The Gold Rush is on again

Dear Mr. Berko:

You've written several cautionary articles about selling gold, but nothing about buying gold. I'm considering investing $35,000 in gold coins or bullion and would appreciate your opinion of Goldline International, which is touted by Glen Beck.

If there are better places to purchase this metal, I'd like a couple of names. I'm told the commissions can be as high as 12 percent, so if it's possible to buy gold under more favorable conditions, I'd certainly be grateful for your advice.

DP, Indianapolis, Ind.

Dear DP:

Goldline International is one of the biggest gold scams advertising on Sirius Radio.

Goldline figured it could purchase credibility by paying Glen Beck millions of dollars to spread the Goldline mantra. The company also reached out to 2008 ex-presidential candidates Fred Thompson and Mike Huckabee (of course, the presidency is for sale), paying Fred and Mike (as well as Dennis Miller, Lars Larson, Mark Levin, Laura Ingraham, Michael Smerconish and Monica Crowley) millions to be their spokespersons.

So if you insist on purchasing $35,000 in gold coins from Goldline International, I advise you to pack a suitcase, because you're about to be taken on a trip to the cleaners.

According to Cory Deitz at About.com, Goldline's average markup is 90 percent above a coin's melt value. Most of the GCCs (Gold Coin Crooks) in Indianapolis will sell you the same coin with a 50-percent markup over melt value. Considering $56 billion worth of gold was sold in 2010 to heavy-breathing investors like you, it's little wonder that thousands of "shade-tree" dealers have set up shop to fleece the public.

If you're going to purchase gold from some of the less dishonest GCCs in Indianapolis, you should check the spot price on the day you make a purchase. It's available on numerous websites, including GoldPrice.org, a site that's chock-full of good historical data and charts on gold (as well as silver).

You may enjoy reading some of them before you buy, but disregard the sponsors who advertise on the site. And be mindful that the typical markup price should be no more than 5 to 8 percent above the spot price. But it's not illegal to pay more -- just industrial-strength stupid.

If you don't feel the need to own bullion, one of the best ways to hold gold is iShares Gold Trust (IAU-$18.15), which is an ETF that owns $6.63 billion in gold. Its one-year, three-year and five-year numbers are +27 percent, +72 percent and +143 percent, respectively.

SPDR Gold Trust (GLD-$180.99) is also an ETF but about 10 times the size of IAU. Its one-, three- and five-year returns mirror that of IAU, its smaller cousin. And if you buy 1,000 or 10,000 shares of IAU or GLD from Schwab, the total commission cost will total $9. Now (SET ITAL)that's(END ITAL) an inexpensive mark-up.

But if you want to hold the metal in your hands, then ring Prudential Securities (212-778-6667), FideliTrade (302-762-2100) or MTB (212-981-4510). Their mark-ups range between 4 and 5 percent, and their shipping costs are between $25 and $50.

----------

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. Visit Creators Syndicate website at www.creators.com.

© 2011 Creators Syndicate Inc.

Published: Mon, Aug 29, 2011