ABC TV – Gold sees a resurgence

REBECCA NASH, REPORTER: It wasn’t so long ago that the idea of the gold price pushing through the $1,000 mark seemed a far-off prospect, but the GFC has seen investors returning to the age-old security of the precious metal, sending its value skyrocketing.

Even those trading in recycled gold are in the midst of a boom, with turnover growing at a rapid pace and new players entering the market.

MICHAEL SALIB, MD, CASH FOR GOLD AUSTRALIA: We receive anything from wedding bands, bangles, bracelets, big 22 carat chains. The type of gold that we receive from people in some cases is bizarre – we get a full set of teeth, with one of the teeth that’s gold.

REBECCA NASH: Michael Salib began buying unwanted gold in 2001.

MICHAEL SALIB: We test their gold and their unwanted jewellery in front of them. The prices that we advertise on our website is the prices they get paid in the office. It gets melted down and refined and put back in the open market. We sell it to gold manufacturers and jewellery shops that would like to buy an ounce or two.

REBECCA NASH: The business now includes Tupperware-like gold parties.

MICHAEL SALIB: The gold party is basically a group of ladies comes to one of their friend’s house and bring their unwanted, broken, unused gold jewellery. We go there and test, assess and weigh the gold. Based on all that we make an offer to the ladies, individually of course. There is no obligation whatsoever. They can accept the offer or reject the offer.

REBECCA NASH: The greatest growth has come through the mail, with many visitors to the company’s website choosing to post their unwanted jewellery.

MICHAEL SALIB: The mail pack has been great since the start and we receive a huge amount of mail daily. It represents 50 per cent of our revenues in the business.

Originally we were a small operation. Turnover was nothing great and when we started the internet business and the gold parties took off and the mail pack took off, the business went into massive overdrive and it became a multi-million dollar business. When the people see the price of gold is good they basically start selling their gold because they know they can capitalise on it and it’s a good opportunity for them to make more money for their gold.

REBECCA NASH: It’s a business model spawning many imitators keen to take advantage of the new gold rush.

MICHAEL SALIB: We have seen every second day a new business popping up on Google doing exactly the same type of business we are doing – some which really copied our website by the letter. The new trend of kiosks in the shopping centres are another copy of our business and they are basically finding the shopping centre a haven for people who don’t do their homework and people who have no time to look on the internet to see what other companies are paying.

We can see the surprises on their faces every time we give them a price, they say, “thank goodness I came here. I nearly got less than half that in the shopping centres.”

REBECCA NASH: Just like its customers, Cash4Gold’s fortunes closely follow the fluctuating gold price.

MICHAEL SALIB: Holding on to the gold is a very risky business because it can go up or go down. Sometimes we’re lucky enough that the gold goes up a fraction and sometimes we’re unlucky and the gold goes down. Either way there’s still a very small margin between the price that we buy the gold and the price that we sell the gold.

REBECCA NASH: But, according to Michael Salib, the future is golden.

MICHAEL SALIB: The price of gold doesn’t fall away and it will not fall away. As everybody knows gold is the best currency in the world. Every currency collapses at a certain stage and gold is the only one that never collapses. It will definitely rise, and that’s the normal trend for the gold.