Gold prices are hitting record highs and there's no shortage of businesses ready to trade bling for bucks, so if you need to raise some extra cash, it might be high time to raid your jewelry box.
On British television it has become common for companies to advertise for people to send them their old or broken gold jewelry in exchange for cash.
Jonathan Williams, director of howcashforgold.com, was one of the first to spot this gap in the market. A jewelry manufacturer by trade, he realized many people have quantities of gold sitting around at home, and banks are in the market to buy.
“We were among the first to start back in January 2008, and since then we’ve never had to buy gold from a bullion dealer, so we’re re-melting and recycling all of the gold we buy in from the public every day," says Jonathan Williams. “Literally we melt it into bars and then we can decide whether to use it for our own production or sell it back to the banks.”
It’s a sign of the times – people are realizing they need all the help they can get in the recession, and the price of gold has risen 28% since last year. Although companies are buying from the public at a high price, they are able to sell it on to banks for even more, as governments cash dollars in for gold in the face of economic instability.
Julian Jessop, director of Capital Economics Group says “Gold is actually being regarded as an ultimate store value. It is the one safe currency when it is a global financial or economic crisis. In fact, prices have been rising steadily from 2001, so buying gold during that period has been a good trade.”
Jonathan Williams receives handfuls of gold through the mail every day. It’s usually a combination of broken chains and watches, and jewelry that people do not wear anymore. He then checks its purity, weighs it and decides a value based on the current price of gold. The business differs from a pawnshop in two ways: you cannot have the gold back once you have been paid for it, and quotes are based on the weight of the gold rather than the resale value. And there’s no shortage of people in need of extra cash.
As long as the commodity’s price keeps rising, Jonathan Williams is sitting on a gold mine. And when the price for the metal starts to fall, he says he’ll go back to making and selling his own jewelry.
Businesses like this are flourishing as people try to make ends meet during the recession. It’s a sellers’ market, as long as investors are buying. And that looks set to continue while gold is still seen as an effective hedge against inflation.