MINNEAPOLIS — For Disa Kullman and millions of gold buyers and sellers like her, the party is over.

In 2009, Kullman hosted a gold party where she and 15 of her friends sold their outdated and broken herringbone necklaces, bracelets and rings for more than $1,500 in cash. “I never did it again,” she said.

Back then, when gold prices started rising after the collapse of stocks, credit and many currencies, parties sponsored by companies such as GoldSwap were common. Gold buyers who set up shop in malls and jewelry stores advertised “we buy gold” incessantly. For middle-class consumers, selling became a source of “found money.”

Today, as the price of gold has dropped from the peaks, the parties have evaporated, most gold-buying stores and kiosks have closed, and the ubiquitous TV commercials are history. How did gold lose its luster?

In late August 2011, gold hit an all-time high of more than $1,900 per ounce in after-hours trading before falling to $1,600 in 2012, $1,200 in 2013, and drifting along at around $1,100 since 2014. As gold prices declined, so did consumer interest in selling gold for scrap.

“It was just crazy in the heyday — 2010 to 2012 was off the charts,” said

Joe Beasy, co-owner of seven Gold Guys stores in Minnesota and California. “We were spending $190,000 a month on nationwide advertising.”

The Gold Guys closed three stores in California and others in Cincinnati, Dallas, Hawaii and Las Vegas. “Our revenue is down 70 percent,” he said. “But we’re still profitable. If you trade gold in the aftermarket and pay attention to the peaks and valleys, you can make a profit on the back side.”

Up to 80 percent of stores that specialized in gold buying nationally are gone, Beasy estimates.

Business at Independent Precious Metals in Minneapolis today is about one-fifth of what it was at the peak, owner Doug Rooney said. “The amount that the scrap market has fallen is staggering,” Rooney said.

Besides the loss of interest due to lower gold prices, some say the drop-off is because many consumers don’t have anything left to sell.

“Six years ago, I got rid of tons of old pieces that I wasn’t wearing,” Bonnie Johnson said. “The jewelry I still have I don’t want to part with.”

Gold pieces sold in the past eight years were often 20 to 40 years old and were bought when gold cost less than $400 an ounce. Jewelry purchased at the higher prices of this latest upcycle would produce a loss if sold today.

Also, current styles of jewelry often are not made of gold. “People aren’t buying gold jewelry as much anymore,” said Dan Wixon, owner of Wixon Jewelers in Minneapolis. “They’re looking at less expensive precious metals such as sterling silver and titanium.”

Many jewelers expanded into the gold-buying business during the gold rush. “The gold boom gave a lot of struggling jewelers a boost,” said Sandy Severt, owner of Gloria’s Jewelry in St. Paul. “But it also prolonged the agony.”

Since 2007 the number of jewelry stores has fallen by 20 percent, based on U.S. Census figures. Independent retailers lead the closures.

Surviving jewelry stores are often the ones that weren’t too focused on gold buying, Severt said. “Diversification is key,” she said.

Pawnshops found a similar niche. “When the gold business went away, it wasn’t a serious blow,” said Patrick Doolittle, general manager at Excel Pawn in St. Paul. “We’re more diversified.”

"Many of the gold buyers were opportunists and scammers,” said Richard Baron, former executive director of the National Association of Jewelry Appraisers. “Most of them have folded up their tents and gone away.”

According to the Better Business Bureau of Minnesota and North Dakota, the number of complaints about gold, silver and coin dealers dropped by more than 50 percent between the high in 2013 and last year. Inquiries about those businesses have dropped, too, from 17,700 in 2014 to 12,860 last year.

Views are mixed on where the price of gold is headed. It has risen modestly in recent weeks, and China’s slowdown and U.S. stock market troubles have stoked enough anxiety to burnish gold’s appeal. Among 24 traders and analysts surveyed by Bloomberg News, 17 are bullish on gold.

Amid the current gloom, though, financial assets show no signs of losing their advantage. They are underpinned by an economy that doesn’t display the weaknesses that can prompt a recession and trigger a lift for gold.

Will buyers and sellers ever see a return of the gold rush of 2008 to 2012?

Wixon thinks it could be 15 years before gold prices rise to new peaks. Beasy, on the other hand, thinks 2016 will be an “interesting” year for gold.

Scott Stebbing, president of Stebgo refinery in South St. Paul, said people who waited too long to sell their gold during the last upturn will come out for the next one. “There are still a lot of estate pieces to come in,” he said.

As for the gold-buying businesses that closed as gold declined, Margaret Olsen, author of “The Gold Book,” said: “When the market kicks in again, they will be back.”

This report includes material from Bloomberg News.

(0) comments

Welcome to the discussion.

Please keep it clean, turn off CAPS LOCK and don't threaten anyone. Be truthful, nice and proactive. And share with us - we love to hear eyewitness accounts.

You must be a digital subscriber to view this article.