Gold and the Velvet Rope
During the Seventies, a pair of entrepreneurs/opportunists, Steve Rubell and Ian Schrager, perceived a shift in the Zeitgeist of the nation and they created a mega-phenomenon by the name of "Studio 54." At first glance, the nightclub's tremendous success seemed to derive from its popular disco music, abundant illegal drugs, and free deviant sex. However, upon closer examination, it became apparent that 54 was the beneficiary of affluent Americans' increasing desire to prioritize status gains above and beyond material acquisitions. More than anything else, the clubgoers yearned to cross the velvet rope and enter the club simply because the privilege could not be purchased; instead, entrance could only be conferred as a sign of the clubgoer's having "made it" in the eyes of the club's gatekeepers.

Although I missed the zenith of Studio 54's decadent exclusivity, nonetheless, I felt a similar feeling of "privilege" when, on one of my several visits to New York, Steve Rubell loaned me a pair of his personal cuff links in order that I could attend a black tie event. At the time, unbeknownst to me, Rubell was dying of AIDS, and he succumbed to the disease shortly thereafter. But the man's gesture remains embedded in my memory if only because it was conferred, and not anything I could ever purchase.

Over two decades later, Americans still line up behind velvet ropes in eager hopes of gaining entry into noisy, smoky nightclubs; obscenely overpriced restaurants; unintelligible, Broadway plays, etc...and all on account of the perceived status such admission provides. In effect, most Americans live with full bellies in terms of material goods but continue to suffer notable deficiencies in terms of self-respect...and nothing enhances their self-image more than access to some private club, either real or imagined.

Now this is where GOLD comes in.....

Today, gold investors finally have a World Gold Council that seems more interested in increasing the value of gold than depreciating it. Under the guidance of Mr. Chris Thompson, gold's marketing campaign now properly prioritizes investment demand over and above jewelry demand. This new focus is especially sensible given that jewelry demand falls during tough economic conditions whilst gold's investment demand should logically expand.

Although the reorientation of the WGC's marketing campaign is encouraging, nevertheless, I would urge the WGC and ALL other gold marketing agencies to adopt the styles and techniques best exemplified by the old Studio 54 velvet rope approach. There is no better proven methodology for selling any luxury good...and let's face it, despite all attempts to commoditize the metal by gold's many antagonists, it remains precious and sublime.

Over time, I have found that it is pointless to sell gold ownership to the common man and even more pointless to attempt a rapid education on the topic. First, thanks to Wall Street's effective gold disinformation campaign, the metal is off the radar screen of the average citizen. In general, Americans know very little about gold and any discussion of its merits or benefits tends to leave them glassy-eyed and bewildered at best, or overtly hostile at worst. It is effectively impossible to sell gold on its unique merits because the average citizen does not really want to entertain the possibility of currency crisis, sectoral hyperinflations, stagflation, bullion bank short positions, systemic banking defaults, etc.

Instead, when I speak to any citizen, I now utilize a velvet rope approach which is much more effective in terms of engendering interest.

For example, if I introduce the topic of gold, I always note that it is one of the favorite investments of the billionaire class (e.g. Buffett, Soros, Gates, Bronfman, etc.) but not one that I would encourage the average guy to own. In other words, in verbal terms, I immediately establish a velvet rope around the metal.

"You need to understand money first"..." You need to have the right connections to buy the metal in any kind of size"...."You need a minimum net worth"... "It's for richer, financially sophisticated types, NOT for you"... "You need to have the ability to protect it"...."You need a minimum education level to understand what it's all about" ...."Why do you think Wall Street never promotes gold to the average citizen?"

I provide a litany of reasons why gold is an exclusive investment ...and nothing bothers Joe Citizen more than the idea that there is some special investment out there which stands to outperform all his other investments, yet remains a special privilege of the "moneyed or connected class." Inevitably, he wants in and wants in badly.

So If I were in charge of the WGC gold marketing campaign, I would only target high quality magazines read by the super-rich. I would take special care to avoid placing gold ads in any kind of mass media outlet, whether it is CNBC or Time Magazine. Most importantly, I would emphasize and underscore that gold is "THE investment of billionaires," it is definitely NOT for everyone.

Let Wall Street continue to sell bonds and stocks in every mass media vehicle, from every billboard, from every side of a bus....but gold should only be presented from a special, secret corner, hidden well behind a velvet rope. As long as the WGC and other gold promotion organizations remain consistent in this approach, then average Americans will seek out gold, gold need never seek them anymore.

It is a known fact that most gold investors subscribe to historical determinism, the belief that history moves in cycles and provides substantive lessons for all future events. Despite its ostensible, intellectual vacuousness, the Disco Era taught us that exclusivity is a genuine consumer product in and of itself -- and when packaged with any other product, exclusivity almost always enhances the value and appeal of the associated product.

If gold is properly marketed as a "special privilege" for the few, then we could see a dramatic shift in the mass perception of gold. Thereafter, it will be only a matter of time before the lyrics of one of the Disco Era's greatest song hits BECOME the new anthem for gold investors across the land.


"Good times
These are the good times
Leave your cares behind
These are the good times"


If gold investors find the foregoing thesis to be compelling and sensible, then please take the time to email the article directly to the World Gold Council at info@gold.org ATTENTION: James E. Burton, CEO.


Farfel

November 22, 2002