A rush on gold

  • Article by: SUZANNE ZIEGLER , Star Tribune
  • Updated: March 5, 2009 - 11:10 PM

Cleaning out old stuff in the jewelry box is turning into a great excuse for a party, and with the price of gold at near-record levels, payments can help cover the bills.

Swap Old Gold for Cash parties

In a new twist on the old Tupperware parties, people are having Swap Old Gold for Cash parties at their homes. Guests dig through their jewelry boxes and dressers and sell everything from tangled chains to relatives’ gold fillings. At this party in Waconia, appraisers from GoldSwap Inc. tested guests’ jewelry and were ready to buy it on the spot if it turned out to be real gold.

Photo: Carlos Gonzalez, Star Tribune

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Lingerie and Tupperware parties: Out. Gold parties: In.

With gold prices soaring and the economy crumpling, "Swap Old Gold for Cash" parties are taking over a growing number of living rooms in Minnesota and nationwide. Instead of buying cosmetics among friends, party-goers are cashing out old class rings, broken necklaces and even gold dental crowns, sometimes with the teeth still attached.

"Let's party and make some money at the same time," one invitation says. Once the jewelry is weighed and evaluated, women are paid cash on the spot with others cheering as money is laid out on the table.

"Can you believe you are going to get $215 for that?" a GoldSwap Inc. representative asks as she dangles a baggie full of jewelry in front of a woman sitting across a table from her at a recent party in Waconia. To another woman a little later, she asks, "Do you know how much you are taking to Honolulu with you? $420!"

All of this gold buying and gold selling is raising concerns that consumers are being ripped off.

"With gold parties springing up in people's homes and in hotel ballrooms across the country, and mail-in gold businesses multiplying, it is important for consumers to become educated about the gold market before selling their gold," the American Society of Appraisers said in a recent press release.

"People do want money," said Margaret Olsen, an accredited senior appraiser with the group. "The part that's the challenge is that people have little knowledge about the value of their items. They just want to get rid of it and get some immediate money." She advised anyone thinking about selling gold to get it appraised if it is vintage or particularly valuable, and to be cautious, especially if they are sending it to an out-of-state company.

And with gold prices closing in on all-time highs, it's not just private parties busy with people trying to cash out the back of their jewelry boxes. Pawn shops, jewelers and mail-in-your-gold companies also are enticing people to bring in scrap gold, which is usually sold to a refinery, purified and resold in the form of coins or bars.

Wedding Day Diamonds advertises that it wants gold, silver and platinum and runs a long list of what it will take, including silver tea sets, wedding bands and anything that's "unwanted, old and unwearable."

A mail-in company called Gold Fellows comes right out with an ad that says: "Want a new plasma HDTV? Sell us your unwanted jewelry."

Even the Mall of America has a store. Too busy to navigate the Bloomington megamall? The Gold Guys have a mobile service that will come to you.

"The new lingerie parties are now gold parties," said Jon Nadler, gold guru at Kitco, a precious-metals dealer in Montreal. "The savvy marketers know that people are pressed for cash right now."

An'ugly pin' brings $113

At the GoldSwap party in Waconia last month, about a dozen women sipped wine and nibbled on appetizers as they waited their turn to see if what they brought was real gold or costume, then to see what they really wanted to know: how much it's worth. Some decided to hang onto the jewelry for sentimental reasons, but most cashed out.

"I just dug through my old bags and just brought what I thought was real gold." said Lynda Wachholz of Waconia, who walked away with $317 for an old class ring and an "ugly pin" made from a coin that turned out to be worth $113.

Asked if she felt that she got a fair deal: "Absolutely. It was just sitting in my closet. It's not bad for a night's work."

Wachholz said she didn't know what she would do with the money. "I'm a real-estate agent so I just might be paying some bills."

Marla Larkin of Waconia got $95 for a ring and some other old pieces. "It's just like my clothes. If I haven't worn it for 10 years, I might as well get rid of it."

Carrying their treasure in small boxes, baggies or jewelry bags, the women placed their jewelry on a black cloth covering the dining room table. First, the GoldSwap employee tested to see if it was real by placing a magnet over it. Real gold won't stick to a magnet. Next, the real gold is tested to determine its purity, which is measured in karats, then weighed to see what it is worth. The GoldSwap buyers ding a bell and everyone cheers while they count the money out.

"We're stimulating the economy in our own way," said Rose, who works for the Michigan-based GoldSwap Inc. and was in the Twin Cities for the Waconia party and about a dozen others that weekend. "We're putting cash into people's pockets." Citing security, Rose declined to provide her last name or say much about the company, but did say it has 60 teams of representatives working in 18 states. GoldSwap does not advertise or have a website, instead, relying on word of mouth.

Rose said each party averages about $4,500 in "sales," with the hostess getting 10 percent of the overall amount. The most one guest has been paid: $3,500. Disa Kullman, the hostess of the Waconia party, said about $1,580 worth of jewelry was sold at her party.

Janell Kraus of Eagan said about 30 women came to her GoldSwap party last month. Total sold: $5,600, with one woman making $700. The lowest paid out was $20.

"People are used to coming to parties where they spend. All these home shows, sometimes you spend $100," Kraus said. "At this party, people were making money and feeling really good."

Buy, sell, invest?

Patrick Lucas of the Twin Cities Gold & Silver Exchange in St. Louis Park has this advice: "If you have a decent bracelet from the '80s that you're not wearing, sell it. Turn it into a house or car payment if you have to," he said. But if you don't need the cash, he recommended reinvesting the money in gold or silver bullion, which can be sold more quickly than jewelry.

Experts urge caution for anyone thinking about investing in gold.

First, anything that is "hot" like gold is now tends to be overpriced, according to Jeff Johnson and Kris Knudtson of Stevens, Foster Financial Advisors in Bloomington. The allure fades -- and gold prices drop -- when stock markets recover and people return to equities. "Gold rushes can be a signal of market bottoms," Johnson said.

Nadler said any gold investment should represent no more than about 10 percent of one's portfolio. And while bullion is liquid, it's not that liquid, he notes.

"One of the last things you want to do is run out and buy some overpriced small bullion coins with the idea the world is coming to an end and you are going to barter those at McDonalds, because you won't be able to."

Suzanne Ziegler • 612-673-1707

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    It pays to shop around. We took a gold bracelet to five venues to see what we'd get for it and how they pay out.

    Gold Guys, Mall of America

    $300, check

    Convenient if you're at the MOA, easy to walk up and get price; friendly, enthusiastic guys who advertise they'll "Pay the highest price; GUARANTEED!"

    PawnAmerica, St. Louis Park: $276, cash or check

     Somewhat disorganized -- could not locate a magnet to test the bracelet to see whether it was real.

    GoldSwap party: $249, cash

     Party was lively and fun with food and beverages. GoldSwap reps knew what they were doing and explained every step of the way.

    Twin Cities Gold & Silver Exchange in St. Louis Park: $230, cash or check

     High security; need to get buzzed into store. Used jewelry, even the trendy--and pricey--David Yurman, is for sale.

    Wedding Day Diamonds, Bloomington: $180, check

    They suggested coming back later that week for a special event that would fetch a better price.

    Note: All prices were quoted on Feb. 23 except Gold Guys, which was the next day. The Gold & Silver Exchange later noted that it was not buying gold bracelets at that time.
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Swap Old Gold for Cash parties