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The gold rush is on at a party near you

As gold prices have skyrocketed to more than $900 an ounce at the same time as paychecks and job prospects are shrinking, gold parties have tapped into a powerful market.
/ Source: and NBC News

Alison DeRuiter of Phoenix showed up at party recently and went home with $542.

The party was at a friend’s home, and the guest of honor was a representative of a company called Gold Rush at Home, based in nearby Fountain Hills. She was there to assess and buy old gold items the guests had brought along, writing checks on the spot.

“It was just sitting in my drawer collecting dust from high school,” DeRuiter said of her bounty at the party, where her mother, Anna Nixon, collected $300 for what she herself described as “junk.”

Forget the Tupperware party. Today’s social/business craze is the gold party.

Beth Maynard started Gold Rush at Home a little more than a year ago after a 20-year career in mortgage lending, joining dozens of similar entrepreneurs across the country. As gold prices have skyrocketed to more than $900 an ounce while paychecks and job prospects have been  shrinking, gold parties have tapped into a powerful market.

“They need money, and they’re very excited,” Maynard said. “I’m writing checks to people, and they love it. They come to a party, they don’t have to spend any money. ... They think a little tiny bit of gold is $25, and I give them $100.”

Gold Rush at Home parties work this way: A representative of the company, often Maynard herself, joins a dozen or so people who have gathered at a friend’s or neighbor’s home. She consults with each one, weighs their gold items and makes an offer based on that day’s spot price of gold. At the end of the party, the host gets 10 percent of the total haul.

Maynard isn’t interested in the artistic or decorative value of the items. She’s strictly after the gold, which she sells to refiners.

Organizers of gold parties say that’s the point — the condition or design of an item isn’t important, so there’s no reason customers shouldn’t dig deep into their drawers and attics for old pieces they would never wear or put on display.

“It can be broken chains, earrings, class rings, [even] dental gold,” said Kelly Rostic, a consultant in Ozark, Mo., for the Gold Refinery, a Michigan-based company that organizes parties across the South and the Midwest.

“Gold isn’t in fashion right now, so it’s an opportunity to go through your jewelry box and see if there is anything you’re not wearing and turn it into cash,” she said.

Rostic said the average seller makes $100 to $200 at a gold party, but she said she had paid as much as $4,000 to a single guest.

Neither Gold Rush at Home nor the Gold Refinery have any complaints listed against them with the Better Business Bureau. But the organization advised sellers to get more than one offer for their items, because the offers at gold parties sometimes come in well below what a seller might be able to get from a registered jeweler.

That’s because offers are based on more than just the weight of the gold and the price of the day, the agency said. Pure gold — that is, 24-karat gold — is worth more than 14- or 18-karat gold, for one thing.

Some dealers, meanwhile, measure gold by pennyweight but pay by the gram, which works against the seller. A pennyweight is roughly 1.55 grams; for a small nugget weighing 2 pennyweights, the dealer gets about 3.1 grams of gold while paying you for just 3 grams.

And because representatives at gold parties are middlemen, buying your gold and then selling it to a refiner, your final price has to be knocked down some so both can make their profit.

Taking all that into account, sellers should expect to make only about 70 percent of the real value of their gold, said Sean Brodrick, a natural resources analyst for investment advisers Weiss Research Inc.

Not always the best prices
To test the prices, reporters for NBC station KCRA of Sacramento, Calif., offered two gold bracelets for sale to a representative of My Gold Party, a national company that organizes parties in 20 states. The prices came back at $117 and $500, respectively.

KCRA took the same bracelets to two local jewelers, who offered identical prices based on the bracelets’ karat content and weight and the market price of gold. They offered $200 and $850 — in each case, about 70 percent more.

Likewise, when NBC station KYTV of Springfield, Mo., offered three pieces of gold jewelry to three pawn shops, a jewelry store and the Gold Refinery, the Gold Refinery’s offer fell in the middle of the pack. While the Gold Refinery offered $165 for all three pieces, one of the pawn shops offered $200 — 21 percent more.

But many customers said they were fine with that. The appeal of a gold party is not just the cash — there’s the the party itself, where friends and neighbors can have a good time together and sell their jewelry in a safe and convenient setting without finding a pawn shop or jewelry store.

Those factors led DeRuiter, of Phoenix, to eventually decide to throw a gold party of her own for about 15 friends. Including her cut as the host, she ended the night with $1,122.

“There’s so many candle parties, jewelry parties, where people have to go and buy,” DeRuiter said. At a gold party, “they get to make money instead of spending it.”