Beck's city of gold continues to unravel
Beck's city of gold continues to unravel
Throughout Glenn Beck's meteoric rise to become king of all right-wing media, a once-obscure Santa Monica peddler of gold coins called Goldline International has been along for the ride. The support of Beck and other radio hosts -- mainly conservatives like Mark Levin and Fred Thompson -- who spend 55 minutes creating fear of an economic collapse and then five minutes telling you why coins from a company like Goldline are the only safe haven has helped Goldline become a $500 million company.
This, for example, is what 2 million TV viewers who clicked on Beck's nightly Fox News Channel show heard on Oct. 6, 2009:
You don’t have any gold, right? This is you. This is you. This is your savings. How much did you lose if you had any money in your 401k? Did you lose, let’s say, I don’t know, 40 percent of it? So, that’s gone. Now, did you know that the dollar has lost nearly 29 percent of its value in the last seven years? Twenty-nine percent. OK, that’s gone. Just gone.
This isn't an advertisement, although it may sound like one. It's the editorial content of the show, although at some point during the hour viewers are sure to see an ad for Goldline with their "800" number prominently displayed. Meanwhile, visitors to GlennBeck.com see a big ad for Goldline, while visitors to Goldline.com can see testimonials from Beck for Goldline. It's hard to know sometimes where Beck -- who famously told his viewers to get behind "God, gold, and guns" -- ends and Goldline begins.
Never mind that anxiety-drenched radio listeners never got to hear the other side of the gold coin, which is that the industry is plagued by high-pressure sales tactics as well as high commissions which mean that gold -- already at a record high (although not when adjusted for inflation) -- would have to rise well beyond its current highs to see a reasonable return on their investment.
Finally, a grown-up has stepped in to try to clean up this mess -- Rep. Anthony Weiner of New York.
At this hour, Weiner is holding a news conference not only call out Goldline as "a company that uses conservative rhetoric, high pressure sales tactics and tall tales about the future of gold to sell over priced coins that can be bought somewhere else for cheaper," but to ask regulators from the Federal Trade Commission and Securities and Exchange Commission to investigate its tactics.
Weiner's staff investigated Goldline and found that the coins it sells are not the good investment that its salesmen -- who are not licensed investment advisers -- claim that it is to consumers, because the price of gold would essentially have to double beyond its current high to begin seeing any gains. Specially, the investigators found Goldline coins selling for 90 percent above the melt value of the coin, that is, its value by weight. The largest markup seen on a coin, Weiner said, was 208 percent above the melt value.
"In the past there is always the “product” that is either the next big thing (the dot com boom) or the investment that will never go down in price (the housing market), and in the past much of the media has failed in its duty to conduct due diligence, but never before have they worked so hand in hand to cheat consumers," Weiner said in his prepared report. "Commentators like Glenn Beck who are shilling for Goldline are either the worst financial advisers around or knowingly lying to their loyal viewers."
Goldline’s high pressure sales tactics and fear mongering about big government as well as their ability to hire sales staff and spokespeople who misrepresent their roles are case studies in why entities like the SEC and FTC are necessary.
The Brooklyn congressman sent letters to the heads of the FTC and the SEC requesting that some of Goldline's more questionable tactics be investigated. In addition, he says he will propose legislation requiring full disclosure of hidden fees, the purchase price/Melt value/Resale value, and how much the cost of gold will need to rise in the value for the customers’ investment to be profitable. All common sense ideas.
Look, no one but Beck himself -- who's made a career out of gaining trust from his listeners only to sell them a bad investment that also enriches him through endorsement fees -- and Goldline International are to blame for this mess. But of course, Beck is doing what he does best and blaming the messengers, accusing them of "McCarthyism" by going after his sponsors. That has nothing to do with this -- it's about consumer protection. If Beck endorsed companies that didn't use questionable sales tactics, there would be no story. And frankly, Weiner wouldn't even be involved if the SEC and the FTC had been doing their jobs in the first place.
As I mentioned in a post yesterday about Beck's sponsor LifeLock, I became interested in Beck's relationship with the type of products he endorses when I was researching my pending book, The Backlash: Right-Wing Radicals, Hi-Def Hucksters and Paranoid Politics in the Age of Obama. It's not a tangential issue at all; instead, Beck works hand-in-hand with these companies to create a non-stop whirlwind of anxiety, fear and gimmicky solutions that enriches both him and the companies, even though the side effect of all the excess paranoia is quite harmful to American politics.
Funny that Beck would talk so much about Joe McCarthy today. When McCarthy-inspired paranoia finally reached the level where the damage to the American body politic was clear, the adults finally stepped in and put an end to the circus. I wonder if the same thing is finally happening here, whether it's finally time to say "good night and good luck" to Glenn Beck's influence.