Home gold-buying parties becoming a fad

Jewelry owners find buyers with cash

jjordan1@herald-leader.comMarch 9, 2009 

  • Golden rules

    Things to do before selling gold jewelry.

    1. Get it appraised beforehand. Call a local jewelry store or go to www.goldprice.org.

    2. Be wary of buyers who lump your gold into one pile. Sort your gold by karat weight beforehand, and be cautious if told your gold is of a different karat.

    3. Selling for scrap means that the final price will not reflect the craftsmanship, antique value or aesthetics of the jewelry.

    4. Understand the scales. Gold is measured in troy ounces (31.1 grams). Shady buyers will buy gold in what's called pennyweight (1.555 grams) and pay you in grams.

    5. The price is based on a troy ounce of 24-karat gold, the pure form of the metal. Divide the karat of your jewelry by 24 for the percentage purity. For example, 18k is 75% pure.

Scoot over, Tupperware and Mary Kay.

There's a new home party-giver who wants a seat on your couch.

As Americans struggle to make ends meet, home gold-buying parties are becoming the latest fad across the South and Midwest.

"We are holding five or six parties a week," said Stacey Mikel, who operates FastCashGoldParties.com in Jupiter, Fla., with her husband, Paul, a pawnshop owner.

The company operates in eight states, but not yet Kentucky, she said. "We have had a few inquiries from Kentucky" and are eying the Bluegrass for future business.

"We are expanding because it's a very good business," Stacey Mikel said. "A lot of people want to get into it. It's kind of the new thing for women."

Why women?

"They usually have the jewelry" — unwanted gold jewelry that they want to turn into cash, Mikel said, although men are welcome at the parties, and so are other gold items besides jewelry.

FastCashGoldParties.com parties work a lot like Mary Kay or Tupperware parties. The host or hostess invites friends and neighbors to their home and provides refreshments. The company sends a buyer, and the host or hostess gets 10 percent of the total purchased by the company.

Stacey Mikel said they held between 100 and 200 parties last year, but the weekly average has now increased to about a half dozen.

In Kentucky, a Louisville company, Good As Gold Inc., advertises itself as "Kentuckiana's Gold Party Coordinator," but calls to its office were not returned.

The secondary market in gold and other precious metals is booming, Lexington dealers say, because the value of gold has rarely been higher — nearly $940 an ounce Friday — and the need to sell has seldom been stronger, with unemployment at 8.1 percent.

At The Castle's nine Kentucky and Ohio locations, "one of the things that keeps us the busiest is buying gold," said Phil Block, president of the Lexington-based jewelry and pawn company.

"They are selling gold like crazy," Block said. "We are doing twice as many buys — up to three times as many buys (at some locations) — per month as we did in the same month last year."

Business is "brisk," agreed Joe Rosenberg, whose family has operated a downtown Lexington jewelry and pawn business for 110 years. "There's no doubt that when times get tougher, people want to get rid of the things that don't bring them money or that they don't have any use for."

Out-of-town buyers are also invading the market.

One of them — a Charleston, S.C., company known simply as Gold Buying Team — bought gold Saturday and Sunday in Louisville and at the Hilton Garden Inn in Georgetown, where its buyers will return March 21-22, said David Layman, who organized the "buys."

Layman, who is based in Atlanta, said sellers typically bring out-of-style or broken jewelry, or even single earrings after they have lost the mate.

Just like at the home "gold parties," the items will be weighed and tested to verify the quality, Layman said. A dollar amount will be offered, and if it's accepted, a check is written to the seller. Buyers do not carry cash.

"We have people take their check and say things like, 'Thank goodness, I can make the car payment this month,'" Layman said.

A few reject the offer and walk away. "We don't pressure anybody to do anything they don't want to do," he said.

What happens to the gold or other precious metals buyers purchase?

Broken pieces or incomplete sets are usually melted down to make new jewelry, buyers say. Diamonds and other valuable gems are removed first for reuse in other jewelry.

"In a way, we are just recycling," Layman said.

But higher-quality pieces can be sold as used jewelry.

Block said The Castle recently bought "a museum-quality necklace" with a gem weighing more than 145 carats that will be resold. "It's the largest gemstone we have ever had," he said.

All buyers claim to pay the highest, or at least competitive, prices, but how do sellers know the offer is a good one?

Heather Clary of the Better Business Bureau in Lexington suggests that sellers get more than one estimate, especially if they have never done business before with the would-be buyer.

Take the item to a local jeweler to get an idea of its value before going to an out-of-town buyer or even mailing the item to buyers who advertise on television, she said.

Home gold parties are "unknown territory" for the Lexington BBB, Clary said.

"We haven't had anybody inquiring about such things. That doesn't mean they won't start, though."

Lexington gold dealers also say they haven't heard of any local parties, although they expect the concept will reach Lexington soon if the economy remains sour.

Block says he also realizes there will be long-term and short-term benefits for local gold dealers from the recession.

"Every one of our stores has had more new customers since the economy has gotten bad," he said. "People who normally wouldn't shop with us because we are a pawnshop, as well as a jewelry store, are coming in now."

Sadly, he said, "This is the best opportunity we have ever had to grow this company."

Reach Jim Jordan at (859) 231-3242 or 1-800-950-6397, Ext. 3242.

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