Cash for Gold: What the Story?
You’ve probably seen the adverts on TV – cash-strapped celebrities endorsing the latest way of making money by selling your unwanted or broken gold jewellery to make a fast profit. Rising gold prices have made gold a very profitable commodity, and since 2004 gold has almost tripled in value.
As there aren’t many commodities that have actually increased in value in the current climate, and because many of us are looking for ways to get our hands on extra cash, the popularity of companies who promise to buy your gold from you at ‘the best rates’ is increasing.
How do Cash for Gold Companies Work?Most of the cash for gold companies work in the same way – they entice people into sending off their unwanted jewellery – for free – in return for a cheque which is promised to be with them very quickly. To be fair, consumers do report that the cheques they are sent arrive swiftly, but that’s not the real issue. The issue seems to be that when the anticipated cheques arrive, they are for sometimes derisory amounts and far less than the same weight in gold would be worth if taken to a high street jeweller offering the same service.
The cash for gold companies usually take the jewellery and melt it down once within about 14 days of sending the cheque, if you don’t argue with them about the amount they’ve offered you for your trinkets. They then sell it on, making a large profit.
Investigations into the Cash for Gold BusinessA recent investigation carried out by Which? Money showed that the companies who advertise on the television were consistently the worst when it came to the amounts offered to sellers. They usually gave between seven and 12 days to object to the amount they offered for the jewellery, after which they would melt the gold down if the cheque wasn’t returned.
The Which? Survey found that the average amount that sellers were offered for their gold was just six per cent of the retail value - while the average price quoted by pawnbrokers was 17 per cent and high street jewellers tended to offer an average of 25 per cent of the retail value of the items being sold.
The Office of Fair Trading is planning to investigate cash for gold firms, and has requested information from some of the companies involved so that it can decide whether they are complying withal the relevant consumer protection legislation.
The OFT has asked for information about the companies’ on their business practices as well as an explanation some of the claims they’ve made on TV and online. The OFT is also looking at whether consumers’ rights to turn down a derisory offer are always being upheld.
At the moment, the consensus is that none of the companies are actually breaking the law until proved otherwise.
What to Do if You Want to Sell Your GoldThe market for the buying and selling of gold by post is unregulated – and there’s nothing illegal in what the companies are currently doing. As far as the laws is concerned, a company can offer you any price it thinks right for your gold, and it’s up to you whether you accept it.
A recent BBC investigation did find that if you’re prepared to haggle with the postal gold companies, you will almost certainly get a better offer. In one case, researchers haggled the company up to almost the same amount that a high street jeweller was prepared to pay – but this took four refusals. The golden rule is not to ever accept the first offer as you can almost certainly get a better one.
If you really want to get a better deal for your gold, your best bet is to use a high street jeweller – but failing this – haggle.