Some gold dealers are cheating sellers by paying a fraction of what the gold is really worth 
(19/09/2009)
With the recession hitting cash-strapped households across the UK, more and more people are selling off gold jewellery and even gold family heirlooms to make ends meet. With the market price of gold already passing $1,000 per ounce, it seems an easy way to make quick money. But some dealers and buyers are cheating sellers by paying only a fraction of what the gold is really worth - frequently around 40 - 50% of the true valuation, and even as little as 20%.
"Buying scrap gold is big business and big news right now," explains Phil Williams, Chief Executive of Gold-Traders (UK) Ltd. "Worldwide, 880 tonnes of gold bullion was recycled from scrap gold in the first half of 2009. This year, over 35 tonnes of gold bullion will be recycled from scrap gold in the UK. At current prices, that's worth around £700 million. But based on their current practices, the cheating scrap gold buyers would only pay out around £270 million. Over the course of a year, it means British pensioners, families and individuals selling their gold risk being swindled out of almost £500 million."
"The main culprits are not necessarily the little back-street companies," reveals Williams, "but are often the high profile scrap gold buyers who advertise on TV or take large ads in the national press. Rogue dealers may promise high rates to lure unwary or desperate sellers, but don't publish their actual prices online - so people doesn't realise they could be ripped off."
"Their deals may look attractive, but the worst offender is actually paying out just 20% of the gold's market value. That's rich pickings for them, and a huge loss for someone who's reluctantly parted with a gold ring, necklace or earrings they've treasured for years."
Not all scrap gold buyers play the rip-off game. "A fair, legitimate dealer will pay at least 90% of the gold's market value," says Williams, "and fortunately, they are out there. At Gold-Traders (UK) Ltd, for example, we always advertise the actual price we pay, updated daily on our website to ensure it reflects the best market rates. We're upfront and honest, and because we're not funding expensive advertising campaigns, our customers benefit from prices that are among the UK's highest."
While the market for scrap gold remains bullish, Williams believes rogue buyers will continue to cheat unwary sellers. Williams' advice to anyone considering selling scrap gold and jewellery is to only use scrap gold buyers, such as Gold-Traders (UK) Ltd, who explain the actual deal and publish their prices upfront, before the gold is sent in.
"A seller should weigh their gold as accurately as possible, then they can use our website for an instant online valuation. We'll check again when we receive their gold, and confirm our offer. In the unlikely event they're not satisfied, we'll return their gold within 24 hours."
Related categories: Invest in Gold and precious metals
