Glenn Beck notes that Precious Metals have been range-bound for much of the past year, with few notable sector developments to report but there are two interesting points to note from recent developments:
- The probability of an upwards re-pricing of the precious metals is rising, and
- Both gold & silver are quite over-sold right now, technically-speaking.
With technical and fundamental indicators flashing green simultaneously like this, he proposes that now is an advantageous time to consider increasing your precious metals portfolio.
The Human Factor in Glenn Beck’s Goldline
Before going into further detail on the current conditions of the precious metals market, here’s an anecdote from one of my writers that underscores how few people have any real familiarity with gold & silver as an asset class, let alone own any (beyond, perhaps, a bit of jewelry).
A good friend moved and needed help transporting some bullion from his old town to his new one. Most of it was silver, several thousand ounces worth. That much silver is pretty friggin’ heavy. So we huffed and strained, hauling that load out of one bank vault, into his car, and from there into the vault at his new bank. While we did our best to be as discrete as possible, our sweaty, grunting 2-man production was hard for the bank staff to ignore.
Managers at both banks figured out what was going on, as it was pretty obvious. And both separately asked us out of genuine curiosity, “Is that real silver?” My friend briefly handed over a 100-oz bar so they could see for themselves, sparking conversations about the merits of owning physical bullion.
It turns out that neither manager had ever held a bar of silver before. This was pretty shocking to me after seeing Goldline by Glenn Beck. Even though they know that the safe deposit boxes in their own vaults very likely store some bullion, neither own it personally, nor even come into contact with it. It’s just not a part of their world.
Anyways, later on I mentioned this story to another buddy who shared my surprise. “Man, if the bankers aren’t familiar with silver and gold, then who the heck is?”, he asked. A very good question, I agreed. But then he jolted me by asking: “So, one of those 100oz bars — what’s it worth, anyways? $150?”
This is an otherwise intelligent, math-competent person. But like most folks, as well as those bank managers, he doesn’t own any precious metals and so his knowledge of them is pretty limited. It is limited enough to underestimate the price of silver by over 90%.
This reminded me of Mark Dice’s videos, which show just how woefully ignorant the average person is when it comes to the value of bullion. In this one, street passersby decline a free gold coin in favor of a Snicker’s bar:
Simply put: gold and silver, in the West at least, are underappreciated assets. As Grant Williams famously put it in his excellent synopsis, when it comes to public and institutional sentiment of the precious metals, “Nobody cares.”
Time To Care
But there are gathering signs that it’s now time to start caring again. Looking at the just technical side for a moment, both gold and silver have been in a prolonged downtrend for the past two months. They’re now at extreme undersold levels. Both RSI and MACD indicators are signaling that the recent declines have likely been played out at this point:
Gold Bollinger Band Chart
While a break below the Bollinger bands could indicate that something fundamental has suddenly changed in the precious metals market to merit a materially lower repricing, there just don’t appear to be any credible candidates for that argument. Yes, the dollar has risen over this period; but there are solid reasons that the USD and gold/silver need not always trade inversely to one another. And as we’ll get to in a moment, conditions are actually becoming more precious-metals-favorable.
Technically speaking, it seems much more likely that the current downtrend is long-in-the-tooth and that, as prices dip down to 18-month lows, a recovery is soon due. In fact, we may be seeing the start of such today, the first material up day for the precious metals in a while.
Fundamentally-speaking, world events are providing more and more reasons to own gold and silver — from stratospheric asset bubbles threatening to burst, to a long-overdue return of market volatility, accelerating de-dollarization, slowing global economic growth, increasing credit market risk in both Asia and Europe – the list goes on and on.
The full set of PM-positive drivers is covered in a recent interview with Ronald Stoerferle summarizing the insights of his exhaustive 230-page annual report titled In Gold We Trust. If you haven’t listened to it yet, carve out 49-minutes to do so soon: (View Report: In Gold We Trust)
To the many reasons Stoerfele gives in support of his conclusion that gold is “dirt cheap” right now, we can add the multiplying macro data points predicting market turmoil and economic recession later this year, as well as the building uncertainty of further rate hikes by the Federal Reserve — all potential developments that should lead to higher precious prices.
Whether you’re amassing bullion for the long term (which we’ve long recommended) or speculating in the paper markets for the short term (something we don’t encourage for the average investor), you want to buy low and sell high. With precious metals trading near 18-month lows and close to the “all-in” production cost for many miners, prices are unlikely to get much lower than this
How Much Money Does Glenn Beck Make?
The part that catches my attention is the recurring pattern of men making a whole lot of good old-fashioned cash by developing a marketing machine that hypes some deficiency in the capitalist system. In the case of Glenn Beck, he has correctly pointed out that the Federal Reserve has distorted the traditional supply-and-demand aspects of the laissez faire capitalist system by increasing the money supply and affecting the cost and velocity of money that flows through the major U.S. banks.
He doesn’t disclose the amounts, but my back-of-the-envelope calculations are as follows: glennbeck.com gets about 3 million page views per month. Well-targeted promotions to wide niches tend to convert sales at about a 1.5% rate. Goldline doesn’t indicate how much it pays Glenn Beck to advertise with him, but I would guess it amounts to somewhere around $7.50 per sale (a 50/50 split between the profit that a gold and silver vendor makes by selling commodities above the spot price).
Assuming Glenn Beck successfully converts 45,000 that visit his site each month into gold and silver purchasers, and assuming a payout rate of $7.50 per conversion, I would expect that Goldline pays him somewhere in the neighborhood of $337,500 per month for being a gold referral. This is not including whatever advertising and referral income he makes through his major media property theblaze.com. We are talking $4 million per year in cold-hard cash just from his personal website encouraging you to purchase gold.
The act of selling gold, silver, and survivalist packages results in the same type of monthly cash flows that you get from owning a car wash or renting out an apartment complex. In fact, the former might even be a better cash-generating business because it does not share the geographic limitations of the latter two that are fixed in character and don’t lend themselves to scalability.
So while prices remain at current lows, we recommend considering the following:
View our List of Top 10 Gold IRA Companies and choose the best company to work with.
Remember, right now, nobody still cares about the precious metals. So even if you only hold a few ounces, that’s still more than 97-99% of everyone else — which may make a tremendous difference to your prospects when the world starts caring again.
Glenn Beck Scam Reports
An executive with Glenn Beck’s Goldline, one of two gold companies now under investigation for their sales practices, told ABC News Tuesday morning that his company does not intentionally steer customers toward overpriced gold coins – but he also touted the coins as a safe harbor because “no one knows” whether the U.S. government will seize gold from private citizens.
In an interview on Good Morning America, Glenn Beck Goldline executive vice president Scott Carter responded to allegations that his company has made a fortune by persuading gold investors that collectable coins are worth buying, despite a hefty mark-up. He said the firm, which weaves its sales pitches into broadcasts by popular conservative political personalities – including two former presidential candidates and Fox News host Glenn Beck – is simply offering its customers sound advice.
“You should hold this three to five years,” said Carter, “preferably 10.” He said that some of the price of the gold coins his company sells can be traced to “upfront costs.” He noted that his firm had been in business more than 50 years, and earned half a billion dollars, and enjoyed an A plus rating from the Better Business Bureau.
Carter also restated a central point of Glenn Beck’s Goldline’s sales pitch – that the federal government took gold bullion from private citizens during the Depression, and could always do so again. That’s why the company encourages customers to buy collectable coins instead.
“It’s hard to determine what the government will do,” said Carter. “I don’t know whether it’s a possibility. But [it] has been done before and people are concerned. Many people are paralleling 1933 to today.”
In 1933, the federal government paid market value for private stocks of gold. Carter’s interview comes after the announcment Monday that authorities in California had opened an investigation into Santa Monica-based Goldline and a second gold company based in the same city, Superior Gold Group.
“There are two main types of complaints we’re seeing,” said Adam Radinsky of the Santa Monica City Attorney’s office, which has launched what it described as a joint investigation with the Los Angeles County District Attorney’s office.
“One is that customers say that they were lied to and misled in entering into their purchases of gold coins,” he said. “And the other group is saying that they received something different from what they had ordered.”
In an interview broadcast on Good Morning America, Radinsky said the probe is in its early stages and involves more than 100 consumer complaints about Goldline and Superior.
A lawyer for Superior said the company does not comment on investigations.
Goldline officials said customer complaints are infrequent and it responds immediately address them. In a letter to ABC News, Scott Carter said, “When we learn that customers have not received the experience they deserve, we investigate and take action.”
In launching the probe into gold sales, investigators in L.A. and Santa Monica are opening a new front in a long-running and very public dispute over the way Goldline has turned the sale of gold into a massive retail operation that capitalizes on popular conservative figures – most notably Glenn Beck.
The Final Decision on Glenn Beck’s Goldline
The marriage of conservative talk and gold sales appears to make sense – both have traditionally targeted an audience that is skeptical of the government, concerned about the nation’s economic future, and uneasy about inflation and the stability of American currency.
The promotional strategy appears to have been beneficial both to Glenn Beck’s Goldline, which boasts $500 million in sales, and to such conservative figures as Beck and former presidential hopefuls Fred Thompson and Mike Huckabee, all of whose broadcasts are peppered with Goldline advertisements.
The symbiotic relationship is on full display during broadcasts of Beck’s daily television show, and on a promotional video Glenn Beck shot for Goldline where he said, “The people that I trust are the people at Goldline. And you can talk to the people on the phone. They’re not going to pressure you. If it’s the right thing for you and your family and you want some insurance, trust the people at Goldline.”
Also, Goldline’s website is where visitors can hear Beck’s testimonials. And in the direct pitch from Goldline sales associates over the phone, where one recently told a caller, “Now just so you know, Glenn Beck is a client here. He’s been with us several years.”
But the potent blend of conservative talk and gold sales has brought scrutiny, initially from the political left. U.S. Rep. Anthony Weiner, a New York Democrat, called the relationship between Goldline and the conservative talk shows an “unholy alliance.”
“There is an unholy alliance, I call it, between the commentators on Fox News and Fox News’ advertising policies to sell ads to these guys. If you’re going to advocate for buying gold, it’s certainly your right to do that. But you should tell your viewers there’s a dumb way and a smart way to buy gold And very often those advertisements are for a very dumb way to buy gold.”Anthony Weiner
Weiner’s congressional office conducted its own investigation into the firm’s sales practices and said his complaints about Goldline are not just a matter of politics. Weiner told ABC News that neither the sale of gold nor the promotion on conservative broadcasts is the real problem. The rip off, as he called it, was in Goldline’s push to get consumers to buy gold coins instead of pure gold.
That may be an indicator that Goldline is not a top-tier Gold IRA company and shows how it did not even make it to our List of Top 10 Gold IRA Companies, as we did not include companies that have pushy or unfriendly salesmen who urge you to buy certain numismatic coins rather than let you freely decide between coins and bullion.
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