Several 'cash for gold' companies had their knuckles wrapped by the Office of Fair Trading recently for effectively forcing customers to accept their offers by melting down jewellery before customers could decline. This doesn't surprise me, as these companies tend to operate at the murkier end of the market, sometimes vanishing as quickly as they pop up.
But with gold still riding high at around $1,400 per ounce and government spending cuts starting to take hold, selling off gold jewellery to raise cash is likely to remain popular.
If you find yourself in this position, where can you get the best price for your jewellery?
Research from Which? magazine suggests ‘cash for gold’ companies generally offer pretty awful prices – probably only a fraction of the price you paid.
In November 2009 they purchased four identical items of gold jewellery (all 9ct), costing £115, £215 and £399, and sent them to four TV gold buyers, as well as getting quotes from three high street pawnbrokers and three jewellers. The results were as follows:
|Buyer||£115 item||£215 item||£399 item|
Why do these companies only offer you a fraction of the price you paid? Well aside from the fact their prices are often stingy in any case (partly to pay for all that glitzy advertising), ‘cash for gold’ buyers simply offer a price based on the value of the jewellery melted down as gold bullion. When you buy new jewellery, the price includes the cost of manufacture as well as VAT and a hefty retailer mark-up.
Want to estimate how much your gold jewellery should be worth if melted down? First, start by checking how many carats the piece is (e.g. 9k or 18k), this is a measure of gold purity. 9k means 37.5% pure gold (the rest of usually a mix of copper and/or silver) while 18k is 75% pure gold. Unsure how many carats your jewellery is? Take a look at this handy guide from the British Hallmarking Council.
|Carats||Pure Gold Content|
Then weigh the item in grams and then divide by 31.10347 to convert to troy ounces. Finally multiply the percentage of pure gold by the weight and by the cost of gold per troy ounce.
To save you lots of number crunching use our Gold Jewellery Calculator, simply enter the carat and weight of your jewellery and discover its true value in gold with the click of a button.
If you do want to sell your gold you’ll almost always be better off going to a jeweller, if it’s something they can re-sell, than using a ‘cash for gold’ firm. Better still, if it’s a desirable piece then try selling it on ebay or via an auction house – after all, that’s what gold buyers will probably do if the piece is too good to melt down.