazan wanted to sell, the salesman gave him the "melt" or market value of his gold. "My $140,000 investment was down to $83,000," Bazan said.
Disclosure Requirements Proposed
Gold coins can have a markup of as much as 30% to 40% above the value of the gold contained in the coin. Bullion is also marked up, but to a lesser degree.
The proposed legislation would require dealers of bullion and certain investment coins to disclose prior to sale all fees associated with purchasing the items, the items' purchase price, the value of the metal in them, and the value for which they could be sold to other dealers.