Consumer - Selling your gold for cash
Friday, 26 February 2010
Cash strapped consumers are turning to their jewellery boxes to raise some much needed funds, selling off unwanted and scrap gold. So how does selling gold for cash work, what are the potential pitfalls and how much money can you expect to get?
Tina Leonard, Consumer Expert
The price of gold is increasing year on year and is currently trading at $1,108 (18th Feb) an ounce compared to $250 per ounce in the year 2000.
At the same time due to the recession, more people than ever are short of cash.
So, what do you get if you combine these two elements?
You get a growth in companies buying your gold jewellery for cash and a parallel growth in the number of people selling it to them.
So how does selling gold for cash work, what are the potential pitfalls and how much money can you expect to get?
How do I sell my gold for cash?
You have three main options:
1) Use the post service offered by the company (most common)
2) Go to a gold party
3) Call to the premises
Some also provide a private service where they call to your house, and some arrange events in hotels, although I haven't seen any advertised for this year so far.
Here are some Irish companies that buy your gold for cash:
How does the postal system work?
If you want to avail of the postal schemes on offer, they all work in the same way. First of all you request an information pack, either online or by phone. Then you collect your unwanted gold and put it in a jiffy bag and then another envelope, which are both provided in your pack. A pre-paid envelope is provided. The rate for gold used is that on the day they receive your gold. They will send your cheque in the post, or call you before hand with your offer and you can accept or reject it.
How do the gold parties work?
A gold party is a party in someone's house arranged by a friend or work colleague for example who acts as host, where an agent who will buy your gold attends. You turn up with your unwanted gold, the agent weighs it and tells you how much they will pay. If you agree you pocket a cheque there and then.
If using the postal system you should register your package. Most of the companies say they insure up to €300. If registered you can claim up to €320 but only if you have declared the value of the items on the envelope. If not you'll only get €25.39. I only saw that advice on one of the websites (dublingoldexchange.com).
An Post say they have pre-pay registered arrangements with some of the companies but not all. So some will send you a bag or label that is pre-paid and registered but you still should declare the contents and value. For other you should register it yourself at the post office.
Returning the cheque
If you're not happy with the amount you receive, you can return the cheque and get your jewellery back but beware the terms imposed. Money4gold.ie say that you have to return the cheque to arrive at their office with 10 days of the date on the cheque, not the date you receive it. This is a potentially unfair term. Some companies will call you with their quote before sending a cheque so this is a better option and look for a company offering this service.
It is of potential concern that some businesses have their name on the envelopes as this could lead to post theft. Secondly there is the issue of criminals selling stolen gold jewellery.
While you have to show ID if in-store or at a gold party, when selling by post you generally just have to tick the box saying you agree to the terms & conditions and they say that you have to have the right to sell the jewellery, whereas with pawnbrokers for example ID is required as well as CCTV cameras filming all customers.
However, with the gold buying companies they do take a photo of all gold received, they have your name and address and make the cheque out to your name.
Of more concern are the gold buying shops that have set up in towns around the country that pay in cash and so require no name and address. These shops also pay about 30% less than the other ones.
<This is of concern to FG Senator John Paul Phelan who has issued two press releases on the matter in the last few weeks and plans to introduce a bill to the Seanad which would aim to regulate the business.>
Am I getting a good price for my gold?
There are two things to consider here:
1. The price you get compared to world gold price
2. The price you get compared to the retail price
World gold price
The price for gold changes every day (see www.goldprice.com)
At today's prices (18th Feb) ($1108 / €816 / per ounce) equals €26 per gram and this is for 24 carat gold, so you have to adjust that downwards for 12 carat, 9 carat etc.
When you sell it you will get from 55% - 70% to this value.
Any retailer will have a 200% to 300% mark up on the intrinsic gold value of an item, as the price will also include craftsmanship, design, brand, marketing etc. This means when you sell a piece on you can expect to get only a small fraction of that.
I.e. your €200 necklace has €25 worth of gold and you get €15.
How much do I get today?
What the Irish cash for gold companies quoted over the phone for a 1oz Ingot necklace of 9carat on Feb 26th is:
Gold Company - Price Today they will give you:
In Ireland and the UK, the standard is 9 carat, which is viewed as poor. Those who travel and have bought gold abroad in areas such as the Far East, Turkey and New York, would have items with higher content, of 14 carat and upwards.
Pure 24-carat gold is given a value of 1. A piece hallmarked .375 is 9-carat, or if it's marked .750 it's 18-carat.
Most European countries do not produce 9-carat gold jewellery, most will be of 18-carat quality.
How is the rate for gold worked out?
. It is worked out on a rate per carat basis. To find out the carat of your gold look at the marking: 9 carat would be marked .375 or 9K.
. Weigh your gold on digital scales.
. The price gold trades at changes every day, and has rocketed in the last year or so. Generally, the price for pure melted gold should be reduced by 10pc to cover the cost of melting and any losses that result. So if the gold is trading at €660 per ounce, scrap gold would be worth about €594 per ounce.
. The next step is to convert the price per ounce into the price per gram, since this is the common measurement used for scrap gold bought at retail level. To do this, divide the price per ounce by 31.11. For example, if the price per ounce is €594 then the price per gram is €19 using this conversion. Bear in mind this price is for pure 24-carat gold.
. To calculate the price for 18-carat gold, simple multiply the price for 24-carat by .75. So if the price for pure gold is €19, then the price for 18-carat is €14.32. To calculate the price for 9-carat, multiply the pure gold price by .375. In this example, the price for 9-carat is €7.12.
. And finally never take the first offer and never accept an offer if you are not satisfied that you are getting value for money.
. Dublin Gold Exchange 086 227 6450 firstname.lastname@example.org
. Forgotten Gold 091704 842 email@example.com
. The Gold Retriever 091 767 760 firstname.lastname@example.org
. Cash4goldireland 086 078 0618 info@Cash4GoldIreland.ie
. Goldtocash 01 830 8242 email@example.com