When President Obama was sworn into office, an ounce of gold was worth about $850. Its value has since grown 50 percent, to $1,275 - a sterling performance in these bleak economic times. Companies like Goldline International Inc. have taken advantage of the modern gold rush to market precious-metal coins as an investment, but Rep. Anthony Weiner is crying foul. Tomorrow, the House Energy and Commerce subcommittee on commerce, trade and consumer protection will consider the New York Democrat's legislation cracking down on what he calls Goldline's "massive overcharges." It is no coincidence that this firm advertises heavily on television and radio outlets critical of the administration.
"No one should buy these coins as an investment in gold," Mr. Weiner told The Washington Times in an interview gilded with phrases like "fraud," "gouging," "cheating," "ripping people off" and "crap that is overpaid." In May, Mr. Weiner's office produced a report showing that the firm offered 18 gold coins priced "90 percent above the melt value of the coin" as if this were unusual. Like jewelry, coins have a value as collectible objects and sell at a premium. The U.S. dime, for example, is marked up 400 percent over its 2-cent melt value. Moreover, if better deals are available, Internet-savvy consumers are perfectly capable of finding them without help from Washington.
Scott Carter, Goldline's executive vice president, told The Washington Times that his company sells gold bars at less than a 5 percent markup over the spot price for the day and that the firm markets hundreds of coins, not just the 18 Mr. Weiner singled out.
Pricing concerns seem to take a back seat in the report, which is obsessed with the fact that Goldline "formed an unholy alliance with conservative pundits to drive a false narrative." Radio and television host Glenn Beck is singled out because he "has dedicated entire segments of his program to explaining why the U.S. money supply is destined for hyperinflation with Barack Obama as president." The report also quotes radio host Dennis Miller saying, "Look at the economy, they're spending more than Paris Hilton on a bad day, and it doesn't get us a tiny dog and a pink purse either. It leads to a lower dollar. What can we do to diversify our portfolio and protect against that falling dollar? Buy gold."
Diversification is sound economic advice. With the government accumulating debt at record levels, many economists point to history to show that countries in similar circumstances devalued their currencies to reduce the cost of repayment. Consumers wishing to hedge against this possibility can hold some of their money in the form of gold. Mr. Weiner clarified that he does not object to the economic arguments conservative commentators put forth, only that they are using fear to drive people toward products from Goldline. The company has a different take. "They only went after us because of where and with whom we are advertising," Mr. Carter said. "Media Matters has targeted and bullied [many other companies] into discontinuing their advertising on Fox."
There is a nugget of truth in Mr. Weiner's complaint. It is entirely possible that the current record gold prices are at their peak, which could leave some speculators wishing that they had purchased less bullion if the price drops. As this risk is no different from that found in the stock, housing or commodity markets, Mr. Weiner's legislation should be rejected as an underhanded way to use the government against conservative commentators who are otherwise protected by the First Amendment.
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