Golden chance to get cash for scrap

It's pointless to have unwanted jewellery lying around. Photo / Supplied

People are dredging their drawers for unwanted jewellery and converting it to cash.

Rebecca Simcock, co-owner of Christchurch-based antique jewellers Youngs, says she's seen a 200 per cent increase in cash-strapped customers coming in to turn trinkets into coins.

"Old gold watches and other family things they've had lying in a drawer - people are realising there's a lot of money tied up in them and choosing to sell," Simcock says.

People of all socio-economic groups are digging out things they don't wear any more - sometimes because they're out of fashion - and selling them while the gold price is high.

Nine-carat scrap is selling for around $12 a gram, the same amount of 18-carat scrap fetches close to $25 and 22-carat scrap will realise $30 a gram. These prices are around double what they were a year ago.

The scrap gold is sent to a refinery to be melted back into fine gold bars or jewellers' gold to be reincarnated.

Current prices are so attractive that Simcock did a clear out of items stored in the shop and sold $10,000 worth of gold to the refinery in one day.

Wellington-based antique jewellery dealer John Fyson agrees more people have been recycling gold while the price is high, but says his region's large public servant population cushions it from the recessionary impacts felt where jobs are less secure.

Graeme Thomson, proprietor of an antique and estate jewellery store in Auckland's swanky Parnell, says customers have asked about the value of their jewellery in his store, but probably wouldn't feel comfortable inquiring about selling it there.

Simcock says although some people might not like to be seen as needing the money, it makes no sense to leave things "sitting in a drawer for burglars" as insurance companies don't pay out "anything like" the true value unless jewellery is itemised in policies separately.

And indications are that whether they feel uncomfortable or not, people are hocking their valuables.

David Morris of Morris and Watson gold refining service in Auckland says his business has seen an "enormous" jump of around 50 per cent in the amount of second-hand gold arriving for processing from jewellery dealers and pawnbrokers around the country.

Chris Devereaux of Webb's auction house says people have been selling gold for scrap "opportunistically" as the gold price has been flying high in the face of international financial uncertainty, but he's seen less evidence of people cashing in their jewellery in Auckland.

"Mostly jewellery is seen as the last-ditch stand that you hang on to." But he says some people use it as a way to disguise their wealth.

"They might have some diamonds or expensive watches, and when it all turns pear-shaped and the receiver comes knocking, they just aren't there."

Jewellery is a convenient way to transport wealth around, he says.

"You're entitled to wear a diamond ring from one country to another - the fact that it might be worth a million or more is beside the point. It becomes the last thing that people dispose of if they're in a squeeze."

In fact, since August last year when the downturn kicked in, Devereaux says Webb's' turnover has "gone through the roof", with record sales sparked by people seeking alternative investments.

"You put your money in the bank and after tax you're getting about 3 per cent, so it's hardly worth having it there. People are saying, 'Well, to hell with it, I've always wanted a two-carat diamond so I might as well buy it now'."

Devereaux reports "a definite move towards the purchase of assets that are not going to fail" in the way others do.

"If you invest in a company and it goes belly-up, you've got some pieces of paper worth zippo.

"If you invest in a major diamond, if you're lucky the market will continue to inflate and you'll make a return on it - what won't happen is that you'll lose all your money, and there's always a buyer.

Surprisingly, big-brand-name jewellery doesn't necessarily hold its value on the second-hand market if it's not a limited edition because, Simcock says, you pay a premium for the name to start with.

Devereaux says the rate at which jewellery appreciates is fashion-driven. Art deco period pieces are extremely sought after and appreciate dramatically. "The same applies to pieces by top makers who made in the classic styles - Cartier, Faberge, Boucheron, Black, Starr & Frost and Tiffany. If it's from a golden age of design, the value increases quite rapidly.

"If it's a marvellous Victorian piece, but quite 'busy' and not necessarily wearable, and not in fashion, there'll always be a buyer for it because it's a collectible item, but it won't necessarily appreciate at the same pace."