Monday, 26 April 2010

Postal Gold Companie's "are like Con Artists"

By Ben Aulakh

Postal gold companies have received stiff criticism from a number of Asian jewellers, who have branded them as being like “loan sharks” and “con artists.”

The proprietors of Kampala and Dhanak jewellers in Leicester and Kanda precious metals in Birmingham have poured scorn on the postal gold industry.

Dhamendra Dhanak of JP Dhanak, Belgrave Road, Leicester said, “They are sharks, similar to loan sharks, they take advantage of people who are desperate.

“They take advantage of people bound not by choice but necessity, they need money so they will send off their gold, but once they do they are lumbered.

Mr Dhanak explained that in his premises customers were served one to one, their gold was weighed and tested, and if they weren’t happy with the quote they could go to another jeweller nearby for a comparison.

At one of Mr Dhanak’s nearby competitors, Kampala Jewellers, Atul Pattni was similarly scathing of the postal gold industry.

“These cash 4 gold firms are like con artists, I have heard of these companies offering one pound per gram for seven pounds of gold, those prices are stupid prices.

“Let’s say the gold you send weighs seven grams and is nine carat and one of these companies’ offers 35 pounds, you might say alright to that; but if the gold actually weighs 50 grams then the real value is 50 pounds.”

“However if you are sending it off to the postal companies you have no chance, there is no weight given, therefore there is no clarity for the customer.”

The industry has seen rapid growth in the last year thanks primarily to the value of gold tripling on the world markets.

Third generation jeweller Jonathan Williams, Managing Director of postal jewellers How Cash 4 Gold said of the business, “The price we offer is four per cent under the gold fix (the price given on the London gold market).”

“There are a lot of imitations in the industry but our business has doubled since they came along, they can pay as little as £2 per gram, that is a quarter of what we pay.”

Mr Williams added that customers were more than welcome to visit the companies shop in London.

Geoff Field, Chief Executive of the British Jewellers Association in Birmingham said,
“The problem is that every business has a different cost base;

“Some online retailers have significant advertising costs and this affects the price offered to the customer as the retailer may need to add that cost to the finished offer for the jewellery.”

Mr Field advised customers to get the accurate weight of their jewellery from a retailer and know how much fine gold is in their jewellery before ringing around and comparing prices.

Nick Kumar, Kanda precious Metals in Birmingham’s Jewellery Quarter added, “Let’s say the price per gram is £7.40, theses firms sometimes offer 50 per cent of that, no jeweller anywhere would offer a customer that.

“With me the price offered is 95 per cent of the value; with these companies once the cheque is in the bank you can’t say you don’t want to sell anymore because the proof is gone.

A spokesperson for Cash 4 Gold said, “We have a 94 per cent customer satisfaction rating and we're proud to have served over 900,000 satisfied customers in the US and UK.

“We pay customers up to 85 percent of the daily spot price of gold, based solely upon the quantity and quality of the precious metal contained in their items.”

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