Gold the new tupperware-WSJ
 

by Kelly Evans
Monday, December 21, 2009
provided by


It's much more fun than a pawnshop; the cash is only so-so but comes in handy

The 1950s were big for Tupperware parties. The 1970s were hot for Mary Kay cosmetics. As this decade hobbles to a close, a new kind of social gathering is invading America's living rooms: the gold party.

Shannan DeCesare, 40 years old, brought four gold chains, two unloved bracelets, some earrings that had lost their mates and a couple of other old pieces to her neighbor's house here last week. Minutes later, she was showing off a check for $610. "Merry Christmas to me!" she exclaimed amid applause from the small group of women clustered around host Christine Smith's dining-room table. "Don't tell my husband," she joked, as she pondered how she might spend the loot.


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Worries about inflation have pushed gold prices above $1,110 an ounce, up 50% from a year ago. And many people stung by the weak economy are looking for discreet ways to raise extra cash without sneaking down to the pawnshop.

As a result, gold parties are booming, creating opportunities for aspiring entrepreneurs -- and a new worry for regulators. Typically, small companies promote the parties through word of mouth or by advertising in communities likely to produce plenty of sellers. The companies provide a specialist to value sellers' items, and pay the host a cut of about 10% of proceeds.

One golden rule: "What happens at a gold party stays at a gold party," jokes Margaret Petrucelli, 43, who founded her firm, It's a Gold Mine Party LLC, a year ago after she was laid off from the mortgage division of investment bank Goldman Sachs Group Inc. She now has a network of about 30 specialists holding 30 to 40 parties a week on her behalf across the country.

"It can be really difficult for a lot of people to walk into a jewelry store or pawnshop holding a little bag of gold," said Lisa Rosenthal, 46, whose two-year-old Massachusetts company, Party of Gold, has grown to 130 specialists working more than 1,000 parties a month, primarily in the Northeast.

Regulators and industry veterans worry that some parties might be capitalizing on consumers' lack of knowledge about the industry and the fair price of gold.

"There are all kinds of house parties out there selling things from plastic goods to candles, but none is really as open to fraud as this particular type," said Claudette Carveth, a spokeswoman for Connecticut's department of consumer protection. "Your guard is down because you're at a friend's house, assuming the person taking your jewelry has been checked out."

Ms. Carveth added that gold buyers in her state are required to file for a precious metals license in each municipality where they work and use a state-certified scale to weigh it.

But, "There are no industry standards," said January Thomas, who started her Birmingham, Mich., company, My Gold Party, two years ago and now has 80 specialists working for her across the U.S. "There's nothing that says you have to pay a certain minimum value to the seller."

Most gold-party companies pay sellers between 65% and 75% of what their gold would be worth to a refiner. The quality of workmanship and sentimental value have nothing to do with it.

Ms. Thomas said one positive effect of the gold-party craze is that competition has helped standardize pricing -- a boon for sellers. "The days when pawn shops could buy gold for $5 a gram and sell it for $12 or $14 are gone, because there's so much more awareness out there," said Leo Anglo, owner of Vincent's Jewelers in Creve Coeur, Mo., and past president of the Missouri Jewelers Association.

Mr. Anglo said all the focus on gold prices may not be in sellers' best interest. "Gold buyers typically don't pay anything for gemstones and might even charge to take them out," he said, recommending sellers take their pieces to a jeweler who can pay for the stones or even sell the piece intact for a higher sum.

Yet jewelers have a tough time matching the convenience -- and excitement -- of a gold party.

One took place on a recent weeknight at Ms. Smith's home in Rowayton, a coastal suburb of Norwalk about 45 miles northeast of New York City.

Peggy Peterson, a 36-year-old stay-at-home mom, brought a plastic freezer bag holding at least a dozen pieces that once belonged to her mother, who died four years ago, and a gold link bracelet she bought herself on a trip to Florence while in college.

Ms. Peterson said she had planned to take the lot to a jewelry store to be appraised but never got around to it, and was wary of mail-in services such as the heavily advertised Cash4Gold. "When I heard about the gold party from a neighbor, I thought it seemed like a safer bet because it's through somebody I know," said Ms. Peterson.

Jeff Aronson, chief executive of Cash4Gold in Pompano Beach, Fla., said in a statement his customers "are looking for an easy, fast, secure and discreet transaction from home, and may not want others to know that they are selling their jewelry for cash." The two-year-old company has recorded about 900,000 transactions of people mailing in their gold, and 94% of people accept the money offered.

Under the glow of a reading lamp, specialist Sarina Galu ran a high-powered magnet over each set of pieces -- the first step used to weed out fake gold and determine each lot's value.

Some of the pieces Ms. Peterson brought, such as a heavy pendant necklace, turned out to be inexpensive costume jewelry. But many of the rings, bracelets and earrings were 10-karat or 14-karat gold -- and Ms. Peterson walked away with a check for $536.

"My mother would be happy to see me get the money for it," she said.

Re: Gold the new tupperware-WSJ
 

I wonder how many heirloom quality pieces/stones have gone to the melt pot from this kind of thing. :s10:

R.

Re: Gold the new tupperware-WSJ
 

This article is such a crock of shit.

Scrap gold is almost NEVER worth more than its melt value, period. And who the hell decides what is "fair?" Whoever wrote this story ought to ask the WSJ to cut their advertising rates in half to be "fair." I am so sick of this anti-business, anti-profit, anti-capitalism crap from people who don't want anyone else but themselves to make good money.

If a restaurant sells you a steak for $25 that costs them $5, does anyone say anything? No - because they are also providing a service, an environment, and a skill. Same thing these gold buyers are doing. WTF do they think is "fair" - melt value? Who is going to work for no money? Not these dumbass reporters, that's for sure.


It is not the "regulator's" responsibility to make sure every damn industry in the world is regulated/fair/etc. It's up to consumers to educate themselves.

Oh yeah -

That's funny, 'cause it happens every day here! I've heard about a pawn shop in the area that pays $3 a gram for ANY karat gold. And every pawn shop I've talked to here is selling for close to melt.



And I scrap out diamonds all the time too. It's not really a waste because there isn't a sustainable market for all this stuff. If there aren't enough buyers, it doesn't matter what something is "worth."

My old business partner bought a GORGEOUS 10ct diamond tennis bracelet as scrap. His dad is a jeweler of many years. The most comparable (but inferior) thing they had in the store is priced at $21,000, and their cost is about $10,000 on it.

Yet he probably won't even be able to sell that bracelet for 10k.

A market needs buyers...

Re: Gold the new tupperware-WSJ
 

I really don't see the harm in a lot of that, it makes the existing older stuff even more valuable. Sort of deflationary for old gold jewelry.

Re: Gold the new tupperware-WSJ
 

That will teach her to be bragging about her gold holdings to her fellow employees while working at GS... lol.

Re: Gold the new tupperware-WSJ
 

Regulators?!?! What government agency is in charge of regulating private sales of precious metals? None that I know of.

Re: Gold the new tupperware-WSJ
 

I bet it's coming.

That will be another trigger point for me to exit the business. When you have to pay 80% spot for broken jewelry because there are 15 other people in a 1 square mile radius who will, or, because the government makes you.

Re: Gold the new tupperware-WSJ
 

"new worry for regulators" means that people will be buying and selling gold and not reporting the "income" causing a tax revenue problem. At least that's how I took it.

Re: Gold the new tupperware-WSJ
 

The price will rise when the Cash4au and party outfits end the day empty handed,

And not until then...