For Disa Kullman and millions of gold buyers and sellers like her, the party is over.
In 2009, Kullman, of Waconia, hosted a gold party where she and 15 of her friends sold their outdated and broken herringbone necklaces, bracelets and rings for more than $1,500 in cash. “I never did it again,” she said.
Back then, when gold prices started rising after the collapse of stocks, credit and many currencies, parties sponsored by companies such as GoldSwap were common. Gold buyers who set up shop in malls and jewelry stores advertised “we buy gold” incessantly. For middle class consumers, selling became a source of “found money.”
Today, as the price of gold has dropped from peaks that followed, the parties have evaporated, most gold-buying stores and kiosks have closed, and the ubiquitous TV commercials by the tan, smiling Gold Guys are history. How did gold lose its luster?
In late August 2011, gold hit an all-time high of more than $1,900 per ounce in after-hours trading, before falling to $1,600 in 2012, $1,200 in 2013, and drifting along at around $1,100 since 2014. As gold prices declined each year, so did consumer interest in selling gold for scrap.
“It was just crazy in the heyday — 2010 to 2012 was off the charts,” said Joe Beasy, co-owner of seven Gold Guys stores in Minnesota and California. “We were spending $190,000 a month on nationwide advertising.”
The Gold Guys closed three of five stores in California, as well as others in Cincinnati, Dallas, Hawaii and Las Vegas, which Beasy attributes to poor locations. “Our revenue is down 70 percent,” he said. “But we’re still profitable. If you trade gold in the aftermarket and pay attention to the peaks and valleys, you can make a profit on the back side.”
Up to 80 percent of stores that specialized in gold buying nationally are gone, Beasy estimates, as well as many of the websites where people could mail in their gold pieces. Locally, gold stores have closed in Northtown Mall, Burnsville Center, Ridgedale, Southdale and Rosedale, as well as independents in Bloomington, Minneapolis, Golden Valley, St. Paul and Robbinsdale.
Business at Independent Precious Metals in Spring Lake Park today is about one-fifth of what it was at the peak, says owner Doug Rooney. “The amount that the scrap market has fallen is staggering,” Rooney said.
Besides the loss of interest due to lower gold prices, some say the drop-off is because many consumers don’t have anything left to sell.
“Six years ago, I got rid of tons of old pieces that I wasn’t wearing,” said Bonnie Johnson of Wayzata. “The jewelry I still have I don’t want to part with.”
Gold pieces sold in the last eight years were often 20 to 40 years old, bought when gold cost less than $400 an ounce. Jewelry purchased at the higher prices of this latest upcycle would produce a loss if sold today.
In addition, current styles of jewelry are often not made of gold. “People aren’t buying gold jewelry as much anymore,” said Dan Wixon, owner of Wixon Jewelers in Bloomington. “They’re looking at less expensive precious metals such as sterling silver and titanium.”
Many jewelers expanded into the gold-buying business during the gold rush. “The gold boom gave a lot of struggling jewelers a boost,” said Sandy Severt, owner of Gloria’s Jewelry in St. Paul. “But it also prolonged the agony.”
Since 2007 the number of jewelry stores has fallen by 20 percent, based on U.S. Census figures. Independent retailers lead the closures.
Surviving jewelry stores are often the ones that weren’t too focused on gold buying, Severt said. “Diversification is key,” she said.
Pawnshops found a similar niche. “When the gold business went away, it wasn’t a serious blow,” said Patrick Doolittle, general manager at Excel Pawn in St. Paul. “We’re more diversified.”
He thinks a 2014 Minnesota law requiring all gold buyers and coin dealers to be registered and their employees subjected to background checks also had a chilling effect on the business.
“Many of the gold buyers were opportunists and scammers,” said Richard Baron, former executive director of the National Association of Jewelry Appraisers. “Most of them have folded up their tents and gone away.”
According to the Better Business Bureau of Minnesota and North Dakota, the number of complaints about gold, silver and coin dealers dropped by more than 50 percent between the high in 2013 and last year. Inquiries about those businesses have dropped, too, from 17,700 in 2014 to 12,860 last year.
Will buyers and sellers ever see a return of the gold rush of 2008 to 2012?
Wixon thinks it could be 15 years before gold prices rise to new peaks. Beasy, on the other hand, thinks 2016 will be an “interesting” year for gold. The Gold Guys have already shot new commercials that will start running on major network TV on Monday.
Scott Stebbing, president of Stebgo refinery in South St. Paul, said people who waited too long to sell their gold during the last upturn will come out for the next one. “There are still a lot of estate pieces to come in,” he said.
As for the gold-buying businesses that closed as gold declined, Margaret Olsen, author of “The Gold Book,” said: “When the market kicks in again, they will be back.”