Beware Recession Based Advertising: All That Glitters is Not Gold.
October 24th, 2008 | Published in Consumer Education | 14 Comments
For several weeks now, I’ve noticed an increasing number of hard sell advertisements in my Sunday newspaper, the websites I frequent, and the few TV shows I take the time to watch.
One gold coin commercial in particular has drawn my attention, or should I say disapproval, that has been running on CNBC for several weeks now. Normally, I dismiss such rubbish by tuning it out or hitting the mute button, but the outlandish claims made by the United States Rare Coin & Bullion Reserve is, in my opinion, probably the worst sales pitch ever.
To set the stage, we have the proverbial spokesperson (i.e. salesman) running his fingers through a large pile of gold coins in front of an open gold vault with a few armed security guards standing about. In my mind, it almost seems like the wishful conclusion of Geraldo Rivera’s lame attempt to find Al Capone’s secret vault back in the 1980s.
Also going by the name of “U.S. Gov’t Gold“, the United States Rare Coin & Bullion Reserve consistently pushes in their advertisement that gold prices will skyrocket to $2,000 per ounce and that you should get in now while prices are cheap.
They also go to the extreme of saying the $50,000 in gold coins the salesman is lavishly fondling would appreciate to $166,000 if gold hits $2,000 per ounce.
Come again? This guy is pitching us a product that he claims is going to triple in value?
Why in the world would anyone sell something that’s going to triple in value? Something mighty strange is going on here.
Of course, it’s not U.S. Gov’t Gold that is endorsing the $2,000 per ounce target price, but a group of unidentified experts. How convenient! I suppose this undocumented detail would allow for a satisfactory scapegoat if gold prices drop below the prices at which their customers purchased their gold coins.
Not to leave out potential advertising space, their website also gets into the mix by hyping ten Orwell-like reasons you should buy their gold coins. Such as “the threat of terrorism“, “potential conflicts with Iran” or “the war in Iraq” are additional reasons why you should their product right now.
Sounds like the sky is falling doesn’t it?
Background information
What strikes me as odd is that the U.S. Gov’t Gold is in no way related to the U.S. Mint or the U.S. Government. Which I would presume is a strategy to look as authentic as possible so that any unsuspecting person would buy immediately from them, after falling for their hard sell tactics, and not think any different.
It also appears that the United States Rare Coin & Bullion Reserve has seen the wrath of the San Francisco Gate with some scathing insights. Nothing like having a court ruling for overpricing coins going against you, or getting banned from serving in a public company by the Securities and Exchange Commission (SEC) to ruin your business reputation.
Say goodbye to the hard sell scare tactics
Like everything that trades on the open market, gold has been a highly volatile commodity considering the uncertainty in the U.S. economy, and the overall global economy as well.
However, the U.S. Dollar value of gold only reached a high of $1,000 per ounce (an all time high) but soon retreated back to the low $700 per ounce range.
No one has a crystal ball, but would you trust a salesman - particularly a questionable coin salesman - making you a bet that you could triple your money? Probably not!
It’s better to buy the coins directly from the U.S. Mint and ignore shady salesman in their entirety.
Final Words
When something that seems to good to be true, it probably is.
So when you see such advertising as this, with someone promising grand returns on your money or prices that are so low you must buy now, it’s best to step back and think about your purchase. By doing some quick investigative research on your own with a quick Google search, five minutes of semi-diligent research could save you tons of time in post-purchase headaches.
As for this example, I’m sure that some time in the future - maybe 1 year, maybe 50 years - gold will be at $2,000 like the United States Rare Coin & Bullion Reserve claims. But it doesn’t mean you should rush out and buy the next hot item because everyone is buying it. More often that not, you’re probably buying at the highest price only to watch it depreciate in value soon thereafter.
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October 27th, 2008 at 10:40 pm (#)
[...] Steadfast Finances tells readers to beware recession proof advertising! He refers specifically to a ‘Hard Sell’ commercial on CNBC of gold coins. Apparently the price of gold is going to triple! Though I suppose the source, the government-sounding-but-actually-private United States Rare Coin & Bullion Reserve, might be a *little* biased. [...]
October 28th, 2008 at 12:21 am (#)
[...] Steadfast Finances tells readers to beware recession proof advertising! He refers specifically to a ‘Hard Sell’ commercial on CNBC of gold coins. Apparently the price of gold is going to triple! Though I suppose the source, the government-sounding-but-actually-private United States Rare Coin & Bullion Reserve, might be a *little* biased. [...]
January 23rd, 2009 at 1:33 pm (#)
Yea, it really annoys me as well. Thanks for the information. I was just looking on Google to find contact info for that firm when I found your article.
January 23rd, 2009 at 1:41 pm (#)
@ Mike
Thanks for commenting. U.S. Gov’t Gold has recently edited their newest CNBC commercial to blatantly say…
“It’s time to take your money out of the stock market, and put your money into gold.”
I’m sure they mean buy their overpriced gold coins instead of buying a gold ETF (symbol GLD) or something similar.
I’m surprised CNBC lets them continue saying such things, but I suppose their advertising dollars are welcome in a down economy.
January 30th, 2009 at 4:06 pm (#)
I just bought 10 of their coins that they advertised on CNBC. I totally agree about their commercial though. They make used car salesmen look honest. However, the price of $99 for a 1/10 ounce coin is now a very good price considering the price of gold. The total for 10 of them was $1021 with shipping. If you check the price of one of these on ebay you’ll see they’re going for about $120. So you could buy them from this lousy sales pitch and resell them on ebay for a quick profit of $179 if you turn them around right away.
January 30th, 2009 at 4:34 pm (#)
@ Dave
Nice catch and thanks for the heads up!
These guys were advertising gold coins for $87 each several weeks ago, but apparently they rotate their commercials based on price from what I’ve observed thus far (yes, I watch too much CNBC).
I bought the Gold ETF (NYSE: GLD) a few days ago, so you’re definitely correct that their outdated prices will bring in a tidy profit when a lag arises b/n gold price spikes and their advertising campaign.
Plus, American Eagle gold coins are at a premium now since the US Mint can’t make enough to satisfy demand. I would hate to buy from these guys, but if the profit is there, got to take it.
Have you seen anything related in Silver or Platinum?
January 30th, 2009 at 4:53 pm (#)
I haven’t seen anything related in silver or platinum. I’m in the gold ETF too, but this turns out to be a decent deal despite their shady commercial that probably hurts them more than helps. Once you get past that it can be a good deal right now. Yes, their prices do fluctuate with the market.
I think the commercial is bait and switch deal. When I said I wanted the $99 deal that I saw on CNBC and placed my order for 10 after he took all my info he asked if I was going to make a necklace out of them or if I was going to hold them as an investment. I said hold them and literally laughed at the idea of making a necklace from tehm and asked why I would want to make a necklace out of them. He said that’s what most people do (???) with them and that if you wanted a good way to hold and invest in gold I should buy the one ounce eagle coins that’s sealed inside of a plastic holder. I said ok, how much are you selling those for? It was over $1500 and he tried to tell me even if the price of gold falls these can still go up in value. Ok, maybe, but that’s not gold investing that’s numismatic coin investing and I’m not into that. I said no thanks. I’ll take the $99 deal.
January 30th, 2009 at 5:15 pm (#)
I found an old SF Chronicle article on these coins from 2004 (http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2004/07/14/BUG7H7KR5U1.DTL&type=business). The coins were priced at $44 each and gold was around $400 an ounce. I wish I’d have bought gold then as opposed to my brokers advice to stay in the market! I do agree that the ‘used car salesman’ approach used by these guys really stinks. But, in light of what gold has done versus the market they are not really wrong in their claims. Better to buy directly from the US Mint (http://www.usmint.gov)
January 30th, 2009 at 5:22 pm (#)
Good tips all around Dave. Thanks for the news on the possible bait and switch. I’m sure there is a shady moneymaking deal in there somewhere, so you may have found it.
Plus, it still astounds me why they would advertise gold going up and wanting to sell off their inventory.
Unless, they were convinced that gold was headed lower or you had a more lucrative profit margin on other products… like that sealed one ounce eagle coin. Talk about a price markup!
January 30th, 2009 at 5:35 pm (#)
@ Don
Agreed. They have been correct, but even though I am holding the Gold ETF, I don’t want gold rocketing to $2000/ounce like they claim in their latest ads.
I also agree its better to buy the US Mint or a more reputable (perhaps more ethical?) source if I were going to buy physical gold. Plus, it really ticks me off that so many companies are painting themselves as government entities when they’re nothing of the kind.
I actually linked back to that SF Gate article because it was so well done. The author, David Lazarus, did a lot of leg work examining this company’s shady past. He now writes for the LA Times, so I tend to follow the better investigative reporters.
January 30th, 2009 at 5:42 pm (#)
The current US mint price for a 1/10 ounce is $129.50. I think their $99 price is a promotional price and I don’t really care that the $99 place is shady as long as they actually send me what I paid for. I looked and can’t find them for less than $99 right now anywhere including ebay.
They’re making their money on volume not on holding their gold inventory.
April 29th, 2009 at 7:34 pm (#)
The guy who wrote this article is a real choad… lol… We will be laughing at him when gold hits 2000 an oz as a result of the worldwide economic situation. Buy rare gold coins and buy bullion; you need both.. Apparently the fellow who wrote the article has never really studied taking physical possession of gold; your a fool if you tie yourself to GLD/ETF.
April 29th, 2009 at 7:57 pm (#)
Your comment suggests you have an agenda pushing gold coins and gold bullion.
What are your affiliations?
I must say, it is ironic that a fearmonger is named Jim Jones. Will you also be advising us to buy cyanide capsules as well?
May 16th, 2009 at 3:40 pm (#)
[...] recession would turn into a second Great Depression. They foretold of worthless paper dollars, gold coins would become our default currency and panic would grip the world as capitalism imploded on [...]