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Is Goldline A Scam?

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Gold Bars & CoinsGold has always been seen as a nice safe store of value. When the world is in crisis, people turn to gold for stability, which is why the price of gold is around $1,200 an ounce these days. I’m not an investor but one important lesson, repeated by savvier investors, is that gold itself may be an investment but it’s true value is as an independent store of value. Should your home currency ever be deemed worthless (in the case of hyperinflation), you could take your gold to another country and convert it into their local currency. If your government were to collapse, you could go elsewhere and still have purchasing power.

You can see how gold has value when the world is in crisis right? That’s given rise to a lot of companies that are looking to make money from the increased popularity in gold. I’m sure you’ve seen ads from Cash4Gold, looking to pay you top dollar for your unwanted jewelry, but there are also companies on the other side. Companies who have gold and are looking to sell it. One of those companies, made popular by their spokesman Glenn Beck, is Goldline.

People want to know – is Goldline a scam? Representative Anthony Weiner of New York seems to think so.

Is Goldline a Scam?

The short answer is No. Unlike Cash4Gold, which has been shown to employ questionable sales tactics, Goldline is a legitimate seller of gold.

However, that doesn’t mean they’re the best place to buy gold. Fortunately gold, like any other commodity, is traded on the open market and you can get a spot price for it. You can use this spot price to determine the true market value of the coins you’re buying to see if it’s a good deal. When the cost of the coin is significantly higher than the gold value, you are overpaying to own gold. The gold coins might have artistic or numismatic value, above and beyond the metal value, and every business has to add a premium for profits, but at some point you are overpaying.

That’s the principal complaint about Goldline.

Bid-Ask Spread

In an open marketplace, the bid is the amount someone is willing to buy something for. The ask is the amount someone is willing to sell something for. Market-makers, the people who “put” sellers and buyers together, can generate a profit off the bid-ask spread – they buy it at one price and sell it at a higher price. In the Consideration for Investors section of the Account & Storage Agreement, Goldline explains that the bid/ask spread on semi-numismatic and numismatic coins is 30-35%! That means Goldline is making at least 30-35% off each sale… that’s a pretty healthy profit margin.

Goldline is, by their own admission, overpriced.

Here’s a video from the Dylan Ratigan Show on MSNBC that looks at Goldline (includes Representative Weiner, Peter Schiff)

Here’s another video of Peter Schiff explaining why Goldline is overpriced:

Protip from the video: If you want to invest in gold, buy gold through an ETF.

Goldline isn’t a scam, they’re a savvy business. They recognize that people are panicking and they are putting out a product that people think they need. They’re advertising on programs, and using pitchmen and women, that bombard their viewers with doom and gloom (perhaps rightly so). Who is to say the numismatic value of these gold coins isn’t 30-35%? :)

Is this any different than someone selling bottles of water at $2 outside a ball game or a concert?

(Photo: bullionvault)

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63 Responses to “Is Goldline A Scam?”

  1. Safeway_Sage says:

    Like I was told years ago the three things that sell are fear, greed, and sex.

    Goldline is simply playing on people’s fear! If a consumer isn’t going to take the time to perform due diligence, it is on them.

    This is not to mention the fact that gold is not even a good investment. It isn’t liquid nor does it pay dividends.

    S_S

  2. JimmyDaGeek says:

    As usual, the nanny state wants to butt in to keep ignorant people from making mistakes. If they don’t make mistakes, how are they going to learn? The problem is: ignorant people never blame themselves for their stupidity. “They were cheated” is the common refrain.

    Remember that old line “Fool me once, shame on you; Fool me twice, shame on me”. Thank goodness for Star Trek ;)

  3. Anonymous says:

    30-35%!? i know they say it in the t&c but still, that’s greedy

    • Fred says:

      30-35% is not an uncommon profit margin for a growing business… Clothing retailers often make much more gross profit… somebody has to pay for all that Goldline marketing hype!

      (I will admit that I agree with Jim, it’s just too much to pay when you can get gold much cheaper…)

  4. billsnider says:

    Love the back and forth between Weiner and Beck. One of them looked like a fool.

    Bill Snider

  5. So people are stupid to buy at a high priced dealer. People should be doing the research BEFORE buying them. This happens all the time when buying products, why should the government get involved?

  6. eric says:

    I’m always weary about these buying gold sites, even if this one is considered legit.

  7. Vic says:

    I’ll stick with stocks for the time being.

    I’d rather have 15%-20% capital gains tax versus 28-35%!

    Besides if you buy now, you are buying at the peak of the gold run. Sure if you bought in 2004 you would be rich. If you bought now right now, you would be loosing money or breaking even at best.

    Honestly, I’d be holding dollars at this point to invest in the market. The Fed is bound to hike up the rates in a year. the Euro is tanking with the recent news of Greece and now Hungary. Spain & Portugal are waiting in the wings to get a bailout.

    http://articles.moneycentral.msn.com/Taxes/CutYourTaxes/taxes-can-take-the-shine-off-gold.aspx

    “Normally, when you sell a capital asset you’ve owned for more than one year, your tax rate is capped at 15%.

    But when you sell a collectible, tax law caps your maximum rate on long-term capital gains at 28%, not 15%. In other words, on a $100,000 gain (lucky you!), that means you don’t pay $15,000 to Uncle Sam, you pay $28,000 — an extra $13,000.

    If you hold the asset for less than a year, it gets worse. Your gain becomes a short-term gain, and it’s taxed at regular income tax rates. That means a rate of as much as 35%. On a $100,000 gain, that’s $35,000 you pay to the government. Ouch!”

  8. cdiver says:

    Scam…no. Uneducated people have been overpaying since the creation of currency.

  9. cdiver says:

    Wish I could think of something that people are willing to over pay for. I know, canned air, like in the movie Spaceballs.

  10. MikeZ says:

    Scam, no. I’d say its a damn savvy business decision on their part to use Glen Beck as their spokesman. They found with him an audience that was too stupid and/or paranoid to know what a good investment is. Good for them.

    On the other hand it certainly makes Glen Beck look like a douchebag for being the exclusive shill for this product but I guess he doesn’t mind presumably this was the appearance he was going for anyway.

  11. thunderthighs says:

    Great article and videos, would like to see more like this!

  12. Silly Person says:

    You don’t have to buy gold. The Goonies found One Eyed Willies ship, and it was full of gold and other goodies.

    Just find a map and follow follow it to where X marks the spot. :-D

  13. Greg says:

    @Vic…..I tend to agree with you, but to make
    the point that you would be buying gold near a
    peak, none of us know. It’s a historically high
    price, but to call it a peak, you need hindsight,
    which is hard to have until the future, LoL
    ;)

    • Vic says:

      I should have stated Relative peak ;) But overall gold has had an amazing run. But its bound to end. Just ask anyone that bought in the 80s for $800 and sold it for $350 in the 90′s.
      There is a reason they put ‘Previous performance doe not indicate future results’ at the end of every prospectus for any thing. The time to buy gold was when things were calm not when things are in a panic. You want to SELL into the gold buying panic and buy into stocks selling panic. It’s like Buffet says “Be fearful when others are greedy. Be greedy when others are fearful” ;)

      • JW says:

        First Vic, it isn’t the gold peak, far from it. Secondly, you don’t buy gold for an immediate turn around, it’s a long term 3-5 year hold recommended, and 5-10 year optimal hold. This is stated when talking to clients.
        Thirdly you can’t compare the gold run in the 80s because the circumstances are way different. There was China a communist country, India a 3rd world country, embargos and impending wars.. Now China and India are hoarding gold. They make up for 1/2 the world population and they’re all buying gold. Then you have our falling dollar, if the economy recovers, interest rates will increase, gold will be worth more along inflation. If the economy falters, gold will go up when the Fed comes to the rescue with more printing of money..

        I think that anyone that owns a business is entitled to charge the premiums they wish, it is after all capitalism at its best!

  14. goldcoinholder says:

    I own gold coins and have bought coins over the years. Goldline is not the place to buy your gold coins. You should buy where you can see the buy and sell prices. Many gold coins will be able to be sold back for a small markdown. So, if you bought a coin for 1000.00 you could sell it back that day for 940.00. However, if you did the same thing at goldline that 1000.00 coin would sell back for 700.00.
    Please check it out. Go to a local coin shop or gold dealer, and compare prices first before you buy. Also, if you are within only 2 years of cash funds, you might think twice before even buying a gold coin.

  15. Denny says:

    I belive anyone dumb enough to listen to Glen
    Beck should spend all their money buying gold
    from Glen and his friends.

  16. Former Employee says:

    I worked for Goldline for a while and made some very good money but I quit because I’m not the type who can continue to cheat good people and feel good about it…

    We were told if someone wants bullion to tell them to send in their money. Once the money is in our bank. we would hard sell them into a higher premium product like the swiss franc. There were designated people to do the hard sell for the bail and switch.

    Fear was a major strategy we were taught to use such as the so call confiscation issue and also we were also told to say that the coins were “private”. No 1099.

    The truth is if Goldline acted in a responsible and ethical way toward their customers…they would not be able to stay in business.

  17. dude says:

    Glen Beck is a scam artist and is taking advantage of a lot of people who don’t know much about the internet and have access to information about how much Goldline is a ripoff. There are a lot of good conservative people out there who are ignorant of his advocating a rip off business. We need a big show like 20/20 etc to bring this out so that it will be common knowledge.

  18. tobby willis says:

    You people are idiots. If you buy and sell collectible coins, you do not divulge your personal information when you sell, no name, social security number or DOB. In other words, folks, you don’t pay capital gains tax. Get it? hello? You guys buy all the ETF’s and stocks you want, you have pieces of paper, I have real money GOLD> I can sell that anywhere.

    I bought swiss frank gold coins from goldline in 2001 for 70 each and just sold them back to them at 280. That is with their spread and mark up and all that. I gained 400 percent in ten years and I don’t pay capital gains tax.

    You’re calling them a rip off. ? My God, I’m calling them ANGELS. I bought a house with the profits.

    Put your money where your mouth is. Show me one other stock or other asset or other company that will show you 400 percent profit with NO TAX in ten years.

    I just bought 50K in british sovereigns from Goldline last month. With the deficit and inflation coming…..I’m cashing in with gold baby. !

    I will quadrupole this investment in 7 years this time.

    • bim says:

      You just proved in your comment they are a rip-off.
      You let them talk you into wasting your money buying numismatic coins. You paid more cash for less gold. For your 50K you could have gotten a lot more actual gold by buying bars or bullion coins (ie maple leaf, gold eagles).

  19. jim says:

    Tobby Willis: What you are doing is called income tax evasion and there is better than a good chance you will end up in prison for it especially since you decided to brag about your crime on the Internet. You think they can’t track down who you are? Idiot. I am thinking of turning you in myself for the reward. Why should I have to pay taxes when a cheat thief like you pays nothing? Fuck you. Well someone will fuck you, in prison.

    • ricardo 88 says:

      Unless, Tobby Willis is just a big fat GOLDLINE employee selling another big fat lie. If it’s too good to be true……

  20. NICK says:

    Goldline is WAYYYYY overpriced. Do not purchase your precious metals from this company. Their mark-up is horrid. I bought gold at $900. The current price is now over $1300. I called to ask what their buy back price is…I would be losing on my original purchase by selling back to them – and the price has increased $400!!

    Don’t waste your money here; I don’t care what Glenn Beck says!

  21. reefdiver says:

    My Dad bought Gold coin from a friend of his who drove his then, brand new Thunderbird to Mexico and back. This was in 1968.
    It was a 1 oz. coin and cost less than a new pair of golf clubs at the time.
    The value today is outrageous. The coin is safe in a vault and is rolling around in the container laughing with joy…..who knew…

  22. Former Employee says:

    Okay…here’s the inside scoop on Goldline from a former employee who left Goldline because of their questionable tactics for manipulating people… I know work for a legitimate company selling precious metals. QUITE SIMPLY… It is not in GOLDLINE’S best interest to sell you gold or silver BULLION, although this is the BEST way to buy gold. The reps will not keep their job nor make much MONEY if they only sold bullion. If you say you want bullion, they will tell you to send in your money, and once received by GL, will beat the heck out of you into buying the freakin coins!! If you want coins, there are plenty of gold dealers where you can get them a lot cheaper than Goldline!! BE WARY OF DOING BUSINESS WITH GOLDLINE!!

  23. Former Employee says:

    Okay…here’s the inside scoop on Goldline from a former employee who left Goldline because of their questionable tactics for manipulating people… I now work for a legitimate company selling precious metals. QUITE SIMPLY… It is not in GOLDLINE’S best interest to sell you gold or silver BULLION, although this is the BEST way to buy gold. The reps will not keep their job nor make much MONEY if they only sold bullion. If you say you want bullion, they will tell you to send in your money, and once received by GL, will beat the heck out of you into buying the WAY OVERPRICED coins!! If you want coins, there are plenty of gold dealers where you can get them a lot cheaper than Goldline!! in my opinion, GOLDLINE is UNETHICAL.

  24. madbull says:

    I made the mistake of buying gold and silver from Goldline about 2 years ago. When gold hit $1400.00 an oz., I broke even. Finally in the black. I think GOLDLINE SUCKS big time. Whenever one of their representatives call me, I never answer. Next time I will and let off some steam. If ever there was a company that needs to be put out of business they’re it.

  25. whitneymuse says:

    After thinking this though, I too; decided it was better to go through an ETF to purchase
    gold. It obviates the necessity to have Brinks escort me back to my car, or have my house rewired for intrusion alarms; actually it already has that, but it’s difficult if you get up in the middle of the night for a glass of water, or a water exchange.

    I just hope I can believe those annual meeting reports.


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