Firstly apologies for the virtually three week gap between posts. I've been very busy.
Readers who have been following this blog since last year may recall that one of the things I wrote about in November 2008 was investing in gold. Following months of research I discover in early 2008 a great place to invest in gold without paying silly premiums and high storage charges, whilst keeping it safe in a secure vault. I put a link on my posting and have subsequently put a link on my sidebar. £10,000 invested at the end of November 2008 could have bought 598gm of pure gold. Selling it now would have generated a profit, after all charges, of £3,930, or 39.3% in just over 12 months. A US investor, investing dollars, would have made an even higher percentage gain. By no means a risk-free bet but with the parlous state of most economies, gold looked one safe haven in the storm. Of course there is absolutely no guarantee the next 12 months will be the same. Many experts see gold peaking very shortly although the long term outlook for gold still looks good with the risk of inflation from all this funny-money printing by governments round the world.
I'm conscious of course in the present harsh economic climate that many people are being tempted to sell their old gold jewellry as they hear reports of record gold prices. There are several adverts on the TV and in newspapers with companies offering to buy old gold. I've heard some pretty disturbing stories about people sending off bracelets worth about £500 and only getting about £80 and failing to get their item back. A much less risky alternative is to sell to a local jewellers. One in my town has a board outside advertising to buy old 9 carat gold. Today it is quoting £5.42 a gram. I wonder how many are tempted in by the sign?
In my view that is not over-generous, being only 61.5% of the gold's market price. I've discovered on the internet a company based in Hatton Gardens, London that today is quoting £8.40 per gram.
The present price of pure gold is £23,500 per kilo. So 9 carat (37.5% pure) is £8.81 per gram. So the Hatton Garden outfit is paying 95.3% of spot gold price compared to 61.5% at the local jewellers. I've not tested the internet company but on a heavy bracelet the difference in price is quite significant (say £150+).
The reason for my research on this matter is that I found myself discussing the price of scrap gold with another jeweller yesterday. Last week I took a gamble and bought a diamond ring at an auction (as you do!). It was described as a 1.1ct brilliant cut diamond in a 18 carat white gold ring. Here's a picture.
A nice piece of "carbon". The estimate was £800-£1,200. High street jewellers, in store and online, seem to charge upwards of £2,500 for a 1 carat diamond ring. So I closed my eyes (figuratively) and bid at the auction getting it for £840. With buyer's premium and VAT it came out at £1,013. It was five ring sizes too big for Mrs Troy's finger so we took it in the next day to be resized and cleaned. For £35 the jeweller also offered a written insurance valuation. We returned yesterday to collect the ring and both held our breath whilst the jeweller opened the envelope with the written valuation in it.
This certifies the ring, describing it's 4 C's (carat, cut, clarity and colour), as well as it's valuation. I asked the jeweller what happened to the gold removed to reduce the size of the ring as even a gram is worth £17 for18ct gold. That's when we discussed scrap gold prices and he told me that there was no way I'd get anywhere near £17 for a gram of 18ct gold. We took home the sliver of gold as one day we might need it to resize the ring upwards.
Oh, I forgot to say what was on the written valuation...£4,500.00
That came as a relief - I hadn't bought a piece of cut glass! Now it is where it was always destined to be when it was being created millions of years ago deep in the earth's crust - on Mrs Troy's finger.
If you know of any young men thinking of getting engaged then perhaps you should advise them to buy their engagement rings at a reputable auction. For the same money, they should get three times the ring at auction compared to a high street jewellers. And with bigger rings come more kudos from both their fiancees and their future mother-in-laws!