Goldline International
Encyclopedia
Goldline International, Inc. is a retail seller of gold and silver coins, and other precious metals for investors and collectors. Headquartered in Santa Monica, California
, Goldline has more than 350 employees and an estimated $737 million in 2010 revenues.
Goldline traces its formation to a Deak & Co. subsidiary created in 1960, a firm that in the late 1970s was the largest storefront gold retailer and later went into bankruptcy in the 1980s. The company was later bought and sold several times in the ensuing years. In 1992, Mark Albarian, Robert Fazio and Joseph Ozaki became key executives of Goldline, then a subsidiary of A-Mark.
Goldline advertises on several television channels and also sponsors some of the more popular conservative radio talk shows.
Goldline has been criticized for some aspect of its sales tactics, charges the company denies. On November 1, 2011 Santa Monica City Attorney's Office charged Goldline International executives with 19 counts of theft and fraud.
seller of gold coins, silver coins, platinum
, bullion bars and bullion coins, special collections, currencies, and other precious metals for investors and collectors. According to the Los Angeles Business Journal
, in 2009, Goldline had more than 300 employees and sales revenue of $825 million which the newspaper said made it the "6th fastest growing company" in Los Angeles County, California
for 2010 David Lazarus
, the business columnist for the Los Angeles Times
, said revenues are expected to climb to $1 billion dollars in 2010/2011. Goldline International is not accredited with the Better Business Bureau and there are 72 closed complaints against the company over the last three years.
s including the Internet, radio, and television. Former Director of the United States Mint
and Democratic
Congressman
Jay W. Johnson
was Goldline's television spokesperson from June 2009 until his death in October of that same year. John Mercanti
, the retired 12th Chief Engraver of the U.S. Mint, is a current Goldline spokesperson. Goldline's television advertising includes cable networks such as CNN
, CNBC
, Fox News, History International
and Fox Business.
Goldline also sponsors the shows of a number of conservative radio and television hosts, including The American Advisor, and The Glenn Beck Program, The Laura Ingraham Show
, The Fred Thompson Show, The Huckabee Report
, The Lars Larson Show, The Monica Crowley Show, The Mark Levin Show
, and The Alan Colmes Show
..
In 2010, then Congressman New York
Representative
Anthony Weiner criticized the advertising relationship between Goldline and these commentators, though Goldline officials maintain there is nothing improper about these relationships.
In 2009, Goldline incorrectly labeled Glenn Beck
as a "paid spokesman" on its website which raised concerns with his employer, Fox News, which prohibit such a relationship; they later corrected it to "radio sponsor". Goldline's then- CEO Mark Albarian has appeared on Beck's radio show, the company was the exclusive sponsor of Beck's 2009 comedy tour. Prior to his Fox News employment, Beck had appeared in a Goldline website video. The late night
satirical
television program
The Daily Show with Jon Stewart has skewered the relationship, and in 2010 some alleged that there is a conflict of interest which both Beck and Goldline deny.
or wire transfer
.
is the difference between Goldline's price for an item and how much Goldline will buy it back from the customer — the bid
and ask
prices. For instance, if Goldline sells a coin containing an ounce of gold for $1,500 and will buy it back for $1,200, the spread is $300. Calculated as a percentage, the spread would be 25% (100 X $300 / $1,200). On their website, they state their spreads are generally 5-20% for bullion coins (typically .999 pure gold) and 30-35% for all other coins. Albarian told The New York Times
they range from as low as 5% for bullion coins and as high as 54% for unusual and historical coins.
The markup
is the difference between Goldline's price for an item and the coin's melt value — the market price of its metal content. Using the same example as above, if Goldline sells a coin containing an ounce of gold for $1,500 and the price of gold that day
is $1,000 per ounce, then the coin's melt value is $1,000, and the markup is $500. Calculated as a percentage, the markup would be 50% (100 X $500 / $1,000). The markup, also called the premium, is a common way to list gold bullion and coin prices.
New York
Representative
Anthony Weiner accused Goldline of overcharging with average markups of 90% to 152%. Dylan Ratigan
, a television financial commentator, said that because Goldline is selling gold at 90% more than one could buy it on a gold exchange-traded fund
, it would be a "dumb" purchase. He went on to characterize Beck and Goldline as "largely snake oil salesman and scumbags trying to create money for themselves" by "fear mongering
" at the buyer's expense.
; if they did, they would be subject to regulations by the Security and Exchange Commission and state regulators.
However, in a July 2010 article , Consumer Reports
reported that a Goldline sales rep advised one of its reporters liquidate their IRA
and retirement account
in order to have 20% of their portfolio in gold. Additionally, in an October 2006 consent order, Goldline voluntarily agreed to return $
217,000.00 to a Missouri
elderly couple in exchange for the products purchased for the company after the Missouri Securities Division alleged that the couple was pressured by a Goldline salesperson to liquidate all their investments and put them into gold
. The Missouri Secretary of State
Securities Division investigated and alleged that the company's agent was acting as an unregistered investment advisor, but the consent order did not judge whether the accusation was true or false.
Goldline recommends that the buyer invest no more than 5-20% of their portfolio
in precious metals while Consumer Reports recommends 5-10%. Goldline recommends holding their products for at least three to ten years.
During the Great Depression
, in order to stabilize the dollar
then backed by gold
and to avoid a run on the banks
, U.S. President Franklin D. Roosevelt issued a 1933 executive order
requiring citizens to surrender their gold for which they were reimbursed at a price set by the government itself. Though confiscation
is generally defined as legal seizure without compensation, in this case it refers to forcible seizure with compensation determined by the seizing authority in a form that was undesirable to the original owners of the gold. In its sales literature, Goldline states that "private gold" (defined as coins that were explicitly exempted from the 1933 order because of their collector value)) would be less likely to be included if the government followed the precedent set by Roosevelt, thereby possibly increasing the desirability of collector-grade coins.
The Roosevelt order resulted in only one failed prosecution, and the dollar is no longer backed by gold thereby putting into question why the government would again ask for its surrender. Rep. Weiner has expressed doubt of the likelihood of a future confiscation and the American Numismatic Association
said it was "a non issue". The Santa Monica and L.A. County investigators alleged that the distinction is used to spur the sale of the more-profitable collectible coins. While Goldline-sponsored Glenn Beck
encouraged the purchase of collectible coins due to the possibility of future "confiscation," he also made clear that rare collectible coins are "the most expensive way you can buy gold".
Goldline includes a replica of the 1933 order in their sales material. When asked about this by George Stephanopolous on ABC's
Good Morning America
, Scott Carter, the Executive Vice President of Goldline, said he didn't know if the government would again "confiscate" bullion but some saw a parallel between 2010 and 1933.
Goldline says that “private gold” does not require a person's Social Security number
(SSN) when the seller liquidates, whereas many of the “government gold” products would require one. While this allows customers to sell anonymously, Goldline also notes that customers are required to report the sale to the Internal Revenue Service
.
Because of collectible coins
' higher markups and mention of past government confiscation of bullion in Goldline sales literature, Weiner accused the company of recommending rare collectible coins over less-profitable bullion. Some customers prefer collectibles because they are recognizable, government-issued coins, and may be less expensive.
Goldline explained collectibles have a greater markup due to their relative rarity, costs of shipping and handling, paying the sales staff, and the company's compliance department
. Additionally, customers are given complete information before purchasing, "pricing is transparent", "fees and commissions are disclosed in writing", and all complaints are investigated. They also offer a "price guarantee program" (see Goldline's price guarantee for details).
However, ABC reported the sales staff are encouraged to promote coins over bullion. ABC gave an account of a customer pressured into buying $5,000.00 of such coins which a dealer later told him were worth only $2,900.00. Another purchased $13,000.00 of "overpriced Swiss gold coins" in 2007 — while the price of gold doubled, the coins were only worth $10,764 in 2010, leaving her feeling "suckered". Consumer Reports noted that Goldline was selling a Gold Eagle
set for $5,924.63 while a competitor had them for $3,295.00. However, they went on to say that Goldline's bullion prices were competitive.
(precursor to the CIA) during World War II
. Deak & Co. specialized in foreign exchange
, gold coins and bullion, and was considered a pioneer in the business.
By the early 1980s, the company was the largest retailer of gold bullion and the oldest and largest retail foreign exchange dealer in the United States. While Deak described himself as a gold bug
, the company felt the strain of growing too rapidly during the gold economic bubble
which burst by 1982. At that point, they planned on expanding into the wholesale
market, offering services to companies instead of the public. The company was the country's leading seller of South Africa
's Krugerrand
before it was pressured to halt sales because of South Africa's apartheid system in 1985.
In 1984, Deak & Co. faced allegations from the President's Commission on Organized Crime
that they laundered money
for Latin American drug traffickers, facilitated the Lockheed bribery scandals
, and smuggled currency from the Philippines
. As a result, shortly thereafter, Deak & Co. declared bankruptcy
in order to reorganize. In 1985, the company was purchased by a Singapore
lawyer for $52 million — the most valued asset was Deak's Swiss bank. In 1986, the foreign exchange and gold business was sold to Australia's Martin Properties Ltd. (later renamed Deak Morgan
) for $12 million. In the following year, the company was transferred to New Zealand
based NZI
and expanded its gold coin dealerships by one-third. At the same time, Deak Investor Services, Inc. changed its name to Deak International Goldline Ltd.
Due to the 1987 worldwide market crash
, the company floundered, and was sold to the London-based Thomas Cook Group
in August 1990 for $10–$12 million. Several months afterward, Deak International Goldline (US) Ltd. was bought by A-Mark Precious Metals Inc, a wholesaler dealer in precious metals, thereby adding a retail presence. In 1992, Deak International Goldline (US) Ltd. changed its name to Goldline International, Inc. and Mark Albarian became president. In 1994, Goldline acquired the assets of Gold & Silver Emporium, and in 1998, acquired Dreyfus Precious Metals, Inc., the precious metal brokerage and storage subsidiary of the Dreyfus Corporation
.
In 2005, the A-Mark Corporation sold Goldline to three investor groups, each of which acquire minority stakes: Prudential Capital, Goldline management, and Goldline’s former chairman. Two years later, Goldline moved its headquarters and trading floor across Santa Monica, California
to offices at the Water Garden complex. In 2009, CIVC, a Chicago-based private equity company, acquires controlling interest in Goldline by purchasing the stakes owned by Prudential Capital and Goldline’s former chairman. Goldline management also increases its stake. This transaction was worth over $50 million.
Representative
Anthony Weiner and Democratic Rep. Bobby Rush
announced in July 2010 they will hold a hearing scheduled for the end of September on Goldline's sales tactics which Weiner, a liberal Democrat, has criticized
In September 2010, the Subcommittee on Energy, Commerce and Consumer Protection held a hearing on proposed legislation by then Congressman Anthony Weiner regarding mandatory disclosures for the sale of coins and precious metals. [80] As one of the largest precious metals retailers in the U.S., Goldline Executive Vice President Scott Carter (now CEO) was invited to testify at the hearing . The Chairman of the Committee on Energy, Commerce and Consumer Protection attended as an ex officio member and stated at the outset of the hearing, “I also don't think it's appropriate to hold a hearing because this is a substance that's being advertised on Glenn Beck or Rachel Maddow or anybody else.” Carter testified regarding Goldline’s sales practices and client policies as well as concerns about the proposed legislation. The former director of the FTC’s Bureau of Consumer Protection testified, “the best protection remains the common law principles that the Commission enforces. Goldline’s practices are entirely consistent with these principles.” No action was taken on the proposed legislation following the subcommittee hearing. Weiner’s legislation never received a single co-sponsor in the House of Representatives and no Senator agreed to introduce similar legislation in the Senate. Weiner never attempted to move the legislation out of the subcommittee.
Goldline has indicated that Rep. Weiner's office never contacted them directly to discuss the matter when creating its report and ignored an offer to tour their facility. Glenn Beck attacked Weiner for using McCarthy-like attacks
, saying he was assailing Goldine at the request of the Barack Obama
administration, and Mark Levin called him “a grandstanding leftist".
At the same time, the offices of the Los Angeles County District Attorney
and the Santa Monica City Attorney launched an investigation into Goldline and Superior Gold Group.ABC News reported that 100 customers from around the country had complained that the two firms misled them or received a different item than the one purchased. However the announcement didn’t distinguish between Goldline and Superior, thereby failing to specify how many complaints were against Goldline and how many were against Superior, a smaller firm with an "F" rating with the Better Business Bureau
. In comparison, as of September 2010, the Better Business Bureau gave Goldline an A+ rating and had received few complaints.The Santa Monica City Attorney set up a website for lodging complaints at www.gold.smconsumer.org. In December, 2010, a Los Angeles County judge placed Superior Gold under receivership and froze the company’s assets . On November 1, 2011 Santa Monica City Attorney's Office, led by consumer protection attorney Adam Radinsky, charged Goldline International with 19 counts of theft and fraud and accused the company of "[running] a bait and switch operation".
Santa Monica, California
Santa Monica is a beachfront city in western Los Angeles County, California, US. Situated on Santa Monica Bay, it is surrounded on three sides by the city of Los Angeles — Pacific Palisades on the northwest, Brentwood on the north, West Los Angeles on the northeast, Mar Vista on the east, and...
, Goldline has more than 350 employees and an estimated $737 million in 2010 revenues.
Goldline traces its formation to a Deak & Co. subsidiary created in 1960, a firm that in the late 1970s was the largest storefront gold retailer and later went into bankruptcy in the 1980s. The company was later bought and sold several times in the ensuing years. In 1992, Mark Albarian, Robert Fazio and Joseph Ozaki became key executives of Goldline, then a subsidiary of A-Mark.
Goldline advertises on several television channels and also sponsors some of the more popular conservative radio talk shows.
Goldline has been criticized for some aspect of its sales tactics, charges the company denies. On November 1, 2011 Santa Monica City Attorney's Office charged Goldline International executives with 19 counts of theft and fraud.
Overview
Goldline is a retailRetail
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
seller of gold coins, silver coins, platinum
Platinum
Platinum is a chemical element with the chemical symbol Pt and an atomic number of 78. Its name is derived from the Spanish term platina del Pinto, which is literally translated into "little silver of the Pinto River." It is a dense, malleable, ductile, precious, gray-white transition metal...
, bullion bars and bullion coins, special collections, currencies, and other precious metals for investors and collectors. According to the Los Angeles Business Journal
Los Angeles Business Journal
The Los Angeles Business Journal, established c. 1979, is a weekly newspaper in Los Angeles, California, which covers general business news. According to the journal's website, it has over 12,000 online subscribers, and a weekly print circulation of 30,000...
, in 2009, Goldline had more than 300 employees and sales revenue of $825 million which the newspaper said made it the "6th fastest growing company" in Los Angeles County, California
Los Angeles County, California
Los Angeles County is a county in the U.S. state of California. As of 2010 U.S. Census, the county had a population of 9,818,605, making it the most populous county in the United States. Los Angeles County alone is more populous than 42 individual U.S. states...
for 2010 David Lazarus
David Lazarus
David Lazarus is an American business and consumer columnist for the Los Angeles Times. He joined the paper in August 2007.Before joining the LA Times staff in 2007, Lazarus worked as a columnist for the San Francisco Chronicle and a nightly talk radio host for San Francisco's KGO Radio...
, the business columnist for the Los Angeles Times
Los Angeles Times
The Los Angeles Times is a daily newspaper published in Los Angeles, California, since 1881. It was the second-largest metropolitan newspaper in circulation in the United States in 2008 and the fourth most widely distributed newspaper in the country....
, said revenues are expected to climb to $1 billion dollars in 2010/2011. Goldline International is not accredited with the Better Business Bureau and there are 72 closed complaints against the company over the last three years.
Marketing
Goldline advertises through a variety of marketing channelMarketing channel
A marketing channel is a set of practices or activities necessary to transfer the ownership of goods, and to move goods, from the point of production to the point of consumption and, as such, which consists of all the institutions and all the marketing activities in the marketing process...
s including the Internet, radio, and television. Former Director of the United States Mint
United States Mint
The United States Mint primarily produces circulating coinage for the United States to conduct its trade and commerce. The Mint was created by Congress with the Coinage Act of 1792, and placed within the Department of State...
and Democratic
Democratic Party (United States)
The Democratic Party is one of two major contemporary political parties in the United States, along with the Republican Party. The party's socially liberal and progressive platform is largely considered center-left in the U.S. political spectrum. The party has the lengthiest record of continuous...
Congressman
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
Jay W. Johnson
Jay W. Johnson
Jay W. Johnson was the director of the United States Mint, Democratic member of the United States House of Representatives from Wisconsin, and a former television news anchor in the Green Bay area....
was Goldline's television spokesperson from June 2009 until his death in October of that same year. John Mercanti
John Mercanti
John M. Mercanti is an American sculptor and engraver. He was the twelfth Chief Engraver of the United States Mint until his retirement in late 2010.-Biography:...
, the retired 12th Chief Engraver of the U.S. Mint, is a current Goldline spokesperson. Goldline's television advertising includes cable networks such as CNN
CNN
Cable News Network is a U.S. cable news channel founded in 1980 by Ted Turner. Upon its launch, CNN was the first channel to provide 24-hour television news coverage, and the first all-news television channel in the United States...
, CNBC
CNBC
CNBC is a satellite and cable television business news channel in the U.S., owned and operated by NBCUniversal. The network and its international spinoffs cover business headlines and provide live coverage of financial markets. The combined reach of CNBC and its siblings is 390 million viewers...
, Fox News, History International
History International
H2 , formerly History International , is a digital cable and satellite television channel that features historical documentaries, traditionally with an international focus...
and Fox Business.
Goldline also sponsors the shows of a number of conservative radio and television hosts, including The American Advisor, and The Glenn Beck Program, The Laura Ingraham Show
The Laura Ingraham Show
The Laura Ingraham Show is a three-hour American radio show hosted by conservative commentator Laura Ingraham on Talk Radio Network. , the show is broadcast live on Channel 2, from 9 a.m...
, The Fred Thompson Show, The Huckabee Report
The Huckabee Report
The Huckabee Report is a radio program hosted by former Republican governor of Arkansas Mike Huckabee, that first aired in January 2009. The program broadcasts on Cumulus Media Networks , three times each day , and each commentary is approximately 4 minutes long.On March 23, 2009, The Huckabee...
, The Lars Larson Show, The Monica Crowley Show, The Mark Levin Show
The Mark Levin Show
The Mark Levin Show is a conservative talk radio show hosted by Mark Levin. It is currently the fourth most listened talk radio show. The radio show is a nationally broadcast program with over 8.5 million listeners.- Syndication :...
, and The Alan Colmes Show
The Alan Colmes Show
The Alan Colmes Show is a nationally-syndicated American radio show hosted by commentator Alan Colmes on Fox News Radio.The show is aired on weeknights from 10:00 p.m.-1:00 a.m. from Fox's New York City studios...
..
In 2010, then Congressman New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
Representative
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
Anthony Weiner criticized the advertising relationship between Goldline and these commentators, though Goldline officials maintain there is nothing improper about these relationships.
In 2009, Goldline incorrectly labeled Glenn Beck
Glenn Beck
Glenn Edward Lee Beck is an American conservative radio host, vlogger, author, entrepreneur, political commentator and former television host. He hosts the Glenn Beck Program, a nationally syndicated talk-radio show that airs throughout the United States on Premiere Radio Networks...
as a "paid spokesman" on its website which raised concerns with his employer, Fox News, which prohibit such a relationship; they later corrected it to "radio sponsor". Goldline's then- CEO Mark Albarian has appeared on Beck's radio show, the company was the exclusive sponsor of Beck's 2009 comedy tour. Prior to his Fox News employment, Beck had appeared in a Goldline website video. The late night
Late night television
Late night television in the United States is the block of television programming airing after 11:00 pm and usually through 2:00 am. Traditionally, this type of programming airs after the late local news and is most notable for being the daypart used for a particular genre of programming that falls...
satirical
News satire
thumb|right|220px|[[The Daily Show with Jon Stewart]] is a news satire program.News satire, also called fake news , is a type of parody presented in a format typical of mainstream journalism, and called a satire because of its content...
television program
Television program
A television program , also called television show, is a segment of content which is intended to be broadcast on television. It may be a one-time production or part of a periodically recurring series...
The Daily Show with Jon Stewart has skewered the relationship, and in 2010 some alleged that there is a conflict of interest which both Beck and Goldline deny.
Sales
The company sells over the phone, via Internet, and in person to customers responding to an advertisement. It also calls past customers when new collectibles arrive but does not cold call. Purchases are made by checkCheque
A cheque is a document/instrument See the negotiable cow—itself a fictional story—for discussions of cheques written on unusual surfaces. that orders a payment of money from a bank account...
or wire transfer
Wire transfer
Wire transfer or credit transfer is a method of electronic funds transfer from one person or institution to another. A wire transfer can be made from one bank account to another bank account or through a transfer of cash at a cash office...
.
Prices
The spreadBid-offer spread
The bid–offer spread for securities is the difference between the prices quoted for an immediate sale and an immediate purchase...
is the difference between Goldline's price for an item and how much Goldline will buy it back from the customer — the bid
Bid price
A bid price is the highest price that a buyer is willing to pay for a good. It is usually referred to simply as the "bid."In bid and ask, the bid price stands in contrast to the ask price or "offer", and the difference between the two is called the bid/ask spread.An unsolicited bid or purchase...
and ask
Ask price
Ask price, also called offer price, offer, asking price, or simply ask, is the price a seller states she or he will accept for a good....
prices. For instance, if Goldline sells a coin containing an ounce of gold for $1,500 and will buy it back for $1,200, the spread is $300. Calculated as a percentage, the spread would be 25% (100 X $300 / $1,200). On their website, they state their spreads are generally 5-20% for bullion coins (typically .999 pure gold) and 30-35% for all other coins. Albarian told The New York Times
The New York Times
The New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...
they range from as low as 5% for bullion coins and as high as 54% for unusual and historical coins.
The markup
Markup (business)
Markup is the difference between the cost of a good or service and its selling price. A markup is added on to the total cost incurred by the producer of a good or service in order to create a profit. The total cost reflects the total amount of both fixed and variable expenses to produce and...
is the difference between Goldline's price for an item and the coin's melt value — the market price of its metal content. Using the same example as above, if Goldline sells a coin containing an ounce of gold for $1,500 and the price of gold that day
Spot price
The spot price or spot rate of a commodity, a security or a currency is the price that is quoted for immediate settlement . Spot settlement is normally one or two business days from trade date...
is $1,000 per ounce, then the coin's melt value is $1,000, and the markup is $500. Calculated as a percentage, the markup would be 50% (100 X $500 / $1,000). The markup, also called the premium, is a common way to list gold bullion and coin prices.
New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
Representative
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
Anthony Weiner accused Goldline of overcharging with average markups of 90% to 152%. Dylan Ratigan
Dylan Ratigan
Dylan Jason Ratigan is an American television host primarily covering financial markets, the global economy, and politics. He is host of The Dylan Ratigan Show which airs weekday afternoons on MSNBC. He is also a frequent contributor on The Huffington Post.- Early life :Ratigan was born in the...
, a television financial commentator, said that because Goldline is selling gold at 90% more than one could buy it on a gold exchange-traded fund
Gold exchange-traded fund
Gold exchange-traded products are exchange-traded funds , closed-end funds and exchange-traded notes that aim to track the price of gold. Gold exchange-traded products are traded on the major stock exchanges including Zurich, Mumbai, London, Paris and New York. , physically backed funds held...
, it would be a "dumb" purchase. He went on to characterize Beck and Goldline as "largely snake oil salesman and scumbags trying to create money for themselves" by "fear mongering
Fear mongering
Fear mongering is the use of fear to influence the opinions and actions of others towards some specific end...
" at the buyer's expense.
Buy-back
The law does not allow precious metal dealers, such as Goldline, to guarantee a buy-back. The customer will pay a 1% liquidation fee on the bid price of the coin (the price Goldline is willing to buy back the coin before discounting for the fee). For example, if Goldline sells a coin for $1,500 and their bid price is $1,200, the seller would receive $1,188 ($1,200 - $12). Goldline will consider purchasing coins sold by other companies but generally their offer will be less than equivalent coins originally sold by them.Price guarantee program
Goldline offers a "price guarantee program": if the price of selected coins (not bullion) declines within two weeks, the buyer may request the difference be used to purchase coins of the same type (not a refund). However, this can only be done once in the two week period; therefore, If the price decreases further, the buyer will not get the difference. Similarly, if a buyer purchased a coin for $100 and Goldline's price decreased to $90 on day 7 but increased again to $95 on day 14, and the buyer requested the difference on day 14 instead of day 7, the amount would be $5.Investment advice
Goldline sales staff are not legally allowed to provide investment adviceFinancial adviser
A financial adviser, is a professional who renders financial services to individuals, businesses and governments. This can involve investment advice, which may include pension planning, and/or advice on life insurance and other insurances such as income protection insurance, critical illness...
; if they did, they would be subject to regulations by the Security and Exchange Commission and state regulators.
However, in a July 2010 article , Consumer Reports
Consumer Reports
Consumer Reports is an American magazine published monthly by Consumers Union since 1936. It publishes reviews and comparisons of consumer products and services based on reporting and results from its in-house testing laboratory. It also publishes cleaning and general buying guides...
reported that a Goldline sales rep advised one of its reporters liquidate their IRA
Individual Retirement Account
An individual retirement arrangement is the blanket term for a form of retirement plan that provides tax advantages for retirement savings in the United States...
and retirement account
401(k)
A 401 is a type of retirement savings account in the United States, which takes its name from subsection of the Internal Revenue Code . A contributor can begin to withdraw funds after reaching the age of 59 1/2 years...
in order to have 20% of their portfolio in gold. Additionally, in an October 2006 consent order, Goldline voluntarily agreed to return $
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
217,000.00 to a Missouri
Missouri
Missouri is a US state located in the Midwestern United States, bordered by Iowa, Illinois, Kentucky, Tennessee, Arkansas, Oklahoma, Kansas and Nebraska. With a 2010 population of 5,988,927, Missouri is the 18th most populous state in the nation and the fifth most populous in the Midwest. It...
elderly couple in exchange for the products purchased for the company after the Missouri Securities Division alleged that the couple was pressured by a Goldline salesperson to liquidate all their investments and put them into gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
. The Missouri Secretary of State
Secretary of State (U.S. state government)
Secretary of State is an official in the state governments of 47 of the 50 states of the United States, as well as Puerto Rico and other U.S. possessions. In Massachusetts, Pennsylvania, and Virginia, this official is called the Secretary of the Commonwealth...
Securities Division investigated and alleged that the company's agent was acting as an unregistered investment advisor, but the consent order did not judge whether the accusation was true or false.
Goldline recommends that the buyer invest no more than 5-20% of their portfolio
Portfolio (finance)
Portfolio is a financial term denoting a collection of investments held by an investment company, hedge fund, financial institution or individual.-Definition:The term portfolio refers to any collection of financial assets such as stocks, bonds and cash...
in precious metals while Consumer Reports recommends 5-10%. Goldline recommends holding their products for at least three to ten years.
Government and private gold
In its sales literature, Goldline draws a distinction between what it calls "government gold" and "private gold."During the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
, in order to stabilize the dollar
Exchange Stabilization Fund
The Exchange Stabilization Fund is an emergency reserve fund of the United States Treasury Department, normally used for foreign exchange intervention...
then backed by gold
Gold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...
and to avoid a run on the banks
Bank run
A bank run occurs when a large number of bank customers withdraw their deposits because they believe the bank is, or might become, insolvent...
, U.S. President Franklin D. Roosevelt issued a 1933 executive order
Executive Order 6102
Executive Order 6102 is an Executive Order signed on April 5, 1933, by U.S. President Franklin D. Roosevelt "forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates within the continental United States"...
requiring citizens to surrender their gold for which they were reimbursed at a price set by the government itself. Though confiscation
Confiscation
Confiscation, from the Latin confiscatio 'joining to the fiscus, i.e. transfer to the treasury' is a legal seizure without compensation by a government or other public authority...
is generally defined as legal seizure without compensation, in this case it refers to forcible seizure with compensation determined by the seizing authority in a form that was undesirable to the original owners of the gold. In its sales literature, Goldline states that "private gold" (defined as coins that were explicitly exempted from the 1933 order because of their collector value)) would be less likely to be included if the government followed the precedent set by Roosevelt, thereby possibly increasing the desirability of collector-grade coins.
The Roosevelt order resulted in only one failed prosecution, and the dollar is no longer backed by gold thereby putting into question why the government would again ask for its surrender. Rep. Weiner has expressed doubt of the likelihood of a future confiscation and the American Numismatic Association
American Numismatic Association
The American Numismatic Association was founded in 1891 by Dr. George F. Heath in Chicago, Illinois. The ANA was formed to advance the knowledge of numismatics along educational, historical and scientific lines, as well as enhance interest in the hobby.The ANA national headquarters and museum is...
said it was "a non issue". The Santa Monica and L.A. County investigators alleged that the distinction is used to spur the sale of the more-profitable collectible coins. While Goldline-sponsored Glenn Beck
Glenn Beck
Glenn Edward Lee Beck is an American conservative radio host, vlogger, author, entrepreneur, political commentator and former television host. He hosts the Glenn Beck Program, a nationally syndicated talk-radio show that airs throughout the United States on Premiere Radio Networks...
encouraged the purchase of collectible coins due to the possibility of future "confiscation," he also made clear that rare collectible coins are "the most expensive way you can buy gold".
Goldline includes a replica of the 1933 order in their sales material. When asked about this by George Stephanopolous on ABC's
American Broadcasting Company
The American Broadcasting Company is an American commercial broadcasting television network. Created in 1943 from the former NBC Blue radio network, ABC is owned by The Walt Disney Company and is part of Disney-ABC Television Group. Its first broadcast on television was in 1948...
Good Morning America
Good Morning America
Good Morning America is an American morning news and talk show that is broadcast on the ABC television network; it debuted on November 3, 1975. The weekday program airs for two hours; a third hour aired between 2007 and 2008 exclusively on ABC News Now...
, Scott Carter, the Executive Vice President of Goldline, said he didn't know if the government would again "confiscate" bullion but some saw a parallel between 2010 and 1933.
Goldline says that “private gold” does not require a person's Social Security number
Social Security number
In the United States, a Social Security number is a nine-digit number issued to U.S. citizens, permanent residents, and temporary residents under section 205 of the Social Security Act, codified as . The number is issued to an individual by the Social Security Administration, an independent...
(SSN) when the seller liquidates, whereas many of the “government gold” products would require one. While this allows customers to sell anonymously, Goldline also notes that customers are required to report the sale to the Internal Revenue Service
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
.
Collectible coins versus bullion
Bullion coin
A bullion coin is a coin struck from precious metal and kept as a store of value or an investment, rather than used in day-to-day commerce. Investment coins are generally coins that have been minted after 1800, have a purity of not less than 900 thousandths and are or have been a legal tender in...
' higher markups and mention of past government confiscation of bullion in Goldline sales literature, Weiner accused the company of recommending rare collectible coins over less-profitable bullion. Some customers prefer collectibles because they are recognizable, government-issued coins, and may be less expensive.
Goldline explained collectibles have a greater markup due to their relative rarity, costs of shipping and handling, paying the sales staff, and the company's compliance department
Regulatory compliance
In general, compliance means conforming to a rule, such as a specification, policy, standard or law. Regulatory compliance describes the goal that corporations or public agencies aspire to in their efforts to ensure that personnel are aware of and take steps to comply with relevant laws and...
. Additionally, customers are given complete information before purchasing, "pricing is transparent", "fees and commissions are disclosed in writing", and all complaints are investigated. They also offer a "price guarantee program" (see Goldline's price guarantee for details).
However, ABC reported the sales staff are encouraged to promote coins over bullion. ABC gave an account of a customer pressured into buying $5,000.00 of such coins which a dealer later told him were worth only $2,900.00. Another purchased $13,000.00 of "overpriced Swiss gold coins" in 2007 — while the price of gold doubled, the coins were only worth $10,764 in 2010, leaving her feeling "suckered". Consumer Reports noted that Goldline was selling a Gold Eagle
American Gold Eagle
The American Gold Eagle is an official gold bullion coin of the United States. Authorized under the Gold Bullion Coin Act of 1985, it was first released by the United States Mint in 1986.- Details :...
set for $5,924.63 while a competitor had them for $3,295.00. However, they went on to say that Goldline's bullion prices were competitive.
History
Goldline traces its corporate history to Deak Investor Services, Inc. formed in 1960 by Nicholas L. Deak of Deak & Co. Nicholas Deak, a Hungarian immigrant, founded Deak & Co. in 1939 and served in the OSSOffice of Strategic Services
The Office of Strategic Services was a United States intelligence agency formed during World War II. It was the wartime intelligence agency, and it was a predecessor of the Central Intelligence Agency...
(precursor to the CIA) during World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
. Deak & Co. specialized in foreign exchange
Foreign exchange market
The foreign exchange market is a global, worldwide decentralized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends...
, gold coins and bullion, and was considered a pioneer in the business.
By the early 1980s, the company was the largest retailer of gold bullion and the oldest and largest retail foreign exchange dealer in the United States. While Deak described himself as a gold bug
Gold bug
Gold Bug is a term used to describe investors who are very bullish on buying the commodity gold . It can also be used to refer to a person who opposes or criticizes the use of fiat currency and supports a return to the use of the Gold Standard or some other currency system based on the value of...
, the company felt the strain of growing too rapidly during the gold economic bubble
Economic bubble
An economic bubble is "trade in high volumes at prices that are considerably at variance with intrinsic values"...
which burst by 1982. At that point, they planned on expanding into the wholesale
Wholesale
Wholesaling, jobbing, or distributing is defined as the sale of goods or merchandise to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services...
market, offering services to companies instead of the public. The company was the country's leading seller of South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
's Krugerrand
Krugerrand
The Krugerrand is a South African gold coin, first minted in 1967 to help market South African gold. The coin, produced by the South African Mint, proved popular and by 1980 the Krugerrand accounted for 90% of the gold coin market. The name itself is a compound of Kruger and rand, the South...
before it was pressured to halt sales because of South Africa's apartheid system in 1985.
In 1984, Deak & Co. faced allegations from the President's Commission on Organized Crime
President's Commission on Organized Crime
The President's Commission on Organized Crime was a United States governmental body that existed during the Ronald Reagan administration. It was established by executive order 12435 in 1984....
that they laundered money
Money laundering
Money laundering is the process of disguising illegal sources of money so that it looks like it came from legal sources. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount...
for Latin American drug traffickers, facilitated the Lockheed bribery scandals
Lockheed bribery scandals
The Lockheed bribery scandals encompassed a series of bribes and contributions made by officials of U.S. aerospace company Lockheed from the late 1950s to the 1970s in the process of negotiating the sale of aircraft....
, and smuggled currency from the Philippines
Philippines
The Philippines , officially known as the Republic of the Philippines , is a country in Southeast Asia in the western Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam...
. As a result, shortly thereafter, Deak & Co. declared bankruptcy
Chapter 11, Title 11, United States Code
Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most...
in order to reorganize. In 1985, the company was purchased by a Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
lawyer for $52 million — the most valued asset was Deak's Swiss bank. In 1986, the foreign exchange and gold business was sold to Australia's Martin Properties Ltd. (later renamed Deak Morgan
Paul Morgan (rugby league)
Paul "Porky" Morgan was an Australian rugby league player and businessman. He is remembered for being co-founder of the Brisbane Broncos club...
) for $12 million. In the following year, the company was transferred to New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
based NZI
NZI
NZI or New Zealand Insurance was formed in 1859 and is one of New Zealand's largest and longest-serving fire and general insurance brands. In January 2003 Insurance Australia Group purchased NZI when acquiring Aviva's general insurance business...
and expanded its gold coin dealerships by one-third. At the same time, Deak Investor Services, Inc. changed its name to Deak International Goldline Ltd.
Due to the 1987 worldwide market crash
Black Monday (1987)
In finance, Black Monday refers to Monday October 19, 1987, when stock markets around the world crashed, shedding a huge value in a very short time. The crash began in Hong Kong and spread west to Europe, hitting the United States after other markets had already declined by a significant margin...
, the company floundered, and was sold to the London-based Thomas Cook Group
Thomas Cook Group
Thomas Cook Group plc is a travel company created on 19 June, 2007 by the merger of Thomas Cook AG and MyTravel Group plc. At flotation on the London Stock Exchange 52% of the shares in the new company were held by the German mail order and department store corporation Arcandor and 48% owned by...
in August 1990 for $10–$12 million. Several months afterward, Deak International Goldline (US) Ltd. was bought by A-Mark Precious Metals Inc, a wholesaler dealer in precious metals, thereby adding a retail presence. In 1992, Deak International Goldline (US) Ltd. changed its name to Goldline International, Inc. and Mark Albarian became president. In 1994, Goldline acquired the assets of Gold & Silver Emporium, and in 1998, acquired Dreyfus Precious Metals, Inc., the precious metal brokerage and storage subsidiary of the Dreyfus Corporation
Dreyfus Corporation
Dreyfus, established in 1951 and headquartered in New York City, is one of the nation’s leading managers of investment products and strategies. The company merged with Mellon Financial in 1994, and then became a subsidiary of Bank of New York Mellon when Mellon Financial and The Bank of New York...
.
In 2005, the A-Mark Corporation sold Goldline to three investor groups, each of which acquire minority stakes: Prudential Capital, Goldline management, and Goldline’s former chairman. Two years later, Goldline moved its headquarters and trading floor across Santa Monica, California
Santa Monica, California
Santa Monica is a beachfront city in western Los Angeles County, California, US. Situated on Santa Monica Bay, it is surrounded on three sides by the city of Los Angeles — Pacific Palisades on the northwest, Brentwood on the north, West Los Angeles on the northeast, Mar Vista on the east, and...
to offices at the Water Garden complex. In 2009, CIVC, a Chicago-based private equity company, acquires controlling interest in Goldline by purchasing the stakes owned by Prudential Capital and Goldline’s former chairman. Goldline management also increases its stake. This transaction was worth over $50 million.
Investigations and lawsuits
In addition to the 2006 Missouri investigation, New YorkNew York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
Representative
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
Anthony Weiner and Democratic Rep. Bobby Rush
Bobby Rush
Bobby Lee Rush is the U.S. Representative for , serving since 1993. He is a member of the Democratic Party.The district is located principally on the South Side of Chicago. It is a minority-majority district and has a higher percentage of African Americans than any other congressional district in...
announced in July 2010 they will hold a hearing scheduled for the end of September on Goldline's sales tactics which Weiner, a liberal Democrat, has criticized
In September 2010, the Subcommittee on Energy, Commerce and Consumer Protection held a hearing on proposed legislation by then Congressman Anthony Weiner regarding mandatory disclosures for the sale of coins and precious metals. [80] As one of the largest precious metals retailers in the U.S., Goldline Executive Vice President Scott Carter (now CEO) was invited to testify at the hearing . The Chairman of the Committee on Energy, Commerce and Consumer Protection attended as an ex officio member and stated at the outset of the hearing, “I also don't think it's appropriate to hold a hearing because this is a substance that's being advertised on Glenn Beck or Rachel Maddow or anybody else.” Carter testified regarding Goldline’s sales practices and client policies as well as concerns about the proposed legislation. The former director of the FTC’s Bureau of Consumer Protection testified, “the best protection remains the common law principles that the Commission enforces. Goldline’s practices are entirely consistent with these principles.” No action was taken on the proposed legislation following the subcommittee hearing. Weiner’s legislation never received a single co-sponsor in the House of Representatives and no Senator agreed to introduce similar legislation in the Senate. Weiner never attempted to move the legislation out of the subcommittee.
Goldline has indicated that Rep. Weiner's office never contacted them directly to discuss the matter when creating its report and ignored an offer to tour their facility. Glenn Beck attacked Weiner for using McCarthy-like attacks
McCarthyism
McCarthyism is the practice of making accusations of disloyalty, subversion, or treason without proper regard for evidence. The term has its origins in the period in the United States known as the Second Red Scare, lasting roughly from the late 1940s to the late 1950s and characterized by...
, saying he was assailing Goldine at the request of the Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...
administration, and Mark Levin called him “a grandstanding leftist".
At the same time, the offices of the Los Angeles County District Attorney
Los Angeles County District Attorney
The District Attorney of Los Angeles County prosecutes felony and misdemeanor crimes that occur within the jurisdiction of Los Angeles County, California....
and the Santa Monica City Attorney launched an investigation into Goldline and Superior Gold Group.ABC News reported that 100 customers from around the country had complained that the two firms misled them or received a different item than the one purchased. However the announcement didn’t distinguish between Goldline and Superior, thereby failing to specify how many complaints were against Goldline and how many were against Superior, a smaller firm with an "F" rating with the Better Business Bureau
Better Business Bureau
The Better Business Bureau , founded in 1912, is a corporation consisting of several private business franchises of local BBB organizations based in the United States and Canada, which work through their parent corporation, the Council of Better Business Bureaus .The Better Business Bureau, through...
. In comparison, as of September 2010, the Better Business Bureau gave Goldline an A+ rating and had received few complaints.The Santa Monica City Attorney set up a website for lodging complaints at www.gold.smconsumer.org. In December, 2010, a Los Angeles County judge placed Superior Gold under receivership and froze the company’s assets . On November 1, 2011 Santa Monica City Attorney's Office, led by consumer protection attorney Adam Radinsky, charged Goldline International with 19 counts of theft and fraud and accused the company of "[running] a bait and switch operation".
See also
- Gold as an investmentGold as an investmentOf all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises...
- Silver as an investmentSilver as an investmentSilver, like other precious metals, may be used as an investment. For more than four thousand years, silver has been regarded as a form of money and store of value. However, since the end of the silver standard, silver has lost its role as legal tender in many developed countries such as the...
- Palladium as an investmentPalladium as an investmentLike other precious metals, palladium may be used as an investment. Palladium price peaked near US$1,100 per troy ounce in January 2001 driven mainly on speculation of the catalytic converter demand from the automobile industry. Palladium is traded in the spot market with the code "XPD"...
- Platinum as an investmentPlatinum as an investmentPlatinum has a much shorter history in the financial sector than either gold or silver, which were known to ancient civilizations.Platinum is relatively scarce even among the precious metals. New mine production totals approximately only 5 million troy ounces a year...
- Coin collectingCoin collectingCoin collecting is the collecting or trading of coins or other forms of minted legal tender.Coins of interest to collectors often include those that circulated for only a brief time, coins with mint errors and especially beautiful or historically significant pieces. Coin collecting can be...
- NumismaticsNumismaticsNumismatics is the study or collection of currency, including coins, tokens, paper money, and related objects. While numismatists are often characterized as students or collectors of coins, the discipline also includes the broader study of money and other payment media used to resolve debts and the...
External links
- Official website
- Representative Anthony Wiener's Investigative Report on Goldline (PDF)
- Nightline Investigation on Goldline
- Good Morning America report on Goldline and interview with Goldline executive
- Goldline's letter to ABC defending its record
- Glenn Beck's website repudiating Weiner's Goldline report