Beware fool's gold

Companies offering cash for gold jewellery in a recent flurry of TV adverts are paying a fraction of the items' true worth. The firms, which have latched on to increases in the price of gold, are 'shockingly bad value', according to consumer group Which?

Three pieces of new jewellery purchased by Which? for a total of £729 drew offers from the firms of as little as £38.57 for the lot. One company refused to return a £399 necklace free of charge, as promised, on the inaccurate pretext that it was 'not gold' at all.

The Which? Money magazine picked out three items of jewellery on the high street, a £115 bracelet, £215 bangle and £399 necklace, and purchased four of each. In November 2009 it sent them to four TV gold buyers, as well as getting quotes from three high street pawnbrokers and three jewellers.

Which? claimed that CashMyGold offered the lowest prices on all three items, offering just £38.57 in total for the three pieces. Money4Gold told a Which? researcher that a 9ct necklace he bought for £399 was 'not gold' and it would cost him £10.95 to have it returned.

The scrap value of a necklace will be considerably less than its price as a piece of jewellery. However, this does not explain the paltry offers. Companies offering cash for gold jewellery are 'shockingly bad value', according to Which? On average, the TV gold buyers offered around 6 per cent of the retail price for gold. High street stores paid around 25 per cent.

Postal Gold surprised the researcher by upping its quote when he rejected its cheque - almost doubling its offer for the bracelet and bangle. However, these rates were still far lower than those from jewellers and pawnbrokers.

Shelley, APA