Getting the best deal for gold
Monday, 21 September 2009 04:06
Gold has been in the news lately for smashing through the $1,000 an ounce mark, climbing 20 per cent from this time last year.
Worries about inflation and the economy seem to be pushing gold toward an all-time high and nervous investors pile into the precious metal.
But the high prices have also sparked interest in consumers selling their unwanted gold jewellery, with businesses springing up to take advantage of the trend.
Sarah Routledge finds out where you can get the best deal for your gold.
Consumers looking to sell their gold can now do so in a variety of ways. There are jewellery and pawn shops who will take it and there is always eBay.
If the gold jewellery you have is in good condition, then it is best to approach a jeweler to have it valued.
You can get an idea yourself by examining the hallmark, which will give you the name of the maker and a year it was made. This should also show the quality of the item in carats.
Gold Traders has a good guide on reading hallmarks.
But if it uneconomical to repair, there is the option of having it valued and bought at a 'gold party' or by posting it off to a buyer.
These companies make their money from melting the gold down and selling it on - so it doesn't matter if the jewellery is broken or old-fashioned.
Valuing your gold
Dave Shuttleworth set up ScrapGold.org.uk after a friend was ripped off selling gold coins. The site operates as an information portal only, and does not buy or sell gold.
Mr Shuttleworth says stories of rip-offs for gold sales are "quite prevalent" because the high price of gold has seen many new entrants onto the market - with many of them making misleading claims.
"Even the ones advertising on TV, a lot of them give poor prices for gold," he warns.
"I think what you should do first is work out the worth of your gold. You would expect a scrap dealer to take a five or ten per cent margin."
But some companies are offering as little as 25 per cent, he warns.
The value of scrap gold is based on weight and quality. While 24ct will get the best price, most jewellery is more like 9ct.
A set of good quality digital kitchen scales should be accurate enough to tell you the weight of your gold, and if you can find out the quality from the hallmark, you can get an idea of what it is worth before you sell it.
This can be a little tricky, however.
The world price for gold is quoted in dollars per troy ounce, while the scrap value of gold in the UK is generally quoted in pounds sterling per gram.
Goldprice.org helpfully gives the most recent price in sterling, and in both troy ounces and per gram.
But basically, you divide the troy ounce price, by 31.1035 to convert to a price per gram.
For carat golds, multiply by the caratage and divide by 24, so for example £ x 9 /24 = intrinsic value of 9 carat gold.
For comparison purposes, the spot price of 24ct gold as this article was written is £19.45 per gram.
Some companies will require you to post off your gold or bring it to a party before they will value it, making it difficult to shop around, while others offer an online calculator to show how much you can expect to receive.
Although this makes things easier, you need to take these with a pinch of salt, Mr Shuttleworth says.
"What I've heard, is companies offer a price that is better than the rest, but once you send off your gold they say it weighs less than you thought, or the quality is not as good. It's at that point they make a lower offer."
Gold parties
A trend that started in the US and has been exported to the UK, gold parties are run along the same lines as Tupperware parties. But rather than get your friends together and buy kitchen utensils, you bring your unwanted gold and sell it to the valuer who also comes along.
Ounces To Pounds pays people up to 60 per cent of the market value for their gold, platinum and silver.
Chief executive, Krista Waddell, says: "With Ounces To Pounds gold parties, people see what they are getting. There is no delay. They are offered a good price there and then and paid for their unwanted gold, platinum and silver. No waiting. No hassle."
The host gets a commission from anything sold, and £35 towards the costs of running the party. This means that you will get better value if you have the time and space to host your own rather than attend a friend's gold party, if you want to go down this route.
Mr Shuttleworth is also skeptical about these parties, and believes the offers made are comparatively low.
Posting gold
If you don't fancy holding a gold party and there aren't any taking place near you, there is another way to sell your gold - by post.
Postal-based buyers will send you a special envelope in which to send off your gold, which should come with insurance to cover any mishaps in the postal system.
Once the firm has received the gold, they take a look at it and make an offer. You will receive your cash by bank transfer, and can either accept it or reject it and ask for your gold back.
Postal Gold is one of these firms and claims to offer up to 85 per cent of the value, which is based on the spot price of gold that day.
"Why is this better than selling on eBay? With Postal Gold you definitely sell your gold for an attractive price. It's a much easier process, and is faster. No special account and no interaction with the buyer are required," a spokesperson for Postal Gold says.
"Interest has definitely been rising with the rise of the gold price. It has never been a better time to sell your gold jewellery," the spokesperson adds.
Part-time secretary Anne Graham was satisfied when she sent her old jewellery off to Postal Gold.
Part of the appeal is time, Ms Graham says.
"I had thought of tramping around Brighton and trying to sell it but it was a time thing."
After seeing an advert on TV, she decided to send off her "bits and pieces" to Postal Gold for a valuation.
"It wasn't valuable stuff, but they said they'd have it - and I got a few hundred quid back! I was quite pleased with that."
Ms Graham says she received the cash the following day and was pleased with the efficiency of the service.
Fierce competition between the various gold-buying companies has led to a war of words between Ounces to Pounds and Cash4Gold.
"In London in particular, people don't necessarily feel completely comfortable piling valuable gold, platinum and silver into an envelope. Who can be sure if it's really going to get there," says Ms Waddell, spokesperson for Ounces to Pounds.
"The risks really do outweigh the benefits. Parties are the way forward."
Cash4Gold pays as low as 20 per cent of the market rate for gold, the firm claims.
The dispute between the dealers really underlines how difficult it is to get a fair price for your gold, especially if you are shopping around on the internet.
The best way to find a reputable dealer is by recommendation, Mr Shuttleworth advises, and he lists Hatton Garden Metals, The Gold Exchange and Scrap Gold Buyers, who will all make reasonable offers and operate a postal service.
Gold Traders, which offers around 90 per cent of the market price, also gives a minimum price guarantee, which should also help reassure customers.
Phil Williams, chief executive of Gold Traders, says: "The main culprits are not necessarily the little back-street companies but are often the high profile scrap gold buyers who advertise on TV or take large ads in the national press.
"Their deals may look attractive, but the worst offender is actually paying out just 20 per cent of the gold's market value. That's rich pickings for them, and a huge loss for someone who's reluctantly parted with a gold ring, necklace or earrings they've treasured for years."
If you want to get a fair price for your gold, it is essential you do some research first. Weigh your gold and work out what the market price is. Then approach a gold trader with a good reputation and who will publish their prices.
You should expect around 90 per cent of market value for your gold, as they will need to cover their own costs of melting it down and selling it on. If the price they promise is close to 100 per cent, or they are making claims like 'best price guaranteed' be suspicious.
Once you have parted with your gold, do not be afraid to ask for it back if you are not happy with the valuation. And if you feel as though you have been ripped off, complain to the Office of Fair Trading - because the chances are you will not be the only one.
Buy and sell gold from a reputable company, Hatton Garden Metals, here.
Comments
Newsletter sign up