AS the recession has taken a grip on households, many families have eased pressing money worries by selling jewellery, watches and other unwanted items to cash in on the soaring price of gold.

This market in “scrap” gold hardly existed in the West until a few years ago, when firms such as Cash4Gold in the US saw the potential of an online marketplace and soon brought the concept to Britain.

With rivals such as Postal Gold, CashMyGold, Money4 Gold, Post Gold For Cash and Ramsdens Got Gold Get Cash joining in spending hundreds of thousands of pounds a month in media campaigns, the market lifted off at the start of last year, fronted by celebrities such as Dale Winton and Anne Diamond, urging people to turn out unwanted treasures.

As the price of gold continued to soar – from about £380 an ounce in 2007 to the peak of £919 recorded a fortnight ago, pawnbrokers began to buy old gold too.

Pawnbroker Albemarle and Bond, a public company, started a gold-buying service in February 2009.

Albemarle and Bond claims a six per cent share of the gold market, measured by the weight of gold bought, and says the service generated £11.5m gross profit in its first year, more than a fifth of the total profits accrued from an operation with 132 UK branches.

So strong is the revival of pawnbroking – the National Pawnbrokers’ Association says member numbers are up from 50 in 1980 to 1,200 today – that The Share Centre is telling small investors to buy Albemarle and Bond shares.

Share Centre invesment advisor Nick Raynor said: “That old ring from grandma could help boost your income. The share price of Albemarle and Bond has had a tremendous run and we can only see this continuing.”

Although buying gold is a booming business, it has so far lacked transparency and price competition. And there are fears that too many private sellers get ripped off.

Enter Tesco, Britain’s largest supermarket group, which is promising to bring order to confusion and chaos.

Tesco promises that its Gold Exchange, which is being trialled online and in at least 15 stores, will lift standards in a sector that has attracted the attention of the Office of Fair Trading.

It is currently promising to pay £10 per gram of nine-carat gold until the end of this month, against £7.59 offered at H Samuel. Insiders say the figure is so generous it scarcely leaves margin for profit.

Some postal operations cashing in on the gold boom h a v e been paying out little more than £3 a gram for nine-carat gold. In some cases, customers who reject the offer they receive are told to pay extra to get their items returned to them.

A Tesco spokesman said: “Customers have been poorly served in this area, so we are pleased we can trial a service which is transparent and offers market-leading value.

“Tesco Gold Exchange helps customers feel confident about raising a few extra pounds from unwanted gold, enabling them to spend it on something more worthwhile.”

When Tesco announced its move, the share prices of some pawnbrokers fell back slightly. Few doubt this is a significant moment for the market in second-hand gold.

Paul Aitken, founder and chief executive officer of borro.com, an online firm that lends against the security of gold but does not buy it, said: “It is interesting that Tesco is linking with Ramsdens, the country’s largest familyowned pawnbroker, which tried its own online gold-purchasing service, backed with TV advertising, in 2010.

“By mid-2010, signs suggested that services of this type, based on heavy advertising, were not taking off.”

Because sellers get only the meltdown value of gold items traded in, the payout is a tiny fraction of original cost.

For a bracelet bought for £115, Which? received offers of £6 to £40, while a £399 necklace drew offers of £22 to £119.

Which? said the lowest quotations were consistently supplied by TV gold buyers. On average they offered prices equivalent to only six per cent of retail value, while high street jewellers offered about 25 per cent of the value.