Standing amid the shiny bling and baubles in his shop in Los Angeles' jewelry district, David Malek said he knows perfectly well why some people have been pouring money into gold. In a word, fear.
"The whole world is under pressure," he said. "It's frightening. Where else are you going to put your money?"
That sky-is-falling mentality among skittish investors has pushed the price of gold to stratospheric levels. It closed Thursday at $1,168 an ounce.
And with so many people seeking safe harbor in gold, Southern California authorities this week said they're investigating whether a pair of local companies are using false pretenses to steer unwary buyers into costlier purchases.
Adam Radinsky, a spokesman for the Santa Monica city attorney's office, said his agency is conducting a joint investigation with the Los Angeles County district attorney's office into Santa Monica's Goldline International — a key sponsor of Fox News host Glenn Beck — and another Santa Monica dealer, Superior Gold Group.
The city attorney's office says officials are looking into whether customers were "lied to and misled" into buying expensive gold coins. A spokeswoman for the district attorney's office declined to confirm or deny whether a joint investigation is underway.
No one at Superior Gold Group could be reached for comment. But most of the attention this week has been on Goldline, which has benefited enormously from its ties to Beck and the conservative host's repeated entreaties to his audience to protect themselves from economic catastrophe by hoarding gold.
Ads for Goldline appear prominently on Beck's website. A recording of Beck interviewing Goldline's chief executive, Mark Albarian, is featured on the Goldline site.
I don't mind saying I've always been somewhat mystified by people's fascination with gold, especially at these prices. But what's particularly striking is that, for Beck and other gold bugs, this is a highly emotional investment, an anxious bet that the Apocalypse may be just around the corner.
Beck has advised his followers to "think like a German Jew in 1934, maybe 1931." That is, to have enough gold on hand to protect yourself in the event of, well … what? Genocide? Fascism? A tyrannical government run by a madman?
I suppose these are all possibilities, but more likely not.
But that's not the point. People are free to invest in whatever they like. The question here is whether companies like Goldline have been using underhanded methods to prod easily spooked customers into pricier purchases.
For instance, Beck has cited on his radio and TV shows a 1933 executive order signed by President Franklin D. Roosevelt authorizing the government to buy people's gold as a way to prevent deflation and put more money into circulation.
The order permitted U.S. citizens to keep about 5 ounces of gold in their possession. It also exempted gold used in industry, jewelry, art and antiques, which could include collectible coins.
Despite alarmist claims to the contrary circulating online, Roosevelt's order did not result in Gestapo-style, house-to-house searches for gold, and only one person was prosecuted for violating the order — a New York attorney who failed to register 27 gold bars stored in a bank.
What SoCal authorities are focusing on is whether Goldline and Superior pushed people into costlier collectible coins by preying on customers' fears that the government, as Beck has said, could "take all your gold," except for collectibles.
Scott Carter, executive vice president of Goldline, acknowledged that his company's markup for collectible coins is about 35%, while the markup for ordinary bullion is closer to 5%.
But he said Goldline doesn't push customers into bigger purchases.
"We take these claims very seriously," Carter told me. "But we think we're on solid ground with how we handle our business."
Goldline has about 200 salespeople, working primarily on commission. The company makes and receives thousands of sales calls daily.
The Goldline employee handbook says the company's No. 1 objective is to "protect our net worth, without which we are unable to compete or operate."
A Goldline insider with direct knowledge of the company's sales tactics told me the usual approach is not to "upsell" a customer who wants to buy ordinary bullion. Instead, the goal is to close the sale quickly and enter the customer into the company's database.
The insider said Goldline's database contains the names of about 750,000 potential sales leads — a number that Carter said sounded accurate.
Whenever a new stock of collectible coins arrives, the insider said, Goldline's sales team cycles through names in the company's database. The goal is to get former customers to buy the heavily marked-up coins.
Carter didn't dispute this. "We'll pursue leads," he said. "It's in our interest to present our products to clients."
The chairman of the House Subcommittee on Commerce, Trade and Consumer Protection has said a hearing will be held into whether Goldline's aggressive tactics cross the line into illegal or unethical practices.
I'm not sure they do. Goldline clearly engages in a hard sell, but it may be difficult to prove that they're deliberately duping people into making unwise investments.
Nor is it necessarily misleading to share with customers a sense of urgency about moving money into gold. "We're in extraordinary times," Carter said. "There's a lot of concern about paper currencies."
No one forces people to believe that the end times may be upon us. Some might see Beck as little more than a self-important blowhard who seldom lets the facts get in the way of a good scare. But for others, he's a voice of reason.
Beck declined through a spokesman to comment.
As with most investments, there's a strong element of "buyer beware" at work here. If you bought a home in L.A. around the peak of the housing bubble in mid-2007, you didn't do particularly well. If you bought more recently, you probably got pretty good value for your money.
Will gold prices keep going up? Who knows?
At his jewelry district shop, Malek said he wouldn't be surprised if gold hit $1,500 an ounce by the end of the year. "Things are that bad," he said.
Or not. It's possible the worst is behind us and gold prices will head south again as stability returns to world financial markets.
Carter said privately held Goldline is now doing about $500 million a year in sales. The insider said the company is on track to hit $1 billion in revenue within the next 12 months — a possibility that Carter confirmed.
That doesn't tell me gold's the place to be. It tells me Glenn Beck and his sponsor have a mighty long reach. And they've got people right where they want them.