GoldLine.com

I just caught a commercial for GoldLine.com. I am not knowledgeable enough to comment on the wisdom of investing in gold in general, but I do know shady marketing techniques when I see them. GoldLine.com is using just a lot of slimy tricks to get people's money. Here's a rough rundown of what I remember:

1) Testimonials
The commercial had a former Fed commissioner, I think. The website has more testimonials, including Glenn Beck, who I plan to write about in the future for his consistently manipulative behavior. Never pay heed to testimonials. Ever. Even when they're not paid (and I bet these are paid), they're not a representative sample. They are useless for making good decisions. It's a trick.

2) Fear-mongering
The commercial started out with the heavy implication that the US economy is in a death spiral that will destroy old people's savings, leaving them penniless. This gets the fear up, so the old folks watching CNN in the middle of the day will pay attention to the rest of the commercial, eager to learn how to protect themselves.

3) Impressive-sounding irrelevant information
3A) "Gold is worth three times as much now than it did in 2000!" When it comes to investments, past performance does not predict future performance. If that were true, everyone would be rich because we would all invest in things that had increased in value in the past. This just does not happen. In fact, there are risks that investments are overvalued (tech stock 10 years ago, houses 18 months ago), which leads to a "correction", in which their value drops. GoldLine.com may be trying to dump its gold right before a correction. It is interesting that they compared the current value of gold to that of 2000, when the economy had tanked because of the DotCom bubble.

3B) "GoldLine.com has over a half-billion dollars in sales!" This is a shady tactic used by some online auction and investment sites in which they report a number based on the sales of things through the site, without the site ever owning the stuff, making the site look like it has a lot of capital when it really has nothing and just collects trading fees. I don't know to what extent that applies to GoldLine.com, but I've seen it before.

3C) "Gold has never had a zero value!" Neither has pretty much anything else, except some stocks and defaulted bonds. So, that is marginally relevant when you're investing. Of course, at $900/oz, you're probably not so worried about a zero value as you are a value of anything less than $900/oz.

Spam Flu

Every day for the last week my Google Reader has been bombarded with posts and articles about Swine Flu. The patterns of media attention are interesting, but unsurprising. The word "news" itself tells us that the content will primarily be things that are new to us. Novelty gets reported, and commonplace events are ignored. Man Bites Dog, right? Let's break down the progression:

1) Swine Flu outbreak in Mexico contributes to some deaths. Had you heard of Swine Flue before this? Probably not. It's new! And it kills people! News sources clamored to hype it up, to breed fear among people, to draw in consumers and sell advertising. They teased us with information that there was a mysterious danger out there, and we would have to keep consuming their news to find out how much danger there was to us, and how we could protect ourselves. Our brains hone in on this using automatic heuristics that generally helped keep our species alive for millennia.

2) Knowledgeable people step forward to dispense facts. Wash your hands. Stay at home if you're sick. We're probably all going to be fine. The risk is exaggerated. This information is new compared to the information in wave 1, even though it's old overall, so it still draws our attention and ratings.

3) Confusion is maintained in the face of wave 2 by constant updates on any fear-invoking event. Calming and frightening information is presented piecemeal to keep us interested, to keep us from figuring out how to feel and getting complacent with that feeling. First death in America! But it was a toddler from Mexico! Schools are closing to protect our children! Even though there was no evidence of Swine Flu! Swine Flu confirmed death toll is somewhere between 7 and 160 pending more tests! The regular flu kills 35,000 Americans each year, mostly the elderly, infants, and people with compromised immune systems! Another person just died! Swine Flu is no worse than the regular flu! We are drawn to seek more information until we can confidently declare that we are safe.

4) Eventually the situation is handled, and confusion is resolved. The "epidemic" is controlled by response measures. Evidence builds up until there is a consensus. We are saturated with information about the topic, and get bored with it. Each person has decided how they are going to respond, be it continuing life normally with confidence or locking oneself in a basement with a shotgun and canned beans. The novelty dissipates. The media looks for some other shocking new item to sell.

Now, I am selective with my news sources, so I probably missed most of the junk news out there. I have been impressed with the consistent quality of the information I got from ScienceBlogs.com. Sources with integrity stay in wave 2, and only try to educate instead of fear-monger. We should demand higher standards in our media. The freedom of the press should not include the freedom to incite damaging panic among people who just lack the education to counter their natural brain processes.