Goldline International was a prominent figure in the precious metals sector, having been established in 1960, only to dissolve and transfer its assets to another company, A-Mark Precious Metals, in 2017. But what essential facts should you be aware of regarding this former entity?
Gold trading businesses are commonplace, with both physical and digital platforms. However, one must always be cautious of deceitful operations and exploitative practices. A well-informed buyer can make discerning choices about which businesses to engage with.
In the times before the internet revolutionized commerce, Goldline commanded significant influence in the precious metals market. However, its latter years were marred by controversy. Let's delve into the services they used to provide.
The establishment's roots can be traced back to 1960 as an offshoot of Deak & Company, a formidable entity that operated within US borders. This parent organization was conceived in 1939 by a Hungarian émigré who acted as a US spy before the CIA was officially formed.
The primary areas of expertise for Deak & Company were foreign currency trading, gold bars, and coinage. They were pioneers within this specific industry.
By the 1980s, Deak & Company had become the US's largest retail foreign exchange dealer. They were also the premier dealer of gold bars nationwide. However, the firm's rapid asset acquisition and growth during the initial gold bubble proved too much. The bubble burst in 1982.
Their response to the precious metals market's collapse was to shift towards wholesale operations. This would allow them to provide bullion in bulk to other dealers at a lower price.
The firm was shaken by scandal in 1984, being implicated in bribery and money laundering accusations. To evade criminal charges and rebrand, they filed for bankruptcy. A Singaporean attorney then acquired the remnants of the business.
Subsequently, it was passed on to the Deak Morgan company in Australia. The following year, NZI in New Zealand became its new owner. This acquisition marked a period of expansion for its storefronts and the first name change to International Goldline.
After the 1987 global market crash, the company was sold to the London-based Thomas Cook Group. A-Mark Precious Metals became the new owners after that, and the name was updated to Goldline International in 1992.
During the 90s, after a shift in management, the firm absorbed the assets of several minor dealerships. In 2005, A-Mark Precious Metals handed the enterprise over to investors. Investment partnerships elevated the company's worth to over 50 million dollars.
In 2017, Goldline was once again sold to A-Mark. Despite the company still technically existing, it operates under the banner of A-Mark.
The firm's primary operations revolved around retailing precious metals. They dealt in the usual gold, silver, and platinum but traded diverse collectible coins and foreign currencies.
As the calendar rolled to 2009, the company was raking in over 800 million dollars in sales revenue and had a workforce of over 300 individuals. It was recognized as one of the most rapidly expanding enterprises in Los Angeles County.
The company executed numerous marketing strategies. Besides conventional mediums like TV and radio, they harnessed the potential of the emerging internet for promotional activities. In 2009, a former director of the US Mint served as their public face.
Goldline aired its commercials on major networks such as Fox News, CNN, and CNBC. The company also had its hand in sponsoring a diverse range of conservative TV programs and radio broadcasts. Glenn Beck was often mentioned as a favoured client and functioned as a radio endorser for the company.
In 2010, the company drew criticism for leveraging conservative talk show hosts to market their services.
The firm's price range fluctuated significantly based on the nature of the product and prevailing market conditions. They were blamed for escalating the cost of metals and collectibles to more than twice their actual worth.
Legal complications besieged the company in 2006. Back then, they voluntarily agreed to reimburse over 200,000 dollars to an elderly duo who claimed they were forced into the transaction. The couple returned all the precious metals they had acquired.
Consumer Reports launched a probe and issued a statement, claiming their journalist was also coerced into liquidating their assets by the company.
The 2006 agreement incorporated an inquiry into whether the sales representative had operated as an unlicensed financial advisor. The staff members were not permitted to provide legal investment counsel.
In 2010, a Congressional hearing concerning disclosures for precious metals companies took place. Congressman Anthony Weiner spearheaded the campaign against Goldline, alleging that the company deliberately collaborated with conservatives to deceive the public.
Those at the hearing testified that existing common law principles sufficed for disclosure to be deemed unnecessary. Post-hearing, no subsequent action was undertaken. The suggested legislation concerning company transparency needed a sponsor. Hence it should have been addressed in the House of Representatives.
Parallel to these events, another investigation into the company was initiated. Media outlets reported about a hundred nationwide customers lodging complaints about counterfeit items and deceptive sales pitches. However, the involvement of another gold dealership muddled the situation, making it challenging to identify the actual number of complaints against Goldline.
Goldline held an A+ rating with the BBB, while the other company had an F.
Media outlets reported that Goldline employees received unfair commissions and were urged to sell valueless items at exorbitant prices. They highlighted that higher management motivated employees to prioritize selling coins over bullion.
ABC News highlighted a scenario where a client faced intense persuasion from a sales agent to invest around 5,000 dollars in coins. Subsequently, this client discovered their coins were valued at merely 2,900 dollars during the transaction. An enormous commission markup was concealed from them.
Another patron expressed that she had invested 13,000 dollars in gold coins, only to find out later that the coins' worth barely reached half of what she had paid. Even when gold prices doubled after three years, she could only sell her assets for slightly over 10,000 dollars, making her feel deceived.
Consumer Reports pointed out persistent price inconsistencies. For instance, a Gold Eagle coin set displayed on the website was priced at nearly 6,000 dollars, yet individuals discovered competitive gold entities offering it for less than 3,300 dollars.
It appeared as though the company exploited its talk show hosts and TV personalities to earn the unsuspecting public's trust. Sales were made to people needing more knowledge to verify the prices of precious metals, who trusted celebrity endorsers promoting the company's ideals.
Consumer Reports did acknowledge some competitive pricing of the company's offerings, varying according to the day and specific product.
When queried about the pricing issues, Goldline responded that they had to price their collectibles higher than bullion due to shipping costs, rarity, sales personnel wages, and compliance department payments.
The company also maintained that clients were furnished with transparent information before purchasing. Allegedly, the contract detailed all commissions and fees, and the company personally scrutinized every complaint.
The Santa Monica City Attorney developed a complaint website, which allowed the city to accumulate evidence of the company's potential misconduct. Due to the ongoing probe, the company's assets were frozen in December 2010.
2011 Santa Monica City formally lodged charges against Goldline, accusing them of an astonishing 19 counts of fraud and theft. The prosecution lawyer stated the company had been employing bait-and-switch methods.
In February 2012, months after the charges were filed, Goldline settled. They agreed to an injunction that modified certain sales practices. The major shift was that a third party now confirmed all commissions and markups were disclosed to clients via phone.
Goldline proposed refunding total assets of 4.5 million dollars to 43 complainant customers as part of the settlement.
Goldline's stance during the negotiation was that the criminal charges were dismissed, and no further civil action was taken against the company regarding that case.
However, the damage was irreversible. The lawsuit left an indelible stain on the company's reputation. They failed to regain their earlier influence. Goldline can be located on its former website URL but operates as a subsidiary of another enterprise. They no longer control the policies that led to their downfall.
The firm known as Goldline International is no longer operational, having sold off its remaining assets to A-Mark Precious Metals before shuttering. Its final years were marred by multiple legal complications, transcending the realm of merely negative customer feedback to 19 indictments of theft and fraud.
Though the firm was never legally proven guilty, it primarily evaded this outcome via an out-of-court settlement, a stipulation of which involved the removal of impending criminal allegations.
Signs of Trouble?
The company's lengthy tenure and its celebrity-backed reputation lulled many into a false sense of trust, leading to the opportunity for the company to misguide its customers about their investment values.
This provides a valuable lesson for future interactions with precious metals firms. Endorsements by celebrities and a long-standing history in the industry need to be more indicators of reliability.
Here are some significant warning signs linked to the company's operation:
Partly, these red flags resulted from being the nation's largest precious metals dealer. Its practices were scrutinized by high-ranking politicians and journalists, which isn't usually the case with an ordinary dealership.
Hence, here are a few considerations when investing in precious metals:
Since 2017, Goldline International has ceased its operations. Despite more than 50 years of industry know-how, the company needed help to escape from the pitfalls of mismanagement and legal disputes. This firm is amongst many established precious metals traders that still need to evolve with changing times.
If you want to invest in precious metals: