Juggling Dynamite

Mike Mayo, MD & financial analyst at CLSA, shares his critical views on the current state of finance industry.

Gold and fraud have a long and colourful history together.  This is one of the reasons I find it so ironic today that so many people have been convinced that gold is the only “true currency–can’t be manipulated…”  (My God if only they would read the centuries of sordid history in “The Power of Gold” by Peter Bernstein).

A recent complaint alleges 19 criminal counts against gold dealer/broker Goldline, the same company which sponsors Glen Beck’s talk show. Here are the details from the Santa Monica Daily Press yesterday:

“Attorneys with City Hall’s Consumer Protection Unit said Tuesday they have filed criminal charges against Santa Monica-based Goldline International for allegedly using conservative spokespeople such as Fox News’ Glenn Beck in a “bait-and-switch” operation to sell overpriced gold coins.

The 19-count criminal complaint was filed Tuesday against Goldline, one of the nation’s largest precious metal dealers, and several key executives and salespeople.

The charges, all of which are misdemeanors and carry a maximum penalty each of one year in jail and fines of between $1,000 and $10,000, include grand theft by false pretense, false advertising, conspiracy and elder abuse involving transactions that took place over the last three years.

…In launching the probe, investigators opened a new front in a long-running dispute over the way Goldline has turned the sale of gold into a massive retail operation that capitalizes on popular conservative figures like Beck who appeal to an audience that is naturally skeptical of the government and are uneasy about inflation and the state of American currency.”

The bottom line: promoting and profiting off wide-spread fear in the population has become a successful business model for a lot of gold firms in the last few years. When the gold bubble finally bursts once more maybe we can get people focused on real life solutions like getting risk sellers out of banking and financial advice, cleaning up our environment and pro-active diet and exercise habits. Too bad we couldn’t get Glen Beck selling for those concepts, apparently his followers would do what he suggests.

David Stockman in a special edition of Conversations with Great Minds. Stockman is a Republican, he is a former United States congressman – representing the state of Michigan – who was elected to three terms before stepping down to head up the Office of Management and Budget under President Ronald Reagan in 1981. He is credited with writing the Reagan Budget – and continued his work on federal budgeting through 1985. After leaving politics, David Stockman pursued a career in investment banking and joined Blackstone Group as one of its earliest partners. He is the author of the book, “Triumph of Politics: How the Reagan Revolution Failed” and his new book – tentatively titled “The Triumph of Crony Capitalism” – will explore how crony capitalism reached a peak during the recent financial meltdown. David talks to Thom about why Reagan would be raising taxes right now, the Republican party has gone crazy and why we need to get control of the Fed and robots trading on Wall Street. Also how the Federal Reserve and the Secretary of the Treasury have both become the handmaidens of Wall Street: “It is not valid capitalism when you have huge financial firms make big mistakes and get bailed out.”