Consumers warned on gold prices

By on 01/02/2010 in News

All that glisters is not gold when it comes to the boom in companies offering cash for unwanted items. Concerned by the discrepancy in the prices being offered for gold, Councillor Neil Eustace, Chair of the City Council Public Protection Committee, is urging people to treat dealer advertising with caution, shop around and to not take the first price offered.

Alerted to the high price of gold seeing a rise in businesses advertising instant cash offers for unwanted or broken gold items, particularly those urging consumers to submit items for valuation via post, Birmingham Trading Standards conducted an anonymous survey of 10 separate dealers, 5 retail and 5 postal.

A number of different batches of gold items were first assembled by Trading Standards. To establish the full potential value of each batch, the weight and fineness of each item was established and the gold bullion prices were monitored on a daily basis.  Batches of gold were then sent or taken to traders. 

The survey results show that prices offered for the same item can vary dramatically. Although none of the businesses surveyed have broken the law, the survey highlights the need for vigilance by consumers and to shop around wherever possible to ensure that they are receiving the best prices for their gold.

The highest percentage of the current gold price obtained was from a gold bullion dealer  in the Birmingham jewellery quarter who offered a very creditable 93%. The lowest value offered was from a postal service trader who offered an extremely low 17% of the true value of the gold. 

Consumers using a postal dealer are urged to reject the initial offer made, as they are usually too low. In one instance, when the valuation was rejected, the business increased their offer from £128.50 to £130 and then, after consulting with their supervisor, to £150, representing a10% increase in value - from 61% to 71% of the prevalent bullion rates.

Caution is also urged when using internet businesses, as an online calculator tends to use only the weight of the item and its fineness (carat value) to check its worth. This means that any estimate may be very inaccurate, as businesses do not generally assign any value to the non gold part of jewellery.  Other considerations like manufacturer, stone, or special decoration will not be taken into account, so consumers may get a better price selling the item as a second hand piece of jewellery rather than just as a piece of scrap gold.

Councillor Neil Eustace said:

“For many years, consumers in need extra money have taken their jewellery to a pawnbroker, but more recently, prompted by the very high price of gold, consumers have been encouraged through local and national advertising to exchange their unwanted or broken gold items for cash.

A lot of people will be selling their jewellery out of sheer desperation and are ripe for exploitation, jumping at the first offer. I am concerned that traders may be attempting to take advantage of vulnerable customers, who are being reassured by advertising using celebrity spokespeople that they are being offered a fair deal when they are not.”

ENDS

For more information please contact Hayley Meachin on 0121 303 1271/ 07920 750007  hayley.meachin@birmingham.gov.uk

Notes for Editors

The businesses surveyed had advertised either on the internet or in newspapers and others were retail traders in the Birmingham area.  Those businesses that have been the subject of a previous complaint from a member of the public were included wherever possible.

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