The price of gold has reached new records over the past few months, and so companies that exchange people's gold for cash have grown in popularity. People have been comparing prices for unwanted gold jewellery from high street and freepost schemes.
So how did Cash4Gold compare with some items valued at £300? The firm sent a cheque for just £63. When they called to ask for the jewellery back that offer was increased to £100.
The firm's boss, Jeff Aronson, makes no apologies for pricing, claiming that some people are willing to accept less for their gold in return for convenience and speed. "Our customers are not interested in going to a pawnshop or a jewellery store." "They would be mortified if a friend saw them doing that. We are serving a new industry that we have created. We are not here to price fight against a jeweller."
Crewe-based CashMyGold is the most high profile British company in the market. Like its American namesake it spends heavily on advertising, especially on daytime TV. It works in an identical way: users call or go online, order an envelope, post off their gold and wait for the cheque to arrive. CashMyGold uses the slogan "best prices paid for your gold" but its offer was the lowest of the three at just £60.20. When questioned a sales rep immediately offered to increase the offer to "£150 maximum". In a statement the firm said it has a "very different business model" to high street gold dealers with "different costs such as postal insurance and administration" to consider. "Taking this into account, we believe we offer a fair price for those who are looking for a hassle free, door-to-door service," it said.
Finally high street jeweller H.Samuel launched its own postal gold service over the summer.
Unlike other firms, it always telephones customers to ask if they will accept an offer rather than sending a cheque straight back. Its quote? The highest of the three at £182 rising to £210 if gift vouchers instead of a cheque, still significantly below the £300 quoted by a gold bullion dealer. Again the firm claimed its offers are fair. "By using our service customers are dealing with a well-known and established high street jeweller with national store coverage," it said. "If the customer does not want to accept our offer the jewellery is returned at no cost to them."
The findings to the Trading Standards Institute. Its joint lead officer for fair trading, Alonso Ercilla, said offering a low price for gold might be irritating but it's not illegal. "Unfortunately there isn't much Trading Standards can do if people are getting a bad deal, provided the trader is not actually misleading the seller about the gold's worth," he said.
"Customers need to shop around and try to establish the price per gram. "If you are using a website, read their terms and conditions. And don't automatically take the first price you are offered."
The Office of Fair Trading (OFT) has launched an investigation into companies that offer cash for gold jewellery by post. The OFT is also asking to hear, via its website, about consumers' experiences of using these firms.
CashMyGold, PostGoldForCash, Pawnbroker Ramsden’s Got Gold Get Cash are thought to be under the spotlight. The US-based Cash4Gold, which was launched in the UK in July, could also be subject to investigation.
The price of gold has soared since the collapse in September 2008 of Lehman Brothers, the investment bank. In December it peaked above $1,200 and remains about $1,100 an ounce.
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