Cash in on old gold

It's amazing what you can find in the depths of your trinket boxes. Photo / Herald on Sunday

That broken brooch or old-fashioned bracelet at the bottom of your jewellery box could be converted into hard cash as dealers look for sources of gold to meet growing demand.

The global economic turmoil hitting the United States and parts of Europe is contributing to a modern-day gold rush.

Mines are struggling to keep up and, with new mines years away from full production, dealers are buying unwanted and scrap gold jewellery that is melted down to produce 99.99 per cent pure gold bullion.

Richard Elliott, senior gold buyer at Gold Smart, said the precious metal had been in a bull market since 2000. Increased demand meant the price for an ounce of pure gold skyrocketed from US$288 ($407) in January 2000 to today's price of around US$1200.

As a result, gold-buying stores and stalls have popped up across the country, offering quick cash for unwanted and broken gold jewellery.

Most of these firms aren't interested in the piece's aesthetic beauty. What matters is the amount of gold and how much it weighs.

Nine-carat gold is made up of 37.5 per cent gold, while 14-carat is 58.5 per cent gold. Other metals in the mix can include copper and silver. Gold mixed with silver will be worth more than gold and copper.

"People can get very good prices for their jewellery, particularly if they bought them a few years ago," Elliott said.

However, Gold Smart did not take artistic merit into account when buying jewellery.

"We have to remind people that there is a significant mark-up for jewellery when you buy it retail. That is because you are paying a premium for the retail store, the design of the item and every time someone has touched it."

Pawnbrokers would consider the artistic value of a piece if they intended to on-sell it, he said.

Other considerations in getting the best price for your scrap gold are the constantly fluctuating spot price and the New Zealand-US exchange rate. Gold is always bought in US dollars.

The price could change every few minutes, Mark Newcombe, CEO of GoldBuyers, said. "We update our prices regularly, much as a bank would do when it updates its foreign currency rates."

GoldBuyers also did not pay a loading for aesthetic value as everything it bought was smelted. It would take gold products in all forms - even dental gold, he said.

The company also runs gold parties, to which the host invites friends for drinks and nibbles and a gold consultant offers on-the-spot valuations.

John Prosser, store manager of the Casino Gold House in Central Auckland, said there appeared to be an "infinitesimal amount of gold hidden down the back of people's sofas and drawers".

"Items that can't be repaired or are too expensive to repair can be turned into cash. It is still hard times out there and people realise that an old, broken piece of jewellery can be worth $30, $40 or $50 in their pocket."

Mike O'Kane, head of bullion at the New Zealand Mint, said it could be another 15 years before demand for gold settled.

Pure gold had come into fashion as a safe-haven investment because of turmoil in the world economy and the sovereign debt crisis.

"There will always be a buyer for gold, unlike company shares," he said.

Trinket box treasure troves

It's amazing what you can find in the depths of your trinket boxes.

A rummage for this story last week produced a broken bangle, a single hoop earring, a broken chain and a ring missing its stone - a total of 4g of 9 carat gold and 5.6g of 18-carat gold.

The Herald on Sunday shopped this small cache around three gold buyers on the same day and found the price they were prepared to pay varied dramatically:

* Casino Gold House, Victoria St: $187

* The Cash Lady, Victoria St: $140

* GoldBuyers, Downtown Shopping Centre: $135

- Maria Slade