Money news, advice and predictions for savers and spenders.
By Jeremy Gates
When full-page adverts claim the price of gold has soared 30% in the past six months alone, it isn't only those facing big debts or mortgage arrears who are tempted to turn old heirlooms and unwanted gifts into cash.
Strictly speaking, the claim isn't true. At £576 per ounce this week, gold is down about 18% on the £700 level seen in February, while the dollar price is down from 1,006 to 955 in the same period.
But this is unlikely to deter sellers who need cash.
Earlier this year, gold achieved its highest-ever price against sterling, the euro, the Swiss franc and the dollar in Canada, Australia and New Zealand - indeed just about everywhere except for the Japanese Yen and the US dollar.
After years of steely jewellers looking dismissively at a well-worn keepsake and advising desperate owners not to waste their time, the internet is creating a world where it is much easier to turn surplus items into cash.
With British Government debt soaring towards a trillion pounds, Adrian Ash, head of research at BullionVault, the UK's leading online service for gold bullion investment, reckons the craze for turning valuable metals into cash may be only just beginning.
"When Cash4Gold, a big American company, gets going in Britain, you could see quite an impact on this business," he says.
"These boys are big enough to take a two-minute advertisement in the Superbowl. A significant amount of the booming level of scrap-gold supply may be down to the model they've established.
"Theirs is an impressive business model: heavy advertising, an efficient collection/distribution network and a cheque rapidly despatched for vendors."
Website CashYourgoldNow.co.uk, which promises "fast, efficient and very discreet" service, is likely to feel the draught as the Americans arrive.
Its selling angle is that any unwanted old jewellery can be turned into instant cash for a holiday, a new outfit, bills or a special occasion.
The argument is a timely one because gold has been a relatively steady store of value through 18 months of financial turmoil which has wiped nearly £9 trillion off global share values. Most other investments, apart from US Treasury bonds, have headed south.
Ash says the "scrap side" of gold sales boomed globally in the first quarter of 2009, with a total value of 500-1,000 metric tonnes sold by owners seeking cash.
If private sales continued at levels seen earlier this year, the scrap side could soon generate more gold than the 2,500 tonnes annually produced by commercial mines.
"Heavy selling by private owners in Asia and the Far East is normal and what you would expect," Ash says.
"There is no banking network in rural India, so farmers turn profits into gold, not rupees, and then sell heavy 'investment jewellery' for cash in the planting season.
"What's new is the volume of old jewellery coming out of Western households. It is being sold off in greater volumes than at any time since the recession of 1979-81."
However, Ash thinks second-quarter sales might actually fall: gold prices tend to drift in summer, and sales have attracted less media coverage lately.
It is also possible, he thinks, that households have dumped items they thought about selling for years. Websites offer easier access to buyers, and a cleaner sale.
But are people selling too cheaply?
Krista Waddell at Ounces to Pounds, which organises 'Gold Parties', claims her 'tupperware-style' events in London, Birmingham, Manchester, Leeds and Scotland pay out £50,000 per week.
"Cash4Gold is short-changing Britain," she claims. "Its margin is chewed away on TV advertising and profit, and not put in the pockets of British consumers.
"With our parties, people see what they are getting, without delay. They get a good price there and then for unwanted gold, platinum and silver. No waiting, no hassle."
Waddell says her customers, mainly 45-plus and mostly women, are not turning valuables into cash to pay the rent.
"They have stuff sitting around and no other sales outlet, and they won't use pawnbrokers," she says.
"Often, they bought items in the 1980s when gold was a third of the price it is today. If they sell today at 50% of value, they still make money. It's a fun evening, and it's an unusual sale which puts cash in your pocket!"
But even these sellers may regret their actions later, say lenders who accept your valuables as security for a loan and return them when the loan is redeemed.
Paul Aitken at leading online asset lender Borro.com says he has been following this market closely since it began in the United States 18 months ago.
"Too many people accept offers of 20-30 pence in the pound. Those who see jewellery as a way of getting money should consider all other options first.
"We can usually lend more money than they will get from a sale. They can come back, perhaps within two months, and have their goods back after we deduct interest.
"In close to 90% of cases we take on, the customer gets back whatever item they have pledged. But this is a solution to short-term money problems, not long-term ones."
Aitken says that when such artifacts are melted down for their precious metals, any intrinsic value, both in workmanship and sentiment, is destroyed.
"If you need money in a hurry, don't sell under distress at a gold party because you are unlikely to get the best price."
Aitken says 'asset lending' is much easier since the internet reduced the need to find a pawnbroker: just go online, find out what an item is worth, send it off in a secure envelope and the cash is ready in 24 hours.
However, Borro charges 4% a month on a loan of £1,000. Over six months, a £1,000 loan costs £300 interest.
Of course, any owner of valuable goods should think carefully before they sell.
Mark Gettinby, director of Intune, the financial services arm of Help The Aged, says it is important to be aware of security as you will be dealing with people you don't know.
"If selling goods online, never give out bank details and make sure you wait for any cheques to clear before parting with the goods," he advises.
"If people come to your house to pick up items, arrange a time when you are not alone. And if you're not selling goods through an auction marketplace, it's always worth getting a second opinion on the price offered to verify you're getting the best possible price."
:: Information: www.BullionVault.com; Borro (0800 756 9877 and www.borro.co.uk); Ounces to Pounds (020 7745 6268 and ounces2pounds.co.uk); Intune Financial Services (020 7239 1991 and www.intunegroup.co.uk).
Poundnotes
:: They think it's all over - and it probably is already! With the football season kicking off on August 8 - the Premier League begins a week later - Andrew Hagger at Moneynet.co uk reckons that keen fans with building-society savings accounts linked to clubs are already relegated, as the average rate paid on their savings has sunk to an average 0.19%.
Fans of Wolverhampton Wanderers have seen their rate crash from 5.15% to 0.75%, while Derby County is down from 4.45% to 0.10%.
However the contribution which clubs receive from the savings accounts has barely changed, down from 1.11% last year to 1.04% now. Obviously they need the lolly to pay for a new Peruvian centre-forward while hapless pensioners watch their income go up in smoke.
"Supporters up and down the land have been saving in 'affinity accounts' in some cases for as long as 10 years and have helped to pump millions into their favourite clubs," Hagger says.
"Affinity accounts won't provide the best return on your money - you can currently earn 3.15% gross on an instant access account at Alliance & Leicester - but many supporters happily sacrifice a higher rate of interest in return for being able to do their bit for the team."
Main providers of affinity accounts are Britannia BS (which has directed over £6.5 million to Ipswich Town since 1998), Norwich & Peterborough BS (where savers have contributed over £2.9m to Norwich City in 12 years) and West Bromwich BS - which has raised £2.2m for 'the Baggies'.
Each of these societies presents the football club with a cheque for up to 1.25% of the value of the combined daily average savings balance for all accounts held by its supporters.
:: Around 2.7 million people have had to take on a second job to boost their income and make ends meet, claims price comparison service uSwitch.com.
It says another 1.6 million have been forced back into the workforce, and 800,000 people previously working part-time have had to go full-time to stay afloat financially.
The survey also claims 1.4 million workers are unhappy in their current employment, but fear they can't move on due to the financial pressures of the credit crunch.
"With unemployment levels set to rise over the coming months, many workers have to put career aspirations on the back-burner and focus on keeping the money coming in," says uSwitch's Louise Bond.
"However, taking on extra hours is not the only way to bolster your income. A simple review of your loans, credit cards and current accounts could save almost £375 a year, which could be used to pay off more pressing bills."
:: For savers who take their time to move their money around, some better-paying accounts are at last slowly beginning to emerge.
Coventry BS has just launched a Stepped Fixed Bond which offers 4.0% gross to August 31, 2010, rising to 4.50% until August 31, 2011 and 5.00% to August 31, 2012.
Coventry BS enquiries: 0845 766 5522 and www.thecoventry.co.uk.
Barnsley BS's three-year bond until August 2012 pays 5.00% gross, while four-year bonds earn 5.15%, five years until August 2014 pays 5.40%. All bonds are online only. Enquiries to www.barnsley-bs.co.uk.
Meanwhile, on minimum investments of £7,200, Cater Allen Private Bank - part of Santander - offers a structured plan lasting either 45 months or 66 months which guarantees the original investment and might pay an additional sum depending on the performance of FTSE 100 in the agreed period.
:: Although Gordon Brown said in July 2007 that longer-term fixed rate mortgages would help to reduce volatility in the housing market, the lenders don't seem to have noticed, says Darren Cook at Moneyfacts.co.uk.
He points out that the decision by Manchester BS to scrap its 30-year fixed-rate loan means borrowers cannot fix for more than 15 years.
"Britannia BS is the only lender to offer 15-year deals, but with rates from 6.49% these are likely to be unattractive to many borrowers," Cook says.
"Only nine lenders offer 10-year deals, with most of the market offering deals no longer than five years. Raising the capital when interest rates are low is difficult."
:: High-five savers:
Phone No Rate Account Period Deposit Interest paid
Yorkshire BS 0845 120 0100 5.40% (F) Fixed Rate Bond 30/09/14 £100 Yly
Barnsley BS www.barnsley-bs.co.uk 5.40% (F) Online Bond 30/09/14 £100 Yly
Aldermore 01372 736700 5.11% (F) Fixed Rate Bond Five Year Bond (P) £10,000 Qly
United Nat'l Bank 0800 218 2266 3.50% Three Month Gold Deposit Three Months £1 Half-yearly
Manchester BS 0161 9233 8015 3.26% Premier ISA 45 Issue 1 45 Days £1,000 Yly
:: Top-five borrowers
Phone No Rate Period Max% Adv Fee Incentive
HSBC 0800 494999 2.49% discounted for two years 60% £249 Yes
First Direct 0845 610 0100 3.09% variable for term 80% £999 Yes
Co-operative Bank 0800 633 5286 3.24% to 30/09/12 75% £995 Yes
Loughborough BS (FTB) 01509 610707 3.39% for two years 80% £449 Yes
First Direct 0845 610 0100 3.69% for term 75% £299 Yes
Code:
*F - Fixed
*P - Operated by Post
*B - Operated by Post/Telephone
*T - Operated by Telephone
*W - Operated by Internet
*H - Operated by Internet/Telephone
*S - Available only to those aged 50 or over
*R - Available to those aged 60 and over.
:: Source: Money£acts - Tel: 01603 476 476 (All rates subject to change without notice).
