Goldline Defends Itself On ABC

The cloud over Goldline, a now-controversial sponsor of Glenn Beck's show, got the company's executive vice-president Scott Carter on ABC's Good Morning America for an interview - particularly since investigators in Santa Monica and Los Angeles are investigating the company for illicit sales practices.

The controversy hinges around Goldline selling semi-numismatic coins with the pitch about possible government confiscation of gold coins. When done in 1933, collectors' coins were exempt. [Trivia: so were $100, or about five ounces' worth, of then-regular gold coins.] That exemption is the base for Goldline pushing the semi-numismatics. The story linked to contains two complaints from customers who found out that other gold dealers buy semi-numismatics only at spot value. [From what I've seen, the same thing goes for private buyers on eBay.] Carter defended his mark-ups by saying they're disclosed, and he intimated that the premiums won't be that big a deal if the coins are held for the long term.


I have to say I'm partial to tracking down the lowest price that's practicable for gold coins. I don't know if Goldline sells to Canadians, and it would be highly unlikely I'd buy from them had I been an American. Had I wanted numismatic coins, lived in America and could swing a way to meet the minimums, I'd likely buy from Tulving.

Here's a cautionary thought for any Glenn Beck supporter: if the crackdown on Goldline is political, then the (current) government is clearly aggravated by Beck. If the aggravation sticks, and a later government decides to confiscate gold coins, what's to stop government officials from confiscating semi-numismatics this time 'round? If the crackdown really is political, "Beck Nation" has a lot at stake when it comes to winning this one - and, I suggest, the mattter of how to win this one.

Summer Gold Demand In Dubai, Abu Dhabi Up

The evidence only comes from a straw poll, but it looks like gold demand has increased in Dubai and Abu Dhabi this summer as compared with the last. Expatriates buying gold were the cause, suggesting that tourists have more money to spend on the metal.


The demand was for jewelry. No mention was made of the gold vending machine in Abu Dhabi.

Russin Bank Offers Time Deposits In Gold

A custodial or allocated account can be considered a kind of bank account; a share of an unallocated pool can be compared to a chequing account minus the cheques. The companies that offer them, though, are either the dedicated gold sellers or another kind of investment firm. There hasn't been a bank offering anything like a deposit account in gold since the fall of the gold standard; any banks that have sold gold have done so as investment firms by offering gold certificates.

Until now.

As a report webbed by the Telegraph explains, a Russian bank is now offering time deposit accounts denominated in gold.

Punters have to deposit a minimum of 100g of gold, or 10,000g of silver, worth $3,885 and $5,893 respectively. The interest rate depends on the term of the deposit, with options ranging from 181 to 732 days.

"A time deposit in precious metals is interesting to depositors who prefer to diversify their savings," said Ilya Filatov, deputy chairman of the board, in a recent interview. "We made sure of this when we launched the product in Moscow, Ufa and St Petersburg.

"That pilot product proved a success. A deposit in precious metals doesn't depend on exchange fluctuations and protects funds from inflation."

Part of the reason for the offering of the accounts is the recent devaluation of the ruble, but demand for gold is another. If a bank in Russia can make a profit on loaning out money derived from gold time deposits, it's only a matter of time before other banks in other countries get the idea they can do so too.

Physical Gold Demand Increasing

Several facts collated by a Bullion Vault article show demand for physical gold is increasing at a nice clip. First and foremost, demand for COMEX gold bar delivery is up 39% from the same period last year. Sales of American Eagles, both one-ounce and fractional, are also rising; Buffaloes and the premium First Spouse coins are also rising, but at a lower rate. In addition:

Jon Spall, director of commodities at the UK’s second largest bank Barclays said, "There's much more demand from gold investors for Allocated Gold. People are attracted to hard assets outside the banking system which do not represent a credit risk to anyone."

It seems to be investment demand behind the increase in coin sales. The coins with the higher premiums are seeing their sales rise more slowly than the straight-bullion ones.

Gold More Attractive For Wealthy Families

According to a Reuters report, firms that cater to wealthy families are reporting that those people are moving more of their money into gold.

Companies that managing money for the wealthy -- called family offices -- focus more on preserving wealth than chasing large investment gains. When the credit crisis hit, they shifted into safe assets, including treasuries and cash as well as gold.

Speaking at the GAIM hedge funds conference, managers of family offices said they have been building positions in gold via gold-focused hedge funds and mutual funds as well as gold exchange traded funds (ETFs), with some even stocking up on the precious metal.

"Physical gold had not been on anyone's asset allocation for 20 years. That's definitely made a big comeback," said Egon Vorfeld, managing partner at the Forum Finance Group, a Geneva-based wealth manager for a global clientele of wealthy families.

It's an open question as to whether the families being catered to by family offices, not to mention the offices themselves, are smart money or dumb money.

There was a brow-raiser at the end of the report: one of the attendees at the conference said that cabdrivers were beginning to talk about buying gold.

A Portent At A Buying Roadshow

Recently, the Global Estate Merchandisers Co. hosted a week-long buying roadshow near Denver, and found something odd: sellers were amenable to letting their silver go, but are hanging on to their gold.

Several sellers interviewed Wednesday shared the expectation that gold still has more bullish days ahead.

One Aurora man turned down a $1,100 offer for a 19th-century gold coin because he expects the price of gold to rise even higher. He acknowledged that the seller's market won't last forever but said he would keep waiting for now.

"I wish I had gold and I'd bought it at $300," said Bob Green, 60, a Littleton sporting-goods retailer. He came to trade old coins and other items.

This report makes for a portent. Not only is their greater public awareness of gold, but also there's more bullishness among would-be sellers. Gold first came into public awareness through gold buyers, not vendors, but it looks like the bull case has spread enough to make would-be seller start hoarding what they've got.

It's only a matter of time before that bullishness translates into more public buying of gold...

Premiums For U.K. Sovereigns Rising

As reported by Bloomberg, the premiums for sovereigns are jumping up as demand overwhelms supply.

Demand for gold coins is tightening supplies and boosting premiums as mounting concern over Europe’s debt crisis and a proposed increase in U.K. capital-gains tax spur purchases, according to GoldCore Ltd.

Wholesale premiums on British sovereigns, added to the price of immediate-delivery bullion, have jumped to about 7 percent from as little as 2.5 percent in early May, the broker and dealer said. For the more popular Krugerrands, they have risen between 1 percent and 1.5 percent in the past month. May bullion sales almost tripled from a year earlier, GoldCore said....

“We’re finding it difficult to get sovereigns in large volumes,” Mark O’Byrne, executive director of GoldCore in Dublin, said yesterday by phone. “People see the crisis getting worse, not better, and demand is increasing. There’s still a bit of doubt in the market about the capital-gains tax, and sovereigns are exempt” from the levy, he said.

Although prompted in part by an exemption from capital-gains tax for U.K. legal-tender bullion coins, the current buying frenzy is concurrent with others in Europe - particularly, Greece and Germany.


A puckish point: the U.S. government seems eager to copy the U.K.'s National Health service, but is quite uninterested in lifting the cap-gains-tax exemption from U.K. shores. Hmm...

MSNBC's John Schoen Counsels Caution In Gold Buying

MSNBC is, of course, part of the mainstream media. Yet, an article by John W. Schoen is fairly even-handed. He starts off by conceding that gold may well rise further, but his caution is based upon the volatility of gold.

Were you smart enough to sell your tech stocks in March 2000? Or your house in July 2006? If so, you should seriously consider buying some gold. A lot of it.

But if — like most people — you don't have the gift for knowing when a financial bubble is about to burst, you may want to take a deep breath before calling the 800-number on that infomercial, selling your jewelry at your friend's "gold party" or converting 5 percent of your hard-earned savings into shiny Maple Leaf gold coins.

Note how he conflated buying and sellling, as both are popular right now. The article points out that any purchase of physical gold is likely to entail a short-term loss because of mark-ups and the spread. He doesn't say so explicitly, but he seems to suggest going into a gold ETF so as to minimize the spreads. Unlike the typical MSM commentator, who ridicules the end-game scenario, Schoen dispenses some common sense about it:

Some gold investors say owning the precious metal gives them peace of mind. Still, if you're worried that your community is headed for a period of social unrest worthy of a Cormac McCarthy novel, you might be better off investing in firearms.

“I don't think anyone is going to go into a store and exchange an American Eagle worth $1,300 for a bottle of water,” Tom Pawlicki, a gold analyst at MF Global.

Junk silver is another matter, of course.

Abu Dhabi Gold Vending Machine A Hit

According to a piece in The National of India, the now-famous gold vending machine in the Emirates Palace lobby sold out of gold in a day.

Four kinds of gold bars (in varying weights) and six kinds of coin were gone so fast that they had to restock before more tourists (and residents) besieged the machine. They had stumbled upon a trend that has been in place for thousands of years. In the West, gold is seen as an investment. In the East, it is much more. It helps you assert your status in society and usually translates into gold jewellery that adorns the necks, fingers and wrists of blushing brides. Especially in India.

[And they say gold has no intrinsic value.]

A few years ago, my mother bought her first gold bar – one given to her at a discount by her bank for being a loyal customer – and she was hooked. Every month, I get a rundown of the gold market from her. She has become an amateur investor in a commodity whose price has soared in the past few weeks, thanks to shaky European politics.

I hesitate to talk askance at the author's enthusiasm, but there are hints in his mother's behavior of something that cynical market players will pick up on.

Good News For eBay Gold Buyers

Specifically, for those who worry about being cheated. An Austrian man who shelled out more than $23,000 for a 1kg gold bar never delivered has gotten his money back thanks to a court judgment that found eBay negligent.

In a landmark court ruling eBay will pay more than $23,000 in damages to a duped user who never received the gold bars bought on its auction site from a fraudulent seller.

The duped Austrian paid for one kilogram of gold from German company ML Agentur which had a local police record for fraud and has since gone bankrupt.

eBay advertised the company as a power seller and particularly trustworthy.

The court has ruled the online auction site had been aware of ML Agentur's record before the gold bar transaction and was therefore guilty of negligence.

Based upon a particularly bad experience, I recommend that anyone buying through eBay had better do so through PayPal or directly through a credit card. Even if you have enough documentation to prove your case in court, the hassle of going to court makes it a mug's game to reclaim unless the amount at stake is large relative to the hassle. Reclaiming the money through PayPal or the credit card is much more convenient. I have a bank-deposit receipt to another's account, for which I got nothing, to remind me of that.

(It wasn't for gold or silver, I should add. I've never had any problems with any gold or silver eBay seller; they've all kept their word, and one of them was particularly nice regarding a refund.)