Making the Most of a Gold Buying Party

With gold reaching up and over $1,000 per ounce in late February 2009 spot price and futures trading, people who had previously held parties where guests bought items, are now all about making money. Specifically, jewelers or numismatic brokers are buying gold bullion from what is lining the bottom of even an average jewelry box.

Sometimes these parties are held in conjunction with some other “recycled” commodity such as jeans or costume jewelry to replace that sent in for melting. The parties are also not limited to women’s jewelry. Buyers will often take old tooth gold, wire, contacts – as long as they are able to discern its purity. This is usually done with a hand-held tester.

Gold buying parties become a hot trend among Americans since the beginning of the 2009, when steadily rising gold prices rose well over $900 per ounce. The idea of selling old gold off for money in a pinch is hardly new. Women in India have been dipping into their considerable gold jewelry reserves during tough time for hundreds (if not thousands) of years. The record price of gold has driven the almost complete collapse of India’s gold imports in 2009, causing a considerable percentage of newly fashioned gold coming from domestic and recycled reserves in the hands of the average Indian consumer’s horde.

American women don’t realize what hoards of precious metals they have. The average piece of jewelry given as a gift (accounting for the majority of gold jewelry held in the US) ranges in purity from the less-expensive 10-karat (-k) pieces that contain less than half (45.8%) pure gold, alloyed with silver or a combination of base metal alloys for strength and durability. 14-k gold is the most common stamp seen on mass-produced consumer pieces, at just over 58% gold. Many chains, broaches and pieces meant for other-than-daily wear are made of 18-k (75%) pure gold. Some antique and very high-end jewelry is made of wholly pure, 24k gold. Bars and coins are most commonly found as either 99.99% or 90% pure.

While this trend is catching on in the US, the market for consumers to invest in gold bullion coins and bars continues to be the dominant force in the US domestic market. In fact, only a fraction of the domestic product made from “recycled” gold. And, even in areas that have been hit very hard by the economic downturn, there are still some people who are buying gold bullion – much of it in melted, purified and sold to satisfy the demand to buy bullion.

The surge in price has been noted while industrial and decorative demand has dropped off significantly. Gold bullion investment opportunities and industries related to the production of gold bullion have surged nearly 70% since the global financial crisis really got going in late 2008.

It is important for anyone arranging such a party that they pay careful attention to the credentials and practices of anyone offering to act as the broker and buyer at a gold buying party. Your buyer should be from a local establishment and provide a certified scale that is calibrated for the party’s inspection.

Guests and hosts alike should be careful that the weight an item is weighed out as corresponds to the amount the broker is buying gold bullion at. A good hostess will have purity conversion tables, calculators and the daily spot price of gold available for her guests to use in their negotiations. There are con artists who pose as jewelers and con party-goers by weighing items in grams and paying in penny-weights (over 1.5g). Other scams involve convincing guests that their items are not as pure as stamped.

While the price paid per ounce of pure gold will certainly be less than the daily spot price, the percentage “off-spot” shouldn’t be more than 15%, ideally less, depending upon whether another party performs the melting. Guests often leave with a few hundred dollars.

Remember, you don’t have to sell, and many people hold on to more valuable pieces for an emergency. It can be a great way to make some money with jewelry that does little more than collect dust or inhabit a dark corner.

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Arthur McGuire

March 1, 2009