Last Updated :
24 September 2009 at 16:30 IST
UK families bank on scrap gold to beat recession
LONDON (Commodity Online): Even as the European nations are reeling under recession blues, ingenious housewives and middle class families are banking on gold to beat the meltdown.
More and more families are now digging deep into their old jewellery boxes to find out small pieces of useless gold jewellery or broken bits of gold so that they can sell them at record prices now to make a killing.
The number of companies offering people cash for their unwanted gold has soared as the price of bullion nudges $1,000 an ounce.
Gold is traditionally seen a safe haven investment for investors and tends to benefit when markets and economies hit troubled times and confidence erodes.
As global investors are shoring up their finances by buying into gold, recession-hit individuals are offloading their unwanted jewellery for cash.
A rash of television advertising, with promises of handfuls of cash has helped to awaken the UK population to the money-making potential on their dressing tables.
Postal firms have been particularly vocal in encouraging the UK to embrace a popular trend in the US.
Customers send their items to the companies in special packs and these items are then assessed and a valuation is made.
The amount of money that someone can expect to get from their gold will depend on the number of carats it has. Most jewellery is 9-carat, which is only 37.5% gold with the rest made up of other metals like copper, zinc and silver. At market level gold is measured and sold in troy ounces. One troy ounce equals 31.1035 gm.
One postal company that does publish its rates is Gold-Traders. It will pay from £6.87 for a gm of 9-carat gold, up to £18.13 for the same quantity of 24-carat at current prices.
The firm quoted £563.90 for an ounce of 24-carat gold, so around 91% of the current world price.
The sort of jewellery people send in to the firm includes anything from your usual 9-carat jewellery; earrings, bracelets as well as watches and coins.
Cash4Gold, which uses former rap star MC Hammer in its US adverts, promises to convert unwanted jewellery into cold hard cash.
Postal Gold offers to pay cash for unwanted jewellery and suggests that items could be worth a lot more than a few years ago.
Pawnbrokers will also buy gold and many have separate services to do so.
Another increasingly popular US import is the Gold Party, conducted in the style of the Tupperware parties of yesteryear – where a group of women gets together at one person’s home and a representative from the firm assesses their gold. Ounces to Pounds is currently the only gold party organiser in the UK.
At each party around 15 women go to a friend’s house, the wine flows and then each person spends 20 minutes with an Ounces to Pounds rep in private weighing up their unwanted gold, silver and platinum.
The hostess of the party earns around £350 per party in a 10% commission. They also receive 3% on the payouts from future parties booked at their event.
Critics have said this commission- based business model reduces the amount available to pay for gold.
NCDEX STEELLONGJUN12 20 June 2012
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