Cash for gold

Gold-buying kiosks offer you convenience, but they don't always give the best price.
 
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01 .Getting a fair price

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Armed with a ring and two necklaces, CHOICE visited 10 jewellers and gold-buying shops in Sydney and was offered between 39% and 89% of the gold value for the items.

We found jewellers in the CBD usually offered the best price, especially when we negotiated, whereas two of the cash-for-gold kiosks in shopping centres were a rip-off. Be careful if you have any items with gemstones such as diamonds, as few gold shops pay prices to reflect their value – most pay only for the gold content.

CHOICE cash-for-gold shadow shop

Many of us have jewellery lying around we no longer wear – a broken necklace or an inherited bracelet that’s out of fashion. In recent years, kiosks offering cash for gold – some with shiny offers – have opened in shopping centres. But do they give you a fair price?

In a recent shadow shop, CHOICE found a huge variation in quotes between shops. We were quoted between $154 and $300 for the same three items of gold jewellery. Their gold value was about $400, so the highest price we obtained is roughly comparable, although obviously nowhere near the retail value, which at $1900 is significantly higher, as it includes workmanship and a retail margin.

Be careful if you have any items with gemstones such as diamonds, as few gold shops pay prices to reflect their value – most pay only for the gold content.

The growing prevalence of gold-buying shops coincides with a dramatic increase in the price of gold over the past decade. It has more than quadrupled from $US274 per ounce in September 2000 to $US1271 in September this year, with most of the increase occurring between 2005 and 2010.

Selling on eBay

Our sister organisation in the UK, Which?, tried their luck at selling unwanted gold jewellery on eBay and found prices were far more competitive than those offered by either TV-advertised or high street gold buyers. Which? sold a batch of gold bangles, bracelets and necklaces on eBay and got five times more than the price offered by the TV-advertised gold buyers. The £215 gold bracelet, for example, sold for £69 on eBay. TV-advertised gold buyers had offered Which? just £12 and high street jewellers, £46, for the same piece. So it pays to investigate selling your jewellery online.

Getting a fair price for your jewellery

You can sell your gold jewellery in a shop, online or at a gold party that one of your friends may organise. 

  • Weigh the items on a kitchen scale to get the approximate weight, check the gold price and calculate what they are worth. 
  • Aim to get at least 70%-80% of the gold value.
  • Try at least three different outlets. Ring them first and ask how much they pay. Look for jewellers and specialist gold-buying businesses or pawnshops. 
  • Go to at least three different gold-buying businesses armed with your quotes and be prepared to ask for a better deal. Don’t be shy, as competition is strong and many shop owners will negotiate. Don’t be pressured to sell on the spot; walk away if you’re not sure. 
  • You’ll usually get better prices for heavier items (or bundle of items) and have more room to negotiate. 
  • Ask the shops if and what they pay for any diamonds or other gemstones of value (most won’t offer you anything). Go to a reputable jeweller and ask them to take out the stones. 
  • If you’re going to a gold party hosted by a friend, only part with your gold if they offer you a good price. You may not be able to negotiate as much at a gold party, as your host will get a commission. 
  • Call and talk to a real person first before selling your gold online. Make sure you get a quote beforehand and that your jewellery will be returned without charge if the quote is too low.
 
 

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Shadow Shop

Our shadow shop was undertaken over three days in early September. We presented each shop with the same three pieces of jewellery (a 9-carat ring, a broken 9-carat chain and a broken 18-carat chain) and asked for a quote. We noted the weight the shop’s scale showed, and used the New York Spot closing price on each day to calculate the gold value. (The Spot price varied by less than 1% over the three days.) Some shops did not accept all three pieces – for example, they thought the ring might be silver and only gold-plated or the 9-carat chain might be too light to be gold.

gold

Using the table

Gold prices are based on New York Spot price of the day on which the price was quoted. Source: www.kitconet.com. All shops in this table are in Sydney; try the following shops as a starting point if you live elsewhere (we haven’t tested them):

Adelaide Adelaide Exchange Jewellers, www.adelaide-exchange.com.au, 10 Stephens Place, Adelaide (also branches in Glenelg and Modbury), (08) 8376 0044.

Brisbane: Gold Buyers Brisbane – Ainslie Bullion Company, www.cashforgoldjewellery.com.au, 289 Queen St, Brisbane, 1800 987 648.

Hobart: Adelaide Exchange Jewellers, www.adelaide-exchange.com.au, Cat & Fiddle Arcade, Upper Level, Hobart, (03) 6234 5000.

Melbourne: Cash For Gold Australia, www.cashforgoldaustralia.com.au, 112 Swan St, Richmond, (03) 9429 7000.

Perth: Perth Mint, www.perthmint.com.au/buybackjewellery.aspx, 310 Hay St, East Perth, (08) 9421 7428.

Table notes

(A) This quote was from the manager of the company, who was called by the shop assistant.

(B) Initial quote by the shop assistant; see (A) for the higher quote for two items provided by his manager.

(C) Company did not accept this piece of jewellery.

(D) Combined price was $160.

(E) Company did not provide weight for this piece of jewellery, so it was not included in the calculation of the percentage of gold value.

Calculating the gold price

You can check gold prices at www.kitconet.com by clicking on “Gold”. Click on the Australian flag to see the price per kg of gold in $AUD (on top of the graph for 24-hour gold price). You’ll need to know the type of gold the jewellery is made from; most times you can see a stamp on the item.

A “375” stamp, for example, means 9-carat gold, which is 37.5% gold, so divide the gold price by 100 and multiply it by 37.5 to get the price for 1kg of 9-carat gold, then divide this by 1000 to get the price per gram:

  • 9 carat – stamp 375, 37.5% gold content,
  • 18 carat – stamp 750, 75% gold content,
  • 22 carat – stamp 916, 91.6% gold content.

In a recent inspection of gold-buying shops around Sydney, NSW Fair Trading identified 25 breaches of regulations. As we experienced in our shadow shop, NSW Fair Trading also noted a large variation in prices offered by different shops.

Gold-buying shops are usually regulated like pawnshops; in NSW, they need a second-hand-dealers’ licence that they’re required to display. The main breaches NSW Fair Trading uncovered related to record-keeping. Gold shops, as with all second-hand dealers, must ask sellers for ID, log the items they buy and keep these items for a specified period before resale (14 days in NSW, for example). A copy of all items bought is forwarded to the police to allow checking against lists of stolen goods.

This regulation partly aims to prevent the use of pawnshops and cash-for-gold shops by thieves as an easy way to dispose of items. Tip: Take photos of all your jewellery and keep them in a secure place, along with photos and a good description of each item. If your goods are stolen, the description and photos give police the best chance to trace them.

Consider an antique dealer

Shops buying gold usually have no interest in the brand, style or design of an item or what you originally paid for it, as they’re only going to melt it down. You may get a better price by selling certain items on eBay or visiting a specialist store such as an antique dealer.

Damian Kalmar, from Kalmar Antiques in Sydney, told CHOICE about a woman who came into his shop wanting to sell the movement from a pocket watch. Her sister-in-law had taken the watch to a gold-buying shop and sold the case for $600. The watch was made by the best watchmaker in Switzerland in the late 1800s and, had it been intact, would have been worth $5000; just the movement on its own, however, was worthless. “From a collector’s point of view, it was a crying shame they melted the case,” said Kalmar.

Negotiating is worth your while

When CHOICE staff member Lydia decided to sell an 18-carat Italian gold chain (weighing close to 30g) she’d been given as a present years earlier, she first got a quote from a gold store in the Sydney CBD for $450.

She decided this price was too low for the chain, which had been bought for about $2500, so she went to a pawnshop in her local area, where she was quoted between $500 and $600.

She then went to another pawnshop and said she would sell the chain if she was given $600. “After the assistant spoke with his manager, they told me that as the chain was heavy they would be able to give me the $600 I was after.”

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