With the price of gold reaching more than $900 per ounce, gold parties have become a popular new trend that allow people to obtain some quick cash by selling unused or unwanted jewelry. Gold parties are when friends and neighbors visit someone’s home and sell gold to a dealer who is hosting the event. The homeowner normally gets a commission on any sales to the dealer and their guests get paid based on the weight and quality of their gold.
Better Business Bureau advises consumers that while gold parties may be a fun and convenient way to make some cash, they may not provide you the best deal. BBB recommends consumers do their homework before selling their jewelry at gold parties.
“With gold at record high prices, people are finding that what was just a pile of broken chains and old rings is now worth a small fortune,” noted Brian Schubot, President of Jules R. Schubot Jewellers, a BBB Accredited Business in Troy. “It is important to determine the value of the jewelry as a whole and not just the scrap value of gold to get the best price. Knowing the karat and weight of your gold before you sell can also help keep you from getting ripped off. Finally any legitimate gold dealer is bound by the Michigan Precious Metals and Gem Dealer Act which requires buyers to be registered and keep detailed records of all transactions.”
BBB recommends keeping the following tips in mind when attending a gold selling party:
• Is the dealer operating legally? Under the Michigan Precious Metal and Gem Dealer Act, dealers should be registered with the police department where the gold party is taking place. The law also requires these gold dealers to keep a permanent record of each transaction and keep all of the precious items they purchase for at least nine days.
• Understand the scales. The weight of gold helps determine its value. If you measure your jewelry on a home kitchen or postal scale it is important to understand that jewelers use a different measurement standard called a Troy ounce. A common U.S. scale will measure 28 grams per ounce, while gold is measured at 31.1 grams per Troy ounce. To add to the confusion, some dealers will also use a system of weights called pennyweight (dwt) to measure a Troy ounce while others will use grams. A pennyweight is the equivalent of 1.555 grams. Consumers need to be alert that a dealer does not weigh their gold by pennyweight, but pay them by the gram. This would allow the dealer to pay the seller less for more weight of gold.
• Know your Karats. Pure gold is too soft to be practically used so it is combined with other metals to create durability and color. The Federal Trade Commission requires that all jewelry sold in the United States describe a karat fineness of the alloy. 1 karat equals 1/24 of pure gold by weight. So 14 karats would mean the jewelry was 14 part gold and 10 part other metals. It is illegal for jewelry to be labeled “gold jewelry” if it is less than 10 karats. It is important to know the karats of your gold to make an informed decision on the scrap value of your jewelry.
• Call a local jewelry store or check with an online source, such as www.goldprice.org, to verify the current market price for gold before you sell.
• To ensure you are getting the best price for your jewelry, have it appraised before selling. Dealers at gold parties are only paying you for the karats and weight of the gold. Your jewelry may be worth more than that price when you include workmanship, artistic value, and embedded gems for the piece as a whole.
“You can have fun and make some money at gold parties if you prepare in advance,” recommends Tim Burns, Spokesperson for the Better Business Bureau Serving Eastern Michigan. “Weighing your gold with a jeweler and knowing your jewelry’s karat content before going to a gold party will help you understand the value of your items to assist with getting the best deal and avoid being ripped off.”
BBB also warns to be aware of the following gold party scams:
• Cheating on the weight. Don’t have your jewelry weight determined by pennyweight (1.55 grams) and be paid by the gram. Make sure you are paid the appropriate price based upon the system of measurement used to weight your jewelry.
• Disputing karats. Some disreputable dealers will try to persuade you that your gold is less karat than it really is. Identify and understand the karat value stamped on your jewelry before attending a gold party.
• Combining karats. Don’t let jewelry of different karat value be weighed together. Some dealers will weigh all jewelry together and pay you for the lowest karat value. Separate your jewelry by karat value before attending a gold party.
• Undervalued Offers. Some dealers know people are just looking for quick cash to put in their pockets and will offer you money for your gold that is lower than the actual value. It is important to know the market price for gold and the weight and karat value of your jewelry to understand the difference between a good and bad deal.