I have great sympathy for the average person trying to navigate financial markets, products and “advice”. The financial world is a hornet's nest rampant with self-serving “advisors” and products. No doubt consumers can be gullible and are often key players in their own pain. Many make bad choices based on lack of due diligence, greed and blind trust. On the other hand, every time we require a service or recommendation in areas beyond our own expertise we inevitably must trust that the person we retain will make a good faith effort to help us. This is vulnerability which we all face everyday.
The biggest problem with the financial services industry is that most participants are actually in the product sales business rather than the risk management business, but they routinely offer self-serving salesmanship as trusted advice and recommendations.
This clip of a CBS investigation into a gold coin company reveals the common web of celebrity, undisclosed self-interest, and how it is frequently used to exert undue influence and financial damage on the unsuspecting:
Other times, financial products are promoted as low-fee, do-it-yourself access for retail investors. Commodity investing has been a hot bed of new products in this vein over the past few years as the secular bear market in stocks drives desperate consumers to seek “alternative” strategies. See this Bloomberg clip on the dangers inherent in some of the commodity ETF products.
At the end of the day none of these highly volatile products are safe for the unsophisticated buyer to blindly buy and hope. The hype and promotion surrounding gold and commodity products today smacks more of other notorious marketing frenzies of the past rather than investing. Buyers, be very wary. Most people lack the skill, understanding and risk controls to safely use them. Most would be better off to avoid them altogether. (No matter what their salesforce will tell you).
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