Consuming Issues: Dodge the gold jewellery rip-off
Saturday 23 January 2010
One of James Bond's most memorable foes was the gold smuggler Goldfinger. As well as his garish habit of painting women in gold, he wanted to detonate a nuclear bomb at the US gold reserve to increase the value of his insufficiently precious bullion. Thankfully, the fictional force of the British state defeated him, but 007's real-life counterparts at the Financial Services Authority were less effective in thwarting other would-be masters of the universe, bankers. The banking-inspired recession and consequent stock market crash have done for the price of gold what Auric Goldfinger intended at Fort Knox.
At the turn of the century, when talk of a new economic paradigm propelled the dotcom boom to absurd heights, out-of-fashion gold sank to £160 an ounce. Now it is a feisty £675.
As a consequence, a new gold rush is under way, characterised not by pioneers wielding pick axes but by colourful entrepreneurs running adverts offering "cash" to members of the public for unwanted jewellery.
People have long wondered whether these firms represent good value. An inspired experiment by the ever dependable Which? suggests (stifle your credulity) that they are not.
Uncommonly flash Which? researchers splashed cash on bling, nine-carat gold bracelets, bangles and necklaces from high street jewellers, then sent them off, undercover so to speak, to postal services such as www.money4gold.co.uk and www.cashmygold.co.uk.
For a bracelet costing £115 on the high street, the merchants offered anything from £6 to £39. For the £399 necklace, they graciously upped their bids to between £22 and £119.
Amusingly, after failing to make contact, Money4Gold claimed the £399 bracelet was "not gold" and could only be returned with a "shipping, handling and processing fee" of £10.95. CashMyGold offered £6.43 for the £115 bracelet; £9.64 for the £215 bangle; and £22.50 for the £399 necklace. Postal Gold and Cash4Gold (be forewarned) made similarly low offers.
Jewellery bound for the smelter will never match its shop price, but the postal gold merchants offered an average of just 6 per cent. CashMyGold explained it advertised for old or broken jewellery, saying: "Gold retail prices and the prices obtained for smelted gold are not comparable. Retail gold can be sold at a marked up price of up to 300 per cent."
Which? found better but still not great value elsewhere: pawnbrokers and independent jewellers offered £80 and £102 for the £399 necklace.
After publication of the survey this week, the Office of Fair Trading – an occasional Hercule Poirot but, in this case, an Inspector Clouseau – announced it would look into postal gold firms. Juliet Young, a director in the OFT's consumer market group, said: "Buying gold using the postal service is a relatively new business model, and while innovation often brings benefits for consumers, we want to check that the market and businesses are developing in a way that treats customers fairly."
If only the OFT could mount a belated inquiry into the greatest gold heist of them all, carried out by Gordon Brown when Chancellor of the Exchequer. Between 1999 and 2002, he sold off half the UK's reserves, 395million tonnes of bullion, with the price at a 20-year low. At today's prices, taxpayers would make an extra £5bn: £96 for every adult in Britain.
Heroes & Villains
Hero: Peter Mandelson
In my column of 8 August, I vilified the Business Secretary for failing to welcome the Competition Commission's recommendation for a supermarket ombudsman to aid grocery suppliers. "Why do the words 'kicked into' and 'long grass' come to mind?" I wrote about his non-committal response. Earlier this month – five months later – the Department of Business announced it did want an ombudsman, but wasn't sure who should fill the post or what its powers would be, and announced a three-month consultation beginning on 4 February. Baron Mandelson, aka President of the Board of Trade, is due to make a decision in the, er, summer. I would like to apologise to him for any suggestion he was dragging his feet on the issue.
Villain: British Gas
January and still no sign of a cut in energy prices. Could it be suppliers are waiting until peak demand is over before reducing prices in the not-so-chilly spring? As Britain's biggest energy supplier, British Gas says it bought gas on long-term contracts more than a year ago and so cannot cut bills yet. Any of the Big Six could be in this slot this week. But, as British Gas will no doubt be telling customers facing disconnection, it's a hard world.
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