The New Gold Rush
As the price of gold skyrockets, modern-day prospectors are turning to Tupperware-style "gold parties" and mail-in companies like Cash4Gold.
Synthetic gold crystals. Image by Alchemist-hp.
At a gold party, there are two kinds of people: opportunists who would sell a limb if a speck of gold fell on it, and sentimentalists who feel guilty parting with anything. "Suckers," a woman next to me called the latter type, as she pawed a stack of money like it was a new pet.
Modeled on Tupperware parties, gold parties have become increasingly popular over the last few years, with companies like Gold Party Canada buying unwanted gold at nearly fifty gatherings a month across the country. Fueling the trend is a 51 percent increase in demand for yellow gold, and the metal's soaring price—some predict it could soon hit $2,000 per ounce. "Like everything else in life," hedge fund manager Paul Tudor Jones recently said, "gold has its time and place. And now is that time."
Although gold party hosts make both a flat fee and a commission from sales, money isn't everything—at least according to GPC. "The big draw is for people to be with their friends and families," GPC co-founder Shawn Zimmerman says, "to have a glass of wine and make some extra money." It's also an opportunity to talk jewelry. Within fifteen minutes at the party I attended in Montreal, I heard about rings, bracelets, Christ-related trinkets and, most of all, theft. "They stole a jewelry box hidden in my underwear drawer!" a woman told me, pausing as if she really wanted me to ask about the underwear. I told my own jewelry theft story instead, explaining how someone had once stolen my mother's engagement ring while I slept in the next room. "Terrifying," the underwear woman said. "But it goes to show, if they want it, they'll get it."
Gold party agents test jewelry on-site with an acid test, scratching gold against a lava rock and splashing nitric acid on its residue. If the piece is 14-karat gold, the residue stays the same colour when splashed with 14-karat nitric acid. If it darkens, it's a lower karat. If it reddens, it's higher. If it disappears altogether, you're holding a yellow-coloured piece of shit.
GPC has 125 agents across the country, the vast majority of them women. These agents undergo training "boot camp" until they are confident enough to work. My party's agents were a middle-aged blonde woman and a perky twentysomething. "I worked at a health club before this," she said, explaining that she loved the flexible schedule and socializing opportunities.
Gold party attendees are often confused about what is being bought. "Gold buyers are not buying for how ornate or beautiful a piece is—they're buying for the gold," Zimmerman says. The trouble starts at the initial purchase, when the craftsmanship, beauty and emotional value of the piece (like an engagement ring) increases its perceived value. People who purchase a bracelet for $1,000 assume they'll get a similar return, even when there isn't $1,000 worth of gold in their jewelry.
This wasn't my problem, as I did much better than expected, mostly because I didn't expect anything at all. I had originally assumed I had nothing to sell, until I remembered that I was raised Catholic. Baptisms, communions and confirmations are all opportunities for Catholics to outdo each other, supplying even the most ardently non-religious with handfuls of unwearable jewelry. Was it right to sell these gifts? I wasn't sure. Wasn't it possible I'd one day wear four Jesus pendants?
No. I was a seller.
The only stumbling block was a gold chain my late grandmother gave me. Looking at it among the other pieces made me feel crass and greedy. An accessories junkie, my grandmother loved hitting a stretch of nearby jewelers, pawning off pieces she'd grown tired of and trading to get something she liked. "I got this one in the Italian Riviera," she'd tell say, holding up a brooch I'd seen her buy at a kiosk in a local strip mall. "I can take this to five different places and get five different prices." She was mesmerized by the unpredictable perception of value and worth.
My grandmother would have laughed at anyone hoarding jewelry for sentimental reasons and sold my stash in ten minutes, tops. For some reason, though, I couldn't hand her chain to the agents. Would they think I was an asshole for selling it? I didn't have to tell them what it was, but it seemed impossible to say nothing; almost every other piece had initiated some banter.
I pictured the gold agents at home, exhausted and guzzling Chardonnay. Ignoring their frustrated partners, they would ramble about the "heartless bastards" in the "cruel world of gold parties," imagining me as a twisted commercialist shedding anything of emotional value.
If I were a member of that opportunistic gold-selling group, I could have lived with that. Deep down, though, I'm a sucker and I didn't want them to know. "Is there anything else?" the younger agent asked at the gold party. "No," I said.
My grandmother, after all, would have expected more of a show.
The Cash4Gold headquarters sits in an industrial park in Pompano, Florida, with no identifying signs. Its forty thousand square feet of surface space stretch out in a seemingly never-ending series of imposing, but mostly underused, rooms.
Upon being buzzed in, you have to walk through a metal detector, relinquishing your driver's license to armed security personnel. This military vibe is, on the surface, a far cry from the splashy advertising that made the company a household name, but the heavy security makes sense. Loud, flashy commercials may have brought Cash4Gold to the forefront of the industry—and inspired a slew of late-night-TV imitators—but staying there requires more than promo spots featuring Ed McMahon and MC Hammer.
Every day, Cash4Gold receives between three thousand and twelve thousand packages. In its three years of operation, the company has seen everything even remotely related to gold, including goldfish crackers, gold-coloured zippers, Christmas tree tinsel and gold teeth.
Sorting through this cavalcade of kitsch, desperation and stupidity are the workers of the receiving department, who, dressed in black uniforms, look like prisoners. Packages are scanned, given a bar code and entered into an internal tracking system. They are then opened, photographed and checked for discrepancies and missing consent forms. This system is so thoroughly maintained that Cash4Gold claims it can find a package within twenty minutes.
Cash4Gold CEO Jeff Aronson is a large, imposing man, who, depending on your view of his company, resembles either a likeable Saint Bernard or a menacing loan shark. He speaks slowly and confidently, with droopy, knowing eyes and the air of someone who would have no problem taking over an underground crime syndicate. "Everyone thought it was crazy, when I first came up with the concept. Who's going to put gold in an envelope and send it to a company?" he says, describing the process that turned his original company—Albar Precious Metal Refining—into Cash4Gold. "We started marketing and building the infrastructure and the techniques, and within a month or two, Cash4Gold was a success." It has even branched out to include a fine jewelry department, EstateBuyer.com.
This success has attracted criticism, most of which, Aronson feels, is unfounded. "We look up a lot of the complaints and find that sixty to seventy percent of the people are not even our customers," he says, aware that many don't believe him. Mark Twain defined a gold mine as "a hole in the ground owned by a liar," and that idea persists, especially when it comes to mail-in gold-buying companies.
Chiefly responsible for Cash4Gold's poor reputation is a list of complaints posted online by a former employee. It includes the following passage: "There is literally a cloud of smoke in the air from acid and other testing material. If you were thinking it was some state-of-the-art testing facility, you thought WRONG." I hoped I would see this cloud of acid smoke. I secretly hoped Cash4Gold would be some demented fourth-world sweatshop, with half-starved employees chained to their workstations. But it wasn't.
The testing area was a well-lit, clean space, with long oval tables separating teams of ten: six testers, two data entry personnel and two photographers. These employees conduct a second round of itemizing, matching, photographing and data entry. They then start testing using three methods: the same acid test used by GPC, an electric tester that determines the percentage of gold and a florescent x-ray that provides a detailed metallurgic analysis. Typically, there is 30 percent copper in any piece of jewelry, as pure gold is too soft for use. A 14-karat gold ring, for example, may only have 58 percent gold. To illustrate this, I was given a print-out of an item that had 51 percent gold, with silver, palladium, platinum, tin and iron rounding out its composition.
This detailed information, however, doesn't mean you'll get the best price for your gold. Aronson admits they pay only 20 to 80 percent of the actual value of gold, which is lower than the industry standard. "The more you send, the more you get," he says, explaining that the company's overhead limits what it can offer. If people are unhappy, it's because they don't understand the process. "It's unreal expectations. I'd be upset too, if I paid $500 dollars for a ring with only $50 of gold in it, and then I only got a percentage of that," he says. To Aronson's credit, he hasn't made Cash4Gold's payment system a secret. Speaking to Good Morning America, he said, "If all you care about is the net dollar, and you're willing to go to the seedy part of town...I want you to go there."
Once Cash4Gold makes an offer, customers have twelve days to accept or decline. If accepted, the gold is melted in one of three furnaces, poured into molds and sold to a network of dealers and wholesalers. If a customer declines, they speak to an agent in the customer service department, which handles transactions throughout the world in multiple languages. I wasn't allowed in there, though this, in a way, was fitting. Cash4Gold's greatest achievement has been in convincing people it's easier, and more private, to send unwanted gold in the mail than bringing it to a local jeweler or pawnshop.
That ease and privacy, however, has raised some thorny issues, particular when it comes to thieves selling stolen materials. Cash4Gold has helped the state of Florida pass a part of Chapter 538, which is the first set of regulations for an industry that didn't exist five years ago. The company is now pushing for nationwide legislation that would make record keeping and authentication mandatory. "I want everybody to be on the same playing field," Aronson says. "As it is today, you send it to a different company in another state, you can't get that documentation."
My road to cash began with the arrival of an envelope. I knew this because the flashy Cash4Gold parcel had only one thing written on it: "Your road to cash has begun."
The package included a stamped return envelope, a letter (and legal warning) from Jeff Aronson, a clear plastic bag and a set of instructions. Everything seemed deliberately idiot-proof, most likely to help you get over the fact that you're putting your trust in the goddamned postal system.
I carefully placed my grandmother's chain in the plastic bag and pictured it going through the maze of processing, photographing and testing at Cash4Gold. Then I thought about it being melted. "Pure gold does not fear the furnace," an old Chinese proverb says, but this wasn't pure gold. I took it out of the bag.
Earlier, I had watched a toothless man examine the chain in a run-down pawnshop. GPC and Cash4Gold rail against these types of places, claiming it's somewhere their customers would never go. I could understand. From the way the man eyed me—like a poker player scouring for an advantage—it was clear he thought I was a liar, and, because I'm skinny and unhealthy-looking, a junkie. "My grandmother bought that for me," I said, trying to conjure up some of her magic, as if that would sway the heavily-tattooed animal behind the glassed-in counter. It did not.
"This isn't worth much," he said finally. I knew this was true—I had assessed its value by reading the small number engraved on it (its percentage of gold), weighing it and multiplying that by the price of gold. But I didn't like hearing someone say that, most especially him. "Give it back," I said. I rushed home to put it in storage.
My grandmother would laugh, but maybe one day, I thought, I'd find a use for the chain. Besides, what was really so bad about being a "sucker"? As PT Barnum said, there's one born every minute.
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