(PRWEB)
March 13, 2010 -- Advertisements promoting gold dominate the airwaves,
touting gold as the ultimate investment, the place to be in these
times of financial and economic uncertainty. Although it is true that
gold has been valued in all civilizations for some 6,000 years, will
the respondents enjoy the benefits that the ads promise? Probably not.
Most of the firms sponsoring the
ads promote gold coins at grossly inflated prices. One company openly
acknowledges marking up their gold bullion coins thirty percent but
sometimes has markups of seventy percent. Another firm has been known
to markup its coins one hundred percent.
How is it that these firms can
convince investors to buy at such inflated prices when the normal
markup on gold bullion coins is two percent to seven percent, depending
on the coins and the quantities? Several factors come into play.
First, the ads are based on
fear, and the telemarketers reinforce that fear by talking about
alarming topics that dominate the news, such as the declining dollar,
the burgeoning national debt and massive deficit spending. The
possibility of war with Iran is often used to scare callers.
By focusing on frightful topics,
the telemarketers get callers to react emotionally, instead of
logically. Instead of buying gold as an investment, callers are moved
toward buying protection against Armageddon.
Should the callers be astute
enough to ask about the American Eagle gold coins, the world’s
best-selling gold coins, or the South African Krugerrand, the world’s
best known gold coins, both of which carry very low premiums over the
value of their gold content, the telemarketers unload their big guns
and start talking about “gold confiscation.”
In 1933, in the midst of the
Great Depression, by executive order President Roosevelt made it
illegal for Americans to own gold bullion or gold bullion coins. The
order stood until December 31, 1974. Telemarketers call Roosevelt’s
act a “confiscation,” but in reality it was a “call-in” of U.S. gold
coins.
Americans turning in their gold
coins were given U.S. paper currency of equal face value. Still,
Roosevelt’s “call-in” was a dark moment in American history, and it
haunts the gold market to this day. In the back of the mind of the
most optimistic gold investor lies the fear that someday the government
may again call in gold “if things get bad enough.”
After instilling the fear of
loss, the telemarketers introduce the notion of “non-confiscation” gold
coins: old U.S. gold coins, or modern U.S. proof gold coins or old
European gold coins. The telemarketers assert that these coins are
“non-confiscation” because Roosevelt’s 1933 executive order exempted
"gold coins having a recognized special value to collectors of rare and
unusual coins."
However, the telemarketers fail
to mention that the executive order did not define “special value,”
“collector” or “rare and unusual coins.” Further, “collectibles” are
not mentioned in the executive order. Still further, the telemarketers
do not tell the callers that on December 31, 1974, President Gerald
Ford repealed the executive order that Roosevelt used to call in gold
in 1933.
Some promoters go as far as to
say that old U.S. gold coins, the most frequently touted coins, are
“not confiscation by law.” The issue of the government confiscating
gold is not addressed in U.S. law, but that does not stop some
telemarketers from asserting such.
Basically, telemarketers take
two steps to reel in their victims. First, they establish the need to
buy gold by discussing truly frightful developments in today’s world,
nothing new to the callers, just the news that the mainstream media
deem newsworthy.
But, in the second step,
telemarketers dismiss standard gold bullion coins, American Gold Eagles
and Krugerrand, saying they are “confiscation.” In essence, they say
gold will protect, but what good does it do to buy gold that the
government can confiscate?
Buying gold has long been an
accepted move during periods of uncertainty, but it is not a prudent
move if you buy at highly inflated prices. Sadly, people who respond
to today’s radio and television ads that hawk gold are likely to pay
way too much for their gold.
Investors wanting to buy gold
would be much better off if they went with basic bullion products, such
as , American Gold Eagles
(http://www.cmi-gold-silver.com/american-eagles-gold-coins.html),
Krugerrand (http://www.cmi-gold-silver.com/krugerrand-gold-coins.html)
or gold bullion bars
(http://www.cmi-gold-silver.com/buy-gold-bullion-bars.html), of which
several sizes are available. These products can be purchased at two
percent to five percent over the value of their gold content, depending
on product and the quantity. Gold bullion bars usually carry smaller
premiums than gold coins.
At first glance, buying gold may
seem a simple, straight forward process. However, there are dangers,
such as falling for a telemarketer’s line that his coins are
“non-confiscation” and somehow have more value because you bought them
from him. Basic bullion is the way to go when investing in gold.
Bill Haynes is a graduate of the
University of Colorado and has been a precious metals bullion dealer
since 1973. He advocates buying gold bullion
(http://www.cmi-gold-silver.com/buy-gold-bullion-bars.html) when
investing in gold
(http://www.cmi-gold-silver.com/buy-gold-bullion-bars.html). His
recommendations include American Eagle gold coins, South African
Krugerrand and gold bullion bars. See his company’s website at
http://www.cmi-gold-silver.com for more information about investing in
gold.
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