Hard Times, High Prices Spur Gold-Party Craze
Linda Barone, a schoolteacher from Kearny, N.J., was looking forward to a night out with the girls. She went to a friend's house to socialize and walked away some $300 richer..
It wasn't poker night. It was a gold party, where a group of friends—usually women—get together and sell their golden valuables.
"I have a lot of jewelry that I haven't used," says Barone. "It's been sitting in a drawer for 15 years. I haven't really missed it, so I thought why not cash it in."
Near-record gold prices —approaching $1,000 an ounce—and a weak economy are two reasons gold-selling parties are popping up around the country.
"Gold parties work similar to Tupperware parties," says Katie Kupferschmid, who buys the precious metal at such parties in the New Jersey area. "A hostess invites all of her friends ...They come, bring all their gold, I weigh it and test it and pay them out money for their old gold scrap."
The reasons people sell their gold vary, according to buyers. Some are looking to recycle old jewelry while others are hoping to make a little extra cash in hard times.
"I was at a party recently where there were nine women, and seven of their husbands were out of work," says Kupferschmid. "One of them made about $1,000 and she was thrilled and had tears in her eyes and said now I can pay my mortgage this month."
The payout depends on the karat and weight of the gold, and, of course, the closing price of the commodity that day. Kupferschmid, like the many others who facilitate these parties, buys the gold, sells it to a refiner and keeps a portion of the sales.
Kupferschmid's refiner, MyGoldParty, has been in business for just under a year. The company started as a one-person operation, but now has a network of more than 30 representatives who buy gold across the country.
Gold Buyers of America, a Florida-based buyer and refiner of gold, also started organizing gold parties a year ago. It has a network of nearly 200 buyers who set up some 100 events a week around the country.
The company went from around $1 million a year in sales in August of last year to more than $20 million this year.
"Gold parties are the cool thing right now," says Steven Livshin, founder and managing partner of Gold Buyers of America.
Cool and comfortable, it seems. A party atmosphere makes selling ones possessions more comfortable, says Tom Meyvis, a professor of marketing at New York University's Stern School of Business.
"There's usually a stigma around selling your own goods. It reminds people of pawn shops, and it's associated with being in dire straits and really needing the money," he says. "If you know your friends are doing it as well, that makes it even more acceptable, which are where these parties come into play."
More news from CNBC.com:
- Gold Hits 7-Month High on Economic Worries
- What to Do When Your Mortgage Is Rejected