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The price of gold is rising worldwide, as investors rush to back a safe bet in the current economic turmoil. With gold hitting $1,000 an ounce on the markets, a slew of companies have sprung up that are only too glad to take your gold off your hands. So should you sell it to them? And how do you choose the right company?

Where can I sell my gold?

There are numerous gold trading websites out there, like Cash4gold.com, Gotgoldgetcash.co.uk and Postgoldforcash.com. Large retailers such as H Samuel are also getting in on the act. Most high street jewellers will also buy second-hand gold.

How does it work?

With online companies, you request a free pre-paid envelope and send your gold back to them. Most company envelopes are pre-insured (usually to the value of £500) in case of theft or loss during transit. If the gold you wish to send is worth more than this, you can secure additional insurance at the Post Office, or simply split your gold into two or more pre-insured packs from the company. Most gold companies will then call or e-mail you with a valuation, which you accept or reject. Other companies will automatically send you a cheque for what they have valued your gold to be worth, which you must return within a certain time (typically between 10 – 12 days) if you are unhappy with their valuation. Be sure to check the company’s returns policy before doing business with them, as they do vary.

How trustworthy are these companies?

Some gold trading companies have been around for years – and you can be confident that established jewellers such as H Samuel are going to be trustworthy in their dealings. However, some companies are there just to make a quick profit and will disappear when gold prices start to dip again. These short term operations are unlikely to care much about fairness, customer service or their reputation, to say the least – they just want to make a quick buck and get out.

It pays to use common sense when dealing with gold trading companies. Have they been trading long? Have they had positive media coverage? Google the company and check chatrooms and forums to see what turns up. If you’ve any doubts, check with Trading Standards to see if they’ve received any complaints.

Below are some of the better known gold trading websites, together with the prices offered per gram of 9 carat gold (correct at time of writing):
• Howcashforgold.co.uk = £7.27 per gram
• Bestpriceforgold.co.uk = £7.25 per gram
• Gold-traders.co.uk = £6.90 per gram
• Sellmygold.co.uk = £6.20 per gram
• Gotgoldgetcash.co.uk = £4.00 per gram
Clearly, it pays to shop around!

Are they a decent option?

If your jewellery is in reasonable condition, it’s worth getting a valuation from a few local jewellers, as they will consider the craftsmanship of the jewellery – not just how much gold it contains. You can then compare the jewellers’ quotes with gold prices listed online (which do not take into account the retail value of jewellery).

With some gold-trading websites, you can get as little as 20% of the market value of your gold. Be especially wary of those sites that don’t reveal their price list – like Cash4gold.com or Postalgold.com. All too often, these sites pour their money into marketing, rather than ensuring the consumer gets a decent price.

The list below offers an estimate from some of the better known companies if you were selling one ounce of 24 carat gold (with an approximate market value of $1,000):
• Howcashforgold.co.uk will pay you: £543.36 = 87% of market value
• Falkosgold.co.uk will pay you: £519.87 = 83% of market value
• Gold-traders.co.uk will pay you: £515.91 = 82% of market value
• Bestpriceforgold.co.uk will pay you: £512.80 = 82% of market value
• Sellmygold.co.uk will pay you: £487 = 78% of market value
It always pays to compare prices – and if the site doesn’t have their prices listed, they’re probably not worth your time. Bear in mind that the price of gold changes daily, so the quotes you get will often vary slightly day-to-day. It also pays to remember that gold is valued in dollars on the markets, so even if the value of gold rises, British sellers can lose out should the pound be weak.

How else can I get cash from gold?

You can use your gold and jewellery as security on loans. Pawnbroking is an easy source of credit. If you need a small loan to tide you over for a short time, pawnshops can be a suitable option. They normally lend you up to half of your gold or jewellery’s value, and will likely charge a typical interest rate of around 8% a month for the amount lent. However, they are certainly not a good option if you’re in need of a loan lasting a reasonable length of time – as the annual rate of interest from pawnbrokers can be close to 100%!