Swap your gold for cash

Published by Rebecca Atkinson on 17 September 2009.
Last updated on 01 June 2011

Gold dust

The price of gold has gone through the roof, passing the key level of $1,000 an ounce in early September and hitting an 18-month high mid-month.

The gold rush is great news for investors holding gold as an asset, especially as it beat all other asset classes in 2008. But even if you don’t have money invested in gold or gold-mining companies, there is a way you could cash in.

If you inherited or were gifted some gold jewellery, that you no longer want or like - or is broken - then selling it to a gold merchant could see you make some money back. There are a host of websites out there offering you hard cash in return for your unwanted gold items, from jewellery to coins, ornaments and even teeth.

The craze for selling gold for scrap is originally an American concept, but now firms are springing up left, right and centre in the UK all hoping to persuade you to part with your unwanted gold.

But should you take advantage? The answer really lies in the item you wish to sell and the amount of effort you want to put into getting cash for it.

How they work

First of all, it’s important to understand how these online gold companies work. Unlike dealers, the value of your gold is based on its carat and the weight. The money you are offered will also depend on the value of gold at the time of the sale.

If you have a rare or antique piece of jewellery, this will not be reflected in the price. In addition, precious stones set within a piece – a cluster of diamonds in a ring, for example – is unlikely to be of interest and you probably won’t be given extra cash for them.

You have two main options. The first is to send your gold in to a company that provides free and insured postage, to find out what it will pay. You can then either agree to accept the offer – in which case you should be paid immediately – or have the item returned to you.

Returned items may be posted back for free, or you may face a charge. Remember, these companies are buying gold for scrap to be melted down, so there is no going back if you accept an offer.

You won’t be able to get a valuation ahead of sending in an item. Clearly, there is risk involved in this method, as you have no protection should the company turn out to be a scam. Many postal gold companies say they rely on recommendations from previous customers to bring in new clients.

This does seem to be working. One firm, PostalGold, claims to receive 1,000 packages a day from gold sellers.

The other option is to ditch the Tupperware and instead host a ‘gold party’. Companies such as Ounces to Pounds will send a gold expert to your event to test and weigh the unwanted gold brought by your guests, and potentially make an offer to buy it. The hostess (or host) then receives a percentage of the total payout, plus commission and cash to go towards the cost of food and drink. 

Are they worth it?

The problem with these methods of selling unwanted gold is that is it far from easy to find out how much your gold is worth upfront – and the companies involved are not exactly forthcoming about how much they’ll pay per ounce.

PostalGold says the amount it will pay is based on the price of gold at the time of your item being valued. However, it says it pays as much as 85% of the market value of gold. On 15 September, it says it paid up to £520 per ounce of 24-carat gold, or £190 for nine-carat pieces.

Ounces to Pounds, meanwhile, estimates its hostesses can make £350 per party, including 10% of the total payout, 3% commission and £35 to cover their costs.

In many cases, sellers of unwanted gold might only achieve 50% of the current market value, and a spokeswoman for PostalGold says many of its competitors only pay 30%.

Of course, there are other ways you can sell unwanted gold - through a jewellery dealers, a pawnbroker, or on a website like eBay, for example. 

As well as potentially making some money from your old gold, there is also an environmental benefit to selling unwanted items for scrap; it is estimated that around 90% of gold jewellery is recycled.

Good if:

* You have gold jewellery, watches or ornaments that you no longer like or wear, or are broken
* Your pieces are mainstream gold and don’t contain any precious stones or other metals
* You are prepared to accept that you may not get paid the full market value

Bad if:

* Your gold items are rare or could have value for re-sale
* Your items contain precious stones or other metals
* You want to get a valuation before you part with your item
* You are prepared to shop around dealers or pawnbrokers to see if you could get a better price

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