The cash-for-gold business is thriving but sellers get a shocking deal for their jewellery
- IT'S A COLD morning and I'm in an shockingly decorated hotel room on a leafy road in Dublin, trying to sell my wedding ring to a man who is not exactly busy.
He’s been in this place for more than five hours waiting for a gold rush which has yet to materialise. Despite the fact that fliers offering to buy unwanted gold for cold hard cash have been posted through every letterbox in the neighbourhood, I’m his first customer of the day – very bad news for a man who works exclusively on commission.
I hand him the ring. He looks for the carat – 18 – weighs it – 6.6 grams – and punches a few numbers into a cheap desk calculator before offering me €80 for the ring. I’m horrified as it’s nearly 90 per cent less than the ring cost when bought in a moment of madness from an upmarket jewellers in the city centre several years ago.
I tell him I am not here to sell but to find out more about the growing trade in recycled gold. The news that he’s not even going to make this, very modest, buy is plainly not welcome news. He is, however, willing to talk about his business although unwilling to identify himself by anything more than his first name, Martin.
He’s been in the gold buying business for six years, the last three of which he has spent in Ireland. He says that while it has been quiet since Christmas, before then he was dealing with between 20 and 30 customers with gold to sell daily.
“There are too many people in the business now and too many websites. At least in here you can see what I’m doing. I can offer €14 a gram while the best price many of the websites will give you is €4.”
Over the last year, daytime television ad breaks have been taken over by mostly web-based companies offering to buy unwanted gold off cash-strapped punters laid low by the global economic malaise.
Martin is right on the money when he says that some of these companies offer consumers shockingly bad value.
The magazine Which?recently sent three pieces of brand-new gold jewellery to four gold buyers that advertise on TV. It also sent the same items to three independent jewellers and three pawnbrokers and it found that TV gold buyers consistently gave the worst quotes.
CashMyGold offered just £38.57 (€44) for the three pieces of new jewellery which had been purchased for £729 (€834). One of the poorest deals from CashMyGold was an offer of just under £10 (€11.40) for a £215 (€246) 9ct gold bangle – an independent jeweller quoted £54 (€62) for the same piece.
Another site, Money4Gold effectively held a 9ct necklace to ransom, telling the Which?researcher that the necklace, which cost £399 (€456), was "not gold" and insisted the customer pay £10.95 (€12.50) to have it returned. The magazine's investigation found that on average, the TV gold buyers offered only around 6 per cent of the retail price for gold, but British high street retailers paid around 25 per cent.
"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," says Peter Vicary-Smith, Which?chief executive. "People should be wary of buyers' adverts as they could almost certainly get more money for their gold elsewhere."
One place might be Martin Gear’s jewellers on Dublin’s Dorset Street. He opened seven years ago and the “We Buy Gold” sign is nearly as big as the name over the door. He offers me €90 for my wedding ring if I am simply scrapping it but says he’ll give me €130 if I trade it in for a new piece.
He says that while the gold buying business is good, there is a misconception that the recession has seen desperate people beat a path to his door. “We have seen an upsurge in recent months and I think that is thanks to the television ads more than the recession. People have suddenly realised how much money they might be sitting on. We might get around 15 people in a week. Mostly they are just having a clear out or a spring clean – there are loads of places that take CDs or books so why not gold?”
When I express dismay at the offer of €90 for my ring, he points out that I paid a premium because the ring was unusual and highlights VAT at 21 per cent and the jeweller’s mark up.
“Some of the big stores would work on a 300 per cent mark up but they have to because they might be paying €10,000 a week in rent as well as up to a million in key money.”
Niall Marren is the MD of forgottengold.com, an Irish-based, gold recycling website. The site has staked its claim to be the first entirely Irish-owned such website and he says that since they started trading 12 months ago, they have bought gold from 7,000 people. There has, however, been a stiffening of competition in recent months and, in addition to a handful of other Irish operators, US and UK sites are looking towards Ireland to boost trade.
He offers €82.67 for the ring. “We determine how much we can sell it for on the gold markets and we work out how long it will take to get it on to those markets. We pay between 65 and 80 per cent of the market value. We are in the business to make a profit but the profit margins are not high, they are in the single digits,” says Marren.
He describes the typical seller as “an astute person” who recognises the value of things. “My impression is that people see this as an opportunity because of gold prices,” he says.
Since August this year, the value of gold has risen steadily on international markets, reaching an all-time high of $1,226 (€879) an ounce on December 3rd, up from $255 (€183) an ounce in December 1999.
He says that 90 per cent of the business is from women selling jewellery they received from old boyfriends or because it has simply gone out of fashion.
“The one thing that people don’t sell is the stuff that has sentimental value, not unless they are really on their uppers. Very often we get rubbish bits of old pieces that people just have lying about the place, stuff that would be of no use to anyone unless it is melted down and recycled.”
He accepts that the Which?study did come to some very grim conclusions about the websites trading in gold but is understandably anxious to distance himself from their findings. "I don't believe that it would come to the same conclusions about the Irish market."
I also tried to flog the ring on a US-based website where I was offered just €53, but the worst price offered came not from one of the new gold traders but from a considerably more old-school operation.
In one of Dublin’s dwindling number of pawnshops, a man behind the thick glass panel could hardly have been less interested as he casually threw the ring onto a scales and barked “50 quid” at me. I made my excuses and left, ring on hand.
