By carefully helping its clients understand the ins and outs of purchasing precious metals, this company has seen steady growth. Goldline International wants to let individuals looking to diversify their portfolios know they don’t need to wait for a 50th anniversary to own gold. Considering gold prices’ consecutive gains in the past 10 years, Goldline’s message that people should consider gold is one investors should pay attention to.
Founded in 1960, Goldline serves individuals looking to acquire physical precious metals such as gold or silver, for diversification as part of a long-term strategy. “Our clients often have concerns about the economy or falling dollar values,” said Scott Carter, CEO.
Goldline markets to these clients through numerous media and marketing channels, but it doesn’t cold call to boost its client base. Instead it lets clients make the first call, which Carter said is generally an information-gathering session during which potential investors find out about the products and the process.
Goldline offers a free investor-information kit to every person who calls. The kits cover three things: the types of products available with an emphasis on semi-numismatic coins; the history of the company, including the depth and breadth of its experience; and the risk factors, costs, and disclosures associated with investing in this type of product.
“If you’re not able to hold precious metals for a minimum of three to five years, or you are investing money that you need to live on, you shouldn’t be speculating and buying a physical asset or paying the fees associated with it,” Carter said. “When someone is acquiring precious metals, transparency and disclosure are the keys to a successful transaction.”
A factor for Goldline’s success is how well the company ensures potential clients have the tools to decide whether precious metals is right for them. The company recommends that the purchase of gold and/or silver represent no more than between 5% and 20% of a client’s total portfolio. Said Carter, “Our clients tend to be well educated and have the resources to acquire precious metals as part of their long-term diversification strategy.”
As such, Goldline’s staying power in the marketplace is extremely important. By demonstrating top-notch customer service and a commitment to a wide array of products, the company maintains a strategic advantage over its competition, especially given the relationship Goldline’s clients have with the company.
“For many of our clients, it’s not a one-and-done purchase,” said Carter. “A number of our clients make multiple purchases over many years, so it’s important we ensure that initial experience goes well.”
Carter said 85% of clients take physical possession of the product they purchase; the rest look to Goldline to arrange storage through Brinks or other third-party storage facilities. Although competitors say they offer the same services, Goldline differentiates itself in a few ways. First is in the quality of its TV advertisements and messaging. “The presentation of the company stands far apart from our competitors,” said Carter.
Second is the way in which Goldline reaches its clients. It has a significant presence on the Internet through pay-per-click and banner advertising. It also has a presence on talk radio programs and various financial talk shows and political news shows hosted by individuals who keep abreast of the market.
Carter said Goldline wants to market to individuals who are interested in precious metals, diversification, and the inclusion of a physical asset. Goldline’s strategy isn’t entirely unique, however. Carter said it works like any solid marketing organization —once you strip away the product details, it comes down to identifying the clients that are interested in the product.
“When we craft our marketing strategy, we make sure we present reasons to choose our company among the thousands of competitors, ” he said.
In 2010, Inc. named Goldline as the 53rd largest private company in the US, and the LA Business Journal named the company as the number one fastest growing private company in Los Angeles, with more than $100 million in annual revenues. Carter admits the company has seen growth, but some of it comes from the increasing value of the products it sells.
“The products we sell have increased in value at least 25% each year, so even if we have the same amount of growth, it would look like we’ve had a 25% increase in our growth based on revenue,” he said. “It’s not all organic growth.”
However, Goldline’s client base has grown as, over the last decade, the idea of diversifying a portfolio and owning physical assets gained momentum. Carter said Goldline’s growth isn’t that surprising given growing concerns about sovereign debt.
“There is concern that our currencies, our paper currencies, are declining in value because governments continue to expand the money supply, reducing the value of dollars and reducing the future buying power of the paper money we have today,” he said.
Historically, commodities such as precious metals have been a hedge against those concerns and tend to increase in value as the value of paper money plummets. Gold is often viewed as an alternative portfolio asset, which is why today more and more institutional investors, as well as individual investors, continue to look at gold as a way to diversify.
“In the ’90s and ’80s, gold was looked down on as an investment, but we’ve since learned that the growth of the ’90s was false,” Carter said. “We’re now paying the price of the tech bubble, real estate bubble, and several other bubbles while hard assets such as gold and silver continue to perform well.”
The challenge for Goldline going forward is to spark even more interest in gold. Worldwide, Carter said gold represents only 1% of portfolios, and only 2% of the population owns physical gold. The company’s strategy is to continue reinforcing gold’s value as a diversified asset.
“And we’re not the only ones carrying that message,” he said. “If you listen to analysts talking on TV, many are saying gold should be an allocation component of your assets.”