Cash for gold firms offer "shockingly bad value"

12:58 21 January 2010

After a Which? report, it has been revealed that 'cash for gold' firms advertising on TV offer "shockingly bad value".

The Which? team stated that one firm offered just £38.57 for the three pieces of new jewellery purchased for £729.

The boost of these cash for gold services was brought about by the fact that precious metals remain a relatively safe prospect for investors during recessions.

TV ads encourage people to send in their unwanted gold for it to be valued by 'their experts' and then a cash sum will be sent back.

Demand for gold has led prices, which is traditionally quoted in dollars, to almost double from $660 at the beginning of the credit crunch in August 2007 to a current level of $1133 per ounce.

Peter Vicary-Smith, Which? chief executive, said: “The poor value for money that these TV gold buyers are providing is simply shocking. The cash for gold market is unregulated, and this investigation has raised some serious concerns about the fair treatment of consumers.

“People should be wary of buyers’ adverts as they could almost certainly get more money for their gold elsewhere.”

The Which? investigation sent three pieces of brand new gold jewellery to four gold buyers that advertise on television. They also sent the items to three independent jewellers and three pawnbrokers.

Which? said gold buyers consistently gave the worst quotes.

CashMyGold was ranked as offering the lowest for all three items, paying out only £38.57 for the three pieces of new jewellery purchased for £729.

A spokesman for CashMyGold said: “We run a very different business model to independent jewellers and pawn brokers and therefore have different costs such as postal insurance and administration to consider."

Cash4Gold said: "We are clear with consumers that our prices are based upon melting down the gold, even telling them on our website that they might get higher prices from pawn shops or jewellery stores which can resell the items."

An unexpected twist in the study saw Money4Gold inform a Which? Money researcher that a 9ct necklace he bought for £399 was ‘not gold’ and it would cost him £10.95 to have it returned, the report revealed.

On average, TV gold buyers offered around 6% of the retail price for gold. Meanwhile high street retailers paid out roughly 25%.

How much would you get for your gold?

                            9ct bracelet    9ct bangle    9ct necklace

Purchase price:     £115                  £215              £399