As the recession has taken a grip on household finances, many families have eased pressing money worries by flogging off their jewellery, watches and other unwanted items to cash in on the soaring price of gold.
This market in 'scrap' gold hardly existed in the West until a few years ago, when firms like Cash4Gold in the US spotted the potential of an online marketplace and soon brought the concept over to Britain.
With rivals such as Postal Gold, CashMyGold, Money4Gold, Post Gold For Cash and Ramsdens Got Gold Get Cash joining in spending hundreds of thousands of pounds per month in media campaigns by January 2010, the market lifted off, fronted by celebrities such as Dale Winton and Anne Diamond, urging people to turn out unwanted treasures.
As the price of gold continued to soar - from around £380 per ounce in 2007 to the peak of £919.50 recorded on January 3, 2011 - pawnbrokers began to buy old gold too.
Pawnbroker Albemarle & Bond, a public company which includes the pawnbroker Herbert Smith operating in the Midlands and North West, started a gold-buying service in February 2009.
Albemarle & Bond claims a 6% share of the gold market, measured by the weight of gold bought, and says the service generated £11.5 million gross profit in its first year, more than a fifth of the total profits accrued from an operation with 132 UK branches.
So strong is the revival of pawnbroking - the National Pawnbrokers Association says member numbers are up from 50 in 1980 to 1,200 today - that The Share Centre is telling small investors to buy Albemarle & Bond shares.
Nick Raynor, The Share Centre investment adviser, says: "That old ring from grandma could help boost your income. The share price of Albemarle & Bond has had a tremendous run and we can only see this continuing."
Its big rival, H&T Pawnbrokers, has more than 180 outlets and is currently using Royal Mail to deliver glossy leaflets declaring 'we buy gold!'
Although buying gold is a booming business, it has so far lacked transparency and price competition. And there are fears that too many private sellers get ripped off.
Enter Tesco, Britain's largest supermarket group, which is promising to bring order to a scene of confusion and chaos.
Tesco promises that its Gold Exchange, which is being trialled online and in at least 15 stores, will lift standards in a sector which has attracted the attention of The Office of Fair Trading.
It is currently promising to pay £10 per gram of nine-carat gold until the end of January, against £7.59 offered at H Samuel and £6.50 at H&T. Insiders say the figure is so generous it scarcely leaves any margin for profit.
Some postal operations cashing in on the gold boom have been paying out little more than £3 per gram for nine-carat gold. In some cases, customers who reject the offer they receive are told to pay extra to get their items returned to them.
Tesco intends to provide its customers with a Gold Exchange pack sent through the post, which they either return by special delivery or in person at a Tesco store.
A Tesco group spokesman said: "Customers have been poorly served in this area, so we are pleased we can trial a service which is transparent and offers market-leading value."
"Tesco Gold Exchange helps customers feel confident about raising a few extra pounds from unwanted gold, enabling them to spend it on something more worthwhile."
When Tesco announced its move, the share prices of some pawnbrokers fell back slightly. Few doubt this is a significant moment for the market in second-hand gold.
Paul Aitken, founder and chief executive officer of Borro.com, an online lender which lends against the security of gold but does not buy it, said: "It is interesting that Tesco is linking with Ramsdens, the country's largest family-owned pawnbroker, which tried its own online gold-purchasing service, backed with TV advertising, in 2010.
"By mid-2010, signs suggested that services of this type, based on heavy advertising, were not taking off. And Which? magazine highlighted the risk that when so much is spent on marketing and advertising, there is less money left over to pay the customers."
Because sellers get only the meltdown value of gold items traded in, the pay out is a tiny fraction of original cost.
For a bracelet purchased for £115, Which? researchers received offers of £6 to £40, while a £399 necklace drew offers of £22 to £119.
Which? claimed the lowest quotations were consistently supplied by TV gold buyers. On average they offered prices equivalent to just 6% of retail value, while high street jewellers offered around 25% of the value, on average more than four times as much.
Dan Moore, a Which? researcher who worked on the report, said: "Until we can look a little more closely at what Tesco is promising to do, it is too early to judge the strength of their offer."
"I remain suspicion of operations which work largely online. Consumers who fill in a form online receive an envelope marked for special delivery after several days and might have to wait almost a week for a definite valuation."
"Some owners who rejected the cheque which is sent to them have faced added costs to get their own items returned to them. The simple fact is that people under pressure tend to accept almost any offer for items not in regular use because of the sense of getting money for nothing."
However, Moore thinks in-store services which can provide rapid valuations are a step forward. A major shortcoming of the present system, he thinks, is the lack of face-to-face contact when valuations are handed out.
"In theory, what is there to stop owners under pressure collecting a figure from Tesco and going round the corner to try to beat it from another pawnbroker?" he says.
"If Tesco consistently gives better prices than rivals, I don't think anybody would have a problem with it," he says.
"Of course, Tesco remains a highly commercial organisation, and it is coming into this sector because it is confident that it can make good money from it."
Adrian Ash, head of research at BullionVault, which enables investors to buy and store new gold securely, thinks Tesco has the potential to transform the public perception of the 'scrap' gold market.
"The market in scrap gold has expanded in the West by more than 1,000% over the last decade," he says.
"Here a big and successful retailer is moving into what has previously been a niche market for a few small companies."
"From now on, who will want to use the smaller companies unless they are more explicit about the prices they are prepared to pay and they can demonstrate that they offer a much better deal?"
Ash believes the prices which Tesco is initially offering for scrap gold is a mark of its determination to dominate the market.
:: Information: Tesco Gold Exchange (0845 304 3321 and www.tescogoldexchange.com); Borro.com (0800 756 9877); BullionVault (020 86000 130 and www.bullionvault.com) provides ongoing analysis of gold market; Albemarle & Bond (0118 955 8100 and www.albemarlebondplc.com); H&T Pawnbrokers (0800 838 973 and www.handtpawnbrokers.com).
Poundnotes
:: The latest hikes in energy prices ensure the average household energy bill rises by 3.8% or £45 to £1,239 a year, says comparison service uSwitch.com, but online users pay only £1,010, saving nearly £230.
The average cost of hot water and heating is £616 a year for online customers, and £756 a year for those on standard tariffs - £140 a year more. But only 13% of users - 3.5 million - are on online plans.
Four of Britain's big six suppliers have increased their prices while cold weather is expected to add £7 a week on to energy bills after the coldest December in 100 years.
Tom Lyon, uSwitch.com energy expert, says: "With Ofcom stats indicating that 71% of adults in the UK have broadband while 16.8 million households have a broadband connection, many more should have cheaper online energy plans."
"When winter fuel bills hit doormats, consumers face a nasty shock. With additional costs caused by severe weather, the risk is that many will cut back on heating and hot water, instead of saving £140 a year by moving online."
uSwitch.com enquiries: 0800 093 0607 and www.uSwitch.com.
:: Lenders want new customers for their credit cards in 2011, says Kevin Mountford, head of banking at finance website moneysupermarket.com, which explains the longest ever interest free period - 17 months - on balance transfers is available from the latest Barclaycard deal. NatWest allows 13 months interest free on both balance transfers and purchases.
Michelle Slade at moneyfacts.co.uk says a £1,000 balance on the average card rate of 18.8% APR costs £220 interest over 17 months. So Barclaycard offers big savings for smart movers.
However, Mountford warns: "Anybody transferring debt to a balance transfer should pay it off before the promotional rate expires, to avoid much higher interest charges. Likewise, if you are using a purchase card, be sure to take advantage of any 0% offer."
:: When National Savings & Investments feebly gave way to pressure from banks and building societies to drop its Index-linked Savings Certificate last summer, fund manager M&G gamely stepped in with an Inflation-linked Corporate Bond Fund to help harassed savers.
Since the launch on September 16, the unit price of the new M&G Fund has moved from £1 to 101.82p, a near 2% rise in four months, so some investors might feel they are keeping up with the level of price rises.
Further details are available from a discount broker, or M&G direct (0800 328 3196) if you're happy to pay the initial charge.
:: The case for working past 65 increases as moneyfacts.co.uk confirms pension payouts continue to plunge. Following a 2.7% fall in 2010, a £10,000 pension pot now gives a 65-year-old man an income of just £607 a year, and a woman £568 because she will live longer.
In 1995, with the same sum, a 65-year-old man got a pension of £1,138 a year and a woman £1,010 - making a drop to 2011 of 46.6% for men, and 43.7% for women.
No wonder millions want to work until they drop.
:: High five savers
Phone No Rate Account Period Deposit Interest paid
Coventry BS 08457 665522 4.75% Fixed Bond (128) 30/04/2016 £1 Yly
Kent Reliance BS 08451 220022 4.51% Fixed end date bond 31/05/2016 £500 Yly
Dunfermline BS 0845 733 6688 3.00% 60 Day Notice 60 Days (B) £1,000 Yly
Cheshire BS 0800 243278 2.95% 30 Day Postal Saver 30 Day (P) £1,000 Yly
Post Office www.postoffice.co.uk 2.91% Online Saver None £1 Yly
:: Top five borrowers
Phone No Rate Period Max% Adv Fee Incentive
HSBC 0800 494999 2.29% (rem) variable for term 60% £99 Yes
Leeds BS 0845 045 4049 2.45% (disc) for two years 75% £199 Yes
ING Direct 0845 032 8800 2.50% disc until 31/03/13 70% none Yes
First Direct 0845 610 0100 2.59% variable for term 65% £99 Yes
Yorkshire BS 0845 120 0874 2.99% (F) until 31/01/13 75% £495 Yes
Code:
*K- Operated by Internet, Telephone, or Post
*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).
