Tag Archives: gold investment

Tricks and Gimmicks Everywhere

I have to confess: Stupid gimmicks, traps and tricks, and misleading ads drive me crazy. But it seems that right now there are a bunch of them around designed to separate you from your money:

Right now, there is a BC car dealer, and one in Ontario on my Facebook page, advertising that they’ll give you 250 airmiles when you purchase a vehicle from them.

Does anyone know what you’re really getting? The wholesale value of an airmile is about 1 ½ cents! That translates to less than $4 of value. On your end, 250 redeemed airmiles gets you around $30 of gas coupons. Let me see: You’re spending $20 or $30,000 and the extra incentive is $30? Are you kidding me? But I wonder how many people chase the points and think it’s some kind of good deal.

There’s an ad for a pawn shop chain with the claim: We’re another kind of bank. THAT is one big stretch. I know the industry wants to clean itself up, and promote itself away from their current image, but a pawn shop is not a bank – give me a break.

Nationally, and it may just be marketed in the US on television, there is now a huge promotion to buy a 24 karat gold coin. They claim it’s a limited edition $50 value for $9.95. Wow – that sounds like a deal…on the surface, especially with the gold mania that’s gone way beyond reasonable and rational.

However, in the ad they mention that the coin contains 14 mg of pure gold. OK, most people know what an ounce is. But hands up if you know what 14 milligrams are? I didn’t think so. At the current value of gold, that 14 mg is worth 78 cents, because it’s 0.000494 ounces.

The ad goes on to claim that this is an incredible investment. How is that? 78 cents worth of actual gold for ten bucks is an investment? It may be shiny, but it’s not all gold.

But a gold fever is a gold fever, and lots of companies are taking advantage of it. In Boca Rotan Florida you can actually find a vending machine that will sell you gold. Just insert your credit card, make your so-called investment selection and buy it, just like you would out of a candy vending machine.

Gold is the only safe investment says one advertisement. Oh, really? As though investing in good growth mutual funds with a long track record hasn’t historically averaged around 12%?

Tim Horton now has an ad campaign designed to get people to automatically re-load their gift cards through their bank account:” Could I get one of these and one of those and get my friend here whatever he wants.” A pre-loaded gift card is like a credit card. Tim Horton, and everyone else in the small cash purchase industry, knows that you’re likely to spend way more money with a card instead of cash!

With a pre-paid card, or credit card, McDonalds average purchase increases 47%, and vending machine purchase per person increases 178%. Small wonder these companies want you to use anything but cash!

Three Stories With More Questions than Answers…

Today, I’ve got three stories that make me ask more questions than I have answers:

Electronically Traded Funds, called ETFs, are modern day mutual funds that you can purchase for a tiny commission and fee. Right now, there is more money invested in Gold ETFs than there is in the entire S&P 500. And that consists of the 500 largest companies. Just think about that. The fever is at an all-time high when there is more invested in something shiny and speculative than there is in the assets of the largest companies in the world. Although invested isn’t the word I’d use. I’d call it gambling. True or false? It may go up for another long stretch, but mark my words, when it corrects, it’ll drop by half in a hurry.

The State of California just approved an insurance company test which charges your insurance premiums based on the miles you drive. What do you think? Is that something that’ll benefit people or hurt them? I guess if you’re a Senior, it could be a good deal, but if you drive a fair bit….not so much….

Bank of America has just announced they’ll now charge $5 a month for their clients to use a debit card.

With the recently implemented financial reforms, banks have had their massive debit card fees capped. The Federal Reserve, and this would be the same in Canada, says it costs the banks 4 cents to process a debit card transactions. But until recently, their fees were averaging 44 cents. That’s a 1,000% return – a pretty good profit! It’s now 25 cents, and that helps merchants, and eventually you and me in lower prices, but cost the banks a ton of money.

Would you pay a fee just to have and use your debit card? I bet 99% of people will when it does come to Canada. Besides, if you go back to a credit card, the banks make even more money. So heads you lose, tails they win. Sick – but true.