Cash for Gold, or an
Opportunity for Jewellery Makers?

© by Genna Delaney; all rights reserved

Anyone in the UK will have seen a bombardment of adverts on television and in newspapers by companies offering cash for gold and silver. They may even be in your local shopping centre on a stall or small shop front.

Black obsidian, garnet and oxidised silver necklace
by Genna Delaney.

Pawnbrokers have always been around but these companies have been spawning everywhere and jewellers are missing out on some great commission opportunities.

The question is -
do the "Cash for Gold" companies
give a good deal?

A recent investigation by Which? (covered by London College of Communication, the Daily Telegraph and the Daily Mail among others) concluded that no - they do not.

The worst offender was giving jewellery sellers less than 6% of the retail value of the precious metals.

How do these companies operate?

Well, that silver or gold ring a customer buys goes through a series of people before it reaches the final customer. Each of these people add a bit of mark up along the way so they make money:

1. The mine where the ore comes from sell it to...


2. a refinery where the ore is smelted to become silver or gold and it is sold to...


3. a bullion dealer who sells it on to...


4. a jeweller who makes it into a ring which is...


5. put in a shop where it is bought by...


6. a customer who wears it.

To use crude figures the mine gets £10 of silver and sells it to a refinery for £20 who smelt it and turn into ingots to be sold to a bullion dealer for £40.

The bullion dealer can then turn this into sheet or wire silver and sells it to a jeweller like you or I for £80.

We then spend some time making it into a piece of jewellery that we need to sell for at least £160 to not lose money.

We go to a craft fair and sell it for say £200, or put in a gallery where it may retail at £250 - £300.

The customer buys jewellery

So the people who sell to these companies have previously bought or been given jewellery.

Perhaps it's a wedding ring from a previous marriage or a grandparent's old ring, or probably just broken chains and odd earrings from a drawer or jewellery box.

Cash for gold - vintage jewelry pawned for cash.

For the sake of illustration we'll show how it would work with a piece bought today.

A customer really likes that silver ring and hands over the £200 to me and this covers the cost of my stall, travel and I have a wee bit left over for rent, materials for new pieces etc.

The customer then needs money or doesn't like the ring any more.

She sees an advert on the TV for Leprachaun Gold Exchange or a similar company. Where do they fit in the chain of events?

They are down at position 2 or 3. So they could buy the silver in that ring for £20-£40.

Customer bought the ring for £200 - what do you think they get offered for it? Probably £10 - £30.

What other factors affect the value?

Perceived value

Well most of the people using these companies are doing it with old jewellery.

They get offered £20 for a piece of jewellery that they remember paying £2 for decades ago.

This seems like a sweet deal - it's more than they paid for it. Except they have forgotten about inflation and that piece would cost £200 to buy new today.

Quality of the piece

The vast majority of jewellery sent to these places will be smelted down - but it is possible to find a rare early piece by a famous designer or really high quality so it will be re-sold.

If it has some nice stones these will be taken out and re-sold too.

In these cases the seller would probably get a bit more for it, but still a lot less than its cost at retail. And a lot less than it's potential value.

How jewellery makers
are missing out!

Well, a lot of people using these services probably do so as they need cash right now.

Others who simply have loads of jewellery they don't wear any more should be coming to us.

Here's how
we could be of service:

Someone finds an odd silver earring in their jewellery drawer - they think the set is ruined and that selling it for scrap is the only option.

A jeweller can make a replacement earring for that long lost pair.

The drawer has broken chains, pendants or old strung beads. A jeweller can incorporate these parts into a new piece.

I recently posted about a necklace of beads I refashioned into a new contemporary piece.

Customer's beads re-fashioned into a necklace
by Genna Delaney.

The same can be done for silver or gold jewellery! Resize rings, melt down metal.

Say a customer wants a new ring that would normally cost £200.

Remember when I explained example costs earlier?

We buy the silver for £80, do lots of work and sell a piece of jewellery for £200.

Well what makes up that figure?

• Materials £80


• Time (labour) and costs (contribution towards studio rent, tools, hallmarking, running a website etc) £80


• Profit £40

In certain circumstances we can make a piece using the materials provided by clients reducing the first amount by a fair amount.

Examples of
commissions I have had like this:

• Reworking beads into a new piece


• Rollering down old gold rings into a pendant using the diamonds from the rings in the finished piece


• Made a pendant to add someone's beautiful 1 carat diamond to.

In each case the client managed to reduce the price of the piece by providing some or all of the materials needed.

The customer benefits by:

• Reducing the cost of the piece.


• Re-using jewellery which may have sentimental value.


• Feeling an even greater part of the design process.

The jeweller benefits by:

• Minimising the material outlay costs on the small chance a customer does not follow through wanting the finished piece.


• Reducing outgoings before you get the final payment from the customer.


• Not having to spend time sourcing materials.

Communicating this to customers

When someone is at your stall at a craft fair you sometimes hear a few comments about why they like something but can't buy it:

"I have a jewellery box full of stuff I don't even wear."

Instead of shrugging it off as a lost sale why not try a different angle:

Does that box have old earrings that are missing a partner? - Offer to make a replacement.

Any rings which don't fit? - Offer to re-size.

Any old jewellery that can possibly be incorporated into a new design? - Tell them about the potential to turn that gold not into cash, but into new contemporary jewellery!

So when you hear a customer mention broken chains, odd earrings and old rings, think "potential commission" - not "lost sale".

Plant the idea of going to a jeweller and not a pawn broker with it!