UPDATE: On Nov. 1, 2011, Goldline executives were charged with fraud. Read on to learn why. And check out our other reporting: Consumers tip off the FTC about Goldline, Beck's counterattack on Rep. Anthony Weiner, the story behind Goldline's perfect BBB rating, and the left-wing radio hosts who pitch gold.
TUNE IN TO GLENN BECK'S Fox News show or his syndicated radio program, and you'll soon learn about the precarious state of the US dollar, a currency on the verge of collapse due to runaway government spending, a ballooning national debt, and imminent Zimbabwe-style hyperinflation. To defend yourself against the coming financial holocaust, Beck explained on his radio show last November, you need to "think like a German Jew in 1934, maybe 1931." And that means thinking about buying some gold.
Conveniently, Beck made that suggestion as he was in the midst of interviewing his own "gold guy," Mark Albarian, the president and CEO of Goldline International, a Santa Monica, California-based precious metals company that is a major sponsor of Beck's radio and cable shows. In a seamless intertwining of anxiety and entrepreneurship, the two amicably debated whether we've already hit "peak gold" or whether the price of gold, then at $1,100 an ounce, might yet hit the inflation-adjusted high of $2,200 it saw back in 1980. Beck speculated that gold could go as high as $2,500 an ounce:
"I think people are running out of options on what, you know, could be worth something at all."
For more than a century, gold has held a special allure for conservatives. Amid economic downswings and social upheaval, the precious metal has come to be seen as a moral and political statement as much as an investment. Ever since the late 19th century, when the gold standard became the center of a ferocious debate about the country's financial future, gold has been mythologized as a bulwark against inflation, federal meddling, and the corrosive effects of progressivism. (See "Goldbug Variations," below.) In the late 1970s, South African Krugerrands became a refuge from soaring interest rates and oil prices. In the '90s, militia groups fearful of big banks and the Federal Reserve hoarded gold.
And now, with the economy limping along and a black Democrat in the White House, gold mania has gone mainstream. Gold prices hit a recent high last December and remained strong as the European debt crisis unfolded this spring. John Paulson, the hedge-fund giant who made billions bundling and betting against Goldman Sachs subprime mortgage securities, has invested heavily in gold, even starting a new fund devoted solely to it. A recent New York Times poll found that 1 in 20 self-identified Tea Party members had bought gold in the past year.
Cashing in on all this is a raft of entrepreneurs who have tapped into financial insecurity and fever dreams of impending tyranny. Nearly every major conservative radio host, including Rush Limbaugh, Sean Hannity, Michael Savage, and Dr. Laura Schlessinger has advertised gold. (See "Full Metal Racket," page 30.) But none has done more to cheer on the new gold rush than Glenn Beck.
Beck, whose various media enterprises brought in $32 million last year, according to Forbes, has a particular interest in plugging gold. Since 2008, Goldline has been one of his most reliable sponsors. Last year, after Beck called President Obama a racist, and advertisers bailed on his cable show (see "Lonesome at the Top"), Goldline stuck by him. And its loyalty appears to have paid off. In an email, Goldline's executive vice president Scott Carter says that while its Beck sponsorship doesn't bring in the majority of its customers, it "has improved sales," which exceed $500 million a year.
In turn, Beck has stood by Goldline. Last year, he made a promo video in which he stated, "This is a top-notch organization"—a quote featured prominently on Goldline's website. After the liberal watchdog Media Matters complained about Beck and Goldline's partnership, Beck posted a video on his site in which he unapologetically noted that he'd started buying from Goldline long before it was his sponsor, back when gold was $300 an ounce.
Such coziness between spokesman and sponsor is not uncommon on talk radio, where hosts can be paid to personally recommend just about any product. In fact, liberal hosts such as Ed Schultz and Thom Hartmann have advertised gold. However, their pitches generally have lacked Beck's tone of apocalyptic urgency.
The feedback loop between Beck and Goldline is unusually powerful even for talk radio, and even more so by cable standards. When he's not talking up Goldline, Beck still hypes gold as a way to weather the coming end of the world as we know it. Last December, he stood in front of his famous chalkboard, where he'd written "Gold, God, Guns," and admonished viewers, "The smart money is saying, 'Hunker down!'" The more worked up Beck gets, the more Goldline can employ his fears in pitching its products to his audience.
Yet in putting his seal of approval on Goldline, "the people that I trust," Beck has gone beyond simply endorsing an advertiser. He's recommending a company that promotes financial security but operates in a largely unregulated no-man's land, generating a pile of consumer complaints about misleading advertising, aggressive telemarketing, and overpriced products. As this story went to press, Rep. Anthony Weiner (D-N.Y.) asked the Federal Trade Commission and the Securities and Exchange Commission to investigate Goldline for its "predatory policies" and accused the company and conservative pundits of working "hand in hand to cheat consumers." Beck and other on-air personalities "who are shilling for Goldline," he said, "are either the worst financial advisors around or knowingly lying to their loyal viewers."