Ruth Rees of local business Martin Rees Jewellers gives us this valuable guide to buying and selling gold.
Insanely Busy
We’ve seen numerous “all-time highs” in the gold price this year, as turmoil in world affairs fuels demand for safe-haven investments.
Some of the price increase here in the UK is also due to the dollar’s drop in value against the pound, as the gold fix is always quoted in US dollars.
It means we’ve been insanely busy over the last few months, valuing and buying an amazing amount of jewellery. We have a full-time member of staff, Hannah, who spends most of her time upstairs at her computer, examining and pricing all the items – quite often, it’s between 10 and 20 valuations a day, some with 5, 10, 20, or more separate items.
Hannah’s little dachshund, Dottie (see feature image), often keeps her company. We affectionately refer to her as our Assistant Valuer, and we all love her dearly. Hannah has been in the jewellery trade for 27 years, having previously worked for Waltons. Together, our exceptional staff team boasts over 250 years of combined experience.
So, should you be buying gold?
Benefits
If you want to buy purely for investment, stick to gold coins, such as sovereigns – they incur no VAT at all and trade at a lower markup too. Those produced by the Royal Mint here in the UK are also exempt from capital gains tax. If you’d rather have something you can wear and enjoy, opt for well-made, classic pieces with UK hallmarks, making it easier to resell. You’re likely to get more gold for your money if you buy pre-owned rather than new, partly because you pay less VAT. Additionally, a second-hand item of any kind typically costs less than the same item when brand new.
The exception could be some rare or highly collectable vintage or antique pieces, which would be more desirable than modern reproductions. However, be sure to purchase something in good condition from a seller with a proven, long-term reputation. Keep receipts, valuations, and any other relevant paperwork, such as diamond reports, for future reference.
Do bear in mind that the retail mark-up on jewellery is quite high, due to overheads such as security (safes, alarms, etc), insurance, and staff training in such a complex field, so as a private individual, you couldn’t expect to get back anywhere near the same amount as you paid for even a pre-owned piece, if you are selling it back to a shop – unless you hang onto it for a really long time… If you can sell on to a member of the public instead, you could do better, of course.
Drawbacks
It can be pretty volatile. We’ve seen some significant drops in our 40-plus years of trading, although the overall trend during that time has been a substantial increase. Look on it as a way to diversify, not necessarily as a significant pillar of your savings. Think in terms of long-term returns rather than short-term ones. There is also a risk that you could lose it or someone could steal it. Ensure you have a safe and well-hidden place to store your jewellery or coins, maintain up-to-date lists and photos in case of need, and have your items revalued for insurance regularly.
Disclaimer: Ruth would like to mention she is not authorised to give financial advice, but the article is based purely on her lifetime experience as a jeweller.
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