Selling the family jewels
By Diana McLaren • Bankrate.com

"Need extra cash for Christmas?" the flyer read. "Do you have jewelry boxes full of forgotten gold trinkets, knotted gold chains, unmatched gold earrings?"

The ad pitched to the elderly residents of a Dundas, Ontario, nursing home promised a fun way to "earn instant cash" and help the home's charitable foundation at the same time.

It's called a gold party, and it's part of a new wave of activity aimed at buying and selling old jewelry, and gold in particular as the price of the precious metal continues to soar with no sign of bottoming out.

Sandy Silver, of Gold Party Toronto, hosted the recent nursing home event. She says the process is simple: People bring their old jewelry, it's tested and weighed, and if the seller agrees to the price, cash changes hands on the spot. As well, Silver's company donates a percentage of sales to the party's host.

In the case of the nursing home's charitable foundation, the donated rate was 15 percent, although for private parties, Gold Party advertises a flat rate of $25 for every guest who sells his or her gold.

Price fluctuates with daily posted market rates for gold. On the day of the nursing home party, Silver's offer for 18-karat gold was "approximately $19 a gram," and a sampling of Internet-based sellers showed rates from $16.35 to $18.50 a gram for 18-karat gold. Market rates were $1,060 an ounce for pure gold (24 karat) and with 31 grams per ounce this translated into $25.65 per gram for 18-karat gold.

How it works
With a company like Gold Party, you meet the representative and are in the room when she tests and weighs your jewelry. That's not the case with the many Internet-based companies that buy gold, silver and platinum jewelry.

Typically, the Internet deals work something like this: You e-mail a request for a mailing kit, send off your jewelry and then receive payment. In some cases, you'll be offered a price to which you agree before payment is sent, while in others you must request an estimate prior to payment.

Once cheques are issued, most Internet companies have a no-refund policy so there's an element of seller beware in these faceless deals.

In fact, says Donald McLean, being cautious when selling old jewelry is a good principle to follow. As head of the jewelry department for Waddington's Auction House, in Toronto, McLean has a quarter-century of experience assessing jewelry for sale and auction value.

All about appraisals
"Jewelry is like any other art form, with one exception," McLean says. "The value of the materials themselves."

What makes a piece valuable, he says, is its quality, who designed it and whether or not it's signed, its rarity and age. "Also, there's a certain sense of fashion where jewelry is concerned."

McLean advises sellers to do some homework in terms of finding out the value of what they're selling and to whom they're selling it. Where Internet sites are concerned, he says, "there are no doubt good ones and bad, but how is the seller to know unless there's some way to check the company's reputation?"

Diana McLaren is a writer living in Toronto.