Grant Philips, manager of Refined Precious Metals (RPM) in Hatton Garden, London's jewellery heartland, is dabbing a recently arrived sovereign ring with acid to check the carat of the metal.

In RPM's crowded offices, people cannot sell their gold fast enough. Many who have found themselves pressed for cash as stock markets plunge are taking advantage of high prices for gold to sell necklaces, rings and watches.

One man waiting to have his offerings weighed at RPM last week makes a living from buying scrap gold from car boot sales. In the past couple of weeks, he says, competition from other buyers has hotted up: “Everyone's doing it.”

The new scrap merchants include many jewellers, who have been unable to sell new pieces so instead are making money by purchasing unwanted gold from cash-strapped customers. This gold, plus the jeweller's unsold stock, is then brought to RPM, where it is deposited in small piles to be scrutinised, weighed and smelted.

“That's basically how some jewellers are making a living,” Mr Philips said. “Joe Public will probably have a couple of hundreds' worth, while a jeweller will come in with a few thousands.”

Not all jewellers are looking to make money by melting down gold. According to Paul Daughters, of Berganza in Hatton Garden, about 50 per cent more customers than normal have stepped into his elegant shop in the past month. Customers are spending anything from £1,000 to “the sky's the limit” on the antique jewellery in which he specialises.

“People are buying it because they have no faith in cash,” he said. “Before they were purchasing on credit cards, but now they're using debit cards. They're spending their own money.”

Antique jewellery is not subject to VAT and is in little danger of anyone lowering its value by mass producing any more. Asked whether his customers were concerned about the potential hazards of wearing one's pension around one's neck, Mr Daughters said: “I think they'd rather themselves lose it than the banks lose it.”

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