Cold wind of downturn brings benefits to pawnbroker H&T

Pawnbroking chain H&T said yesterday that demand among recession-hit consumers to swap their unwanted gold for cash had more than tripled scrap profits for 2009.

The group – the UK's largest pawnbroker – now expects full-year profits at the top end of forecasts as it reaps the rewards of rocketing gold prices and a burgeoning market to trade in the precious metal.

Its update came a day after the consumer watchdog launched an investigation of five companies offering cash for gold by post.

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The Office of Fair Trading said it was demanding information from the firms to ensure they were not breaking consumer protection laws. H&T, based at Sutton in Surrey, said it was not one of the five firms.

It offers a postal service, but largely trades its cash for gold across its stores, having recently launched a chain of 56 shopping centre-based Gold Bars outlets.

The cash for gold market has boomed over the past year, with a number of new entrants launching in the UK and advertisements promoting their services becoming a regular feature on daytime television.

But the OFT is now casting its eye over some of those in the market following complaints from consumers and as Which? Money warned that the gold buying companies offered "shockingly bad value" and urged people not to use them.

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Research carried out by Which? Money found that the gold companies advertising on television offered people an average of just six per cent of the retail price of their gold.

H&T said yesterday it offers on average 4.50 to 5 a gram for gold, against a scrap value of 8.

But the group said it quotes the weight and price to a customer before making the trade, even when gold is sent in by post.

John Nichols, chief executive of H&T, said: "The principle should be that the consumer knows how much it weighs and the carat so they can make a good judgment and compare with other providers on the market."

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