Monday, January 25, 2010

A Golden Opportunity?

The cash for gold market has really taken off recently. All of sudden we are being bombarded with TV ads, flyers in the door, stalls in supermarkets from companies offering to take all that unwanted gold off our hands for bundles of cash. Gold has always been an attractive commodity in times of financial and political turmoil and this time is no different, global prices have soared in the last year. This means there is a great market for scrap gold now. So in the middle of a recession it seems a bit of a no brainer, gather all that unwanted gold jewellery, stick it in an envelope and wait for the cheque in the post by return. The buyers can resell the gold for a tidy profit, so its a good news story all round.

Well it is not that simple, as it seems many people could be selling their gold at a fraction of its worth. When you think about it, in normal circumstances would you allow the buyer to dictate the price they are willing to give you? As with all new crazes problems arise, in the US, there has been a lot of controversy about one particular company highlighted by and alleged wrongdoing. Here Senator John Paul Phelan of Fine Gael has also rightly raised legitimate questions concerning the regulation of this activity and the potential for it to increase burglaries and theft. Senator Phelan is proposing a private members bill to deal with this. Although if there is evidence that some companies are using sharp practice, then that could be tackled under the existing provisions of the Consumer Protection Act 2007 dealing with unfair and misleading commercial practices.

Like the Cash for Gold craze...Glee is the latest TV craze, no TV channel is safe!

However there is no law against illogical consumer behaviour and if people insist on sending their gold in the post without any idea of its value and accepting whatever price is offered, then no surprise if companies buy it as cheaply as possible. According to one company in the US 94% of customers accepted the offer given. However a very recent survey by Which in the UK found that most of the TV cash for gold operators offered poor value compared to pawnbrokers and jewellers. Now obviously no one would expect to get the retail value of the gold, but most of the cash for gold operators were only offered about 6% of the retail value of the items, compared to about 25% from the jewellers/pawnbrokers.

The lesson here is to do a bit of work. Find out the caratage (quality) and weight of your scrap gold. This expert gives great advice on what to do. Some of the companies involved provide online price calculators, so you have an idea of the price being offered. I came across this site which gives information on the value of gold based on weight and quality, they don't claim it is perfect, but it might give you some ballpark idea of values. If all that seems a bit too challenging, at the very least take your scrap gold to a pawnbroker or jeweller to get a valuation. As the seller of a now even more valuable and sought after commodity doing some leg work gives you information, choice and bargaining power and will probably ensure you get more for your gold!