« Previous | Main | Next »

Cash for gold

Post categories:

X-Ray production team X-Ray production team | 19:34 UK time, Monday, 21 September 2009

Gold is one commodity that has withstood our credit crunch times with its value increasing 13.6% this year.

But what is it about this precious metal that is making the country dig up their carats and cash in?

To find out more, Rhodri went to meet David Hughes-Lewis, an independent jeweller based in Cardiff. David is also a member of the National Association of Goldsmiths.

He told us that the buying and selling gold business is actually nothing new. But, in the last two years the price of gold has escalated dramatically and the credit crunch has a part to play in lots of people rushing to turn their gold into pounds.

David said: "The high price of gold is obviously saving some people, you know, they're digging out their old jewellery box and turning it upside down and finding they get 5, 6, £700 for it."

Because of this latest frenzy the World Gold Council have issued recommendations to consumers. They say you should get fair market value for your gold and that it's crucial that people understand the true value of their jewellery, both in financial and sentimental terms.

To see if the Welsh public are getting a good deal on our old gold we sent our researchers on a mystery shop to see what we could get for our old jewellery.

In one day they visited 22 venues right across Wales - from pawn brokers, to jewellery shops and to places set up just to buy your old gold.

We took a variety of items for evaluation; a 9 carat gold chain, 9 carat bracelet, 18 carat ring and some broken bits of gold watch strap.

There was a huge difference in the cash we were offered for the lot, the lowest price being £180 and the highest £397, from two different outlets in Swansea.

As part of our shop, we visited four different outlets run by the Guardian Jewellery Company. They're currently running an advertising campaign on TV and in Welsh newspapers, featuring Wales rugby player Lee Byrne.

They claim to be the "foremost buyer of second hand jewellery in Wales", and the company has over 100 branches in the UK and Ireland.

You would think, being the same retailer that we would be offered the same money for our gold. But, we weren't. We were offered between £275 and £360 for all our jewellery. And there were big differences in the prices offered for the items individually from shop to shop.

The ring brought us a quote of £45 in Guardian Jewellery's Port Talbot outlet but a quote of £80 in Neath. For the chain there was a big difference - from £125 offered in Cardiff to £180 in Swansea.

Guardian Jewellery told us that as the largest buyer of gold in the UK they don't just offer quotes based on the weight and scrap value of the metal; they also consider the re-sale value of certain items.

The quotes we received will have differed because individual consultants will have different and subjective opinions.

The company also say they're warning customers that the increase in demand for scrap gold has led to a spate of counterfeit jewellery being offered to them for sale.

As a result, the difference in the prices we were quoted for the ring is due to the fact that recently, very similar fully hallmarked fakes have flooded the market.

That's why their sales consultants would initially offer a low quote, but Guardian Jewellery say they would revise their quote once they've had the chance to test the quality of the gold.

So if you have some gold to sell, what's the best, the safest way to go about doing it? David suggests that in the first instance, you should work out exactly what you have.

Separate your nine carat gold from your 14 and your 18 carat. This can be distinguished by the hallmark, and the chart below will help you to work out exactly what caratage you have.

David says that once you have a thorough understanding of what you want to sell you should take it to a reputable jeweller who'll make you an offer. He says you should get at least three different offers from various outlets before making your decision who to sell your gold to.

He also said that reputable jewellers can identify pieces that have a resale value which in some cases can be worth more than the scrap value for the item.

There is a way to work out the market value of your gold, so you can compare what you are being offered. Firstly you need to weigh the gold you want to sell. You can use kitchen scales to do this.

Then, find out the current price of gold, which can be found on the World Gold Councils website. Even though gold is bought in grams, the daily price is issued in troy ounces. One gram is the equivalent of 0.03215 troy ounces.

You then multiply the purity of your gold (for example if 9 carat, the figure would be 0.375, see chart below) x weight (multiply its weight in grams by 0.03215 for the troy ounce figure) x current gold price.

Hallmark Gold Content/Purity, Comments
24 990 99.0 Minimum allowed for pure 24c
22 916 91.6 Indian Subcontinent
21 875 87.5 Arabic countries
18 750 75.0 Standard international caratage
14 585 58.5 Most common in USA
9 375 37.5 Minimum in UK

It's worth remembering that you probably wont be offered the full market value for your jewellery as gold dealers need to make a profit.

And what about the companies that encourage you to post your gold to them using one of their gold kits? The World Gold Council advise that high values of gold should never be posted and you should make sure there is adequate insurance in place before sending anything. We requested two postal gold kits, and both companies sent us Royal Mail 'Special Delivery' envelopes. One company says that the goods would be insured for up to £500, and the other up to £1,000.

Both companies say, however, that you would need to claim from the carrier if the envelopes were to get lost. We asked Royal Mail about this and they told us that if you did need to make a claim then you would have to show as much evidence as possible as proof of the value of the jewellery. That means if you don't have the original receipts then you would need to provide a valuation from a reputable jeweller. But this isn't something that some of these postal gold companies tell you.

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.