How to Start Your Own Business Buying and Selling Gold
You Can Buy and Sell Gold Jewelry for Profit
The price of gold is often in the news—sometimes it's soaring, and other times it's plummeting. When its price is on the rise, many of us wonder if we should sell the gold we possess for a profit. When the price is falling, some of us consider investing in gold in order to make a profit down the line when its value rebounds.
The truth is that you can earn a living buying and selling gold, but I don't mean buying from jewelry stores or selling on the stock market. I am referring to buying gold from the public for resale. In this article, I will walk you through the process of making money on gold and other precious metals.
Although you may think you'll need a lot of capital up-front to start this business, you really don't. A gold business can be started with just a few simple tools, which I'll cover in more detail below. Some of these—like a jewelry scale—you may be able to purchase used. Additionally, If you let friends and family know what you're doing, they may give you some jewelry to help you start your business off. If you reinvest any profit you make back into your new business, you can make your money work for you. That way, if someone brings you a piece that you know is a bargain, you'll have the cash to buy it. Now, let's dig into the details.
In This Article
- Terms to Be Familiar With
- Supplies You'll Need to Begin
- Buying Gold
- Selling Gold
- How to Be Professional
- How to Stay Safe
Terms To Be Familiar With
As a buyer and seller of gold, there are a few important terms that will come up in your work repeatedly. It's important to familiarize yourself with their meanings before moving forward.
What Is a Hallmark?
In jewelry, a hallmark is a small stamp or impression used to certify that a piece is composed of a certain quality of a noble metal like gold, silver, or platinum.
What Is a Carat (Karat)?
A carat (karat in the US) is a fractional measure of a gold alloy's purity out of 24. An 18-carat gold ring is 18 out of 24 parts pure gold, or 18 parts gold and 6 parts another metal. In other words, it is about 75% pure gold.
Supplies You'll Need to Begin
Before getting started in the gold business, there are a few essential items you should be equipped with. It's okay to purchase some of these used so long as they are of good quality.
Gold Testing Kit
The first thing you'll need to buy is . These are reasonably priced and absolutely necessary for your new business. The majority of jewelry pieces you'll be offered won't have a hallmark, and you can't simply guess at the quality of the metal. The acids in the kit will tell you which carat of gold you're dealing with. Two additional acids are also included to test silver and platinum. With this knowledge, you can then give your customers accurate valuations of their jewelry. Your kit should contain different acids to test for 10, 14, 18, and 22-carat gold. a gold testing kit
Professional Jewelry Scale
A professional jewelry scale is also a necessity for your new business. Although it may be somewhat costly, it will provide you with years of reliable service. Don't use a kitchen scale, even if for only a short time, as they're not legal for trade. You're running a business, so you need to make it professional. It's a good idea to take readings from your scale at least once a day to ensure its accuracy. Keep up-to-date records to avoid any legal problems that might result from complaints by customers or regulatory agencies.
Magnet, File, and Loupe
Because you will be using a magnet every time someone brings you a piece of jewelry, it behooves you to buy a quality one. The same goes for your metal file, which will be used to scrape away the outer coating of certain pieces. Neither of these items is expensive, and both will last for years. You can find them at a hardware store or purchase them online. You will also want a magnifier loupe to view the smaller details of the jewelry you inspect.
Before you can sell gold for profit, you'll have to buy some from the public. Close friends and family may give you a few items to help you get started, but eventually, you'll have to buy all of the gold you wish to sell. Here are a few things to keep in mind about the gold-buying process.
When a customer brings you an item, it may have a hallmark on it that tells you what carat of gold it is. Using your magnifier loupe, check for any hallmarks. Refer to the graphic above to see which hallmarks correspond to which carat ratings and purity levels.
Even if an item has a hallmark, you may still want to do an acid test. After asking the owner's permission, make a small scratch through the outer layer of the piece with your metal file. Then begin with your 10k acid from the set above. When you are just starting, practice on your own jewelry—this will give you confidence when testing a customer's.
Hosting Valuation Parties
A good way to get clients when you are starting out is to organize a "valuation party." You can ask a friend to host the event for you. Serve snacks and light refreshments, and tell family and friends to invite their friends and ask them to bring any gold they wish to have valued. Some guests may take your offers that night, while others might simply take a business card, go home, think about it, and contact you later.
Gain someone's trust and respect, and you could have a customer for many years to come. You may find that people will be happier to sell to you instead of taking their gold to a pawnbroker or a "cash-for-gold" store. The relaxed, friendly environment will put everyone at ease, and with everyone taking home a business card or leaflet, you will be expanding your client base. Word of mouth is the best advertising.
Buying Gold Teeth
Gold teeth are an unexpected part of buying gold. Some dentists save gold teeth they've pulled for their retirement. If you are offered these, knock the tooth away from the gold before weighing it. If you feel squeamish about this, use latex gloves or hand wipes when working with the teeth.
In the gold business, selling is just as important as buying. Keep the following considerations in mind as you begin to sell purchased jewelry, rings, and coins.
Timing When You Sell
Because you will be buying gold or other precious metals below market value, you can sell them easily for a small profit. However, holding back until the market goes up is a better idea. Then you will see a better return on your money.
Acknowledging the Risk
As with all business ventures, there are always financial risks, as prices fluctuate widely. Do not overextend yourself, and be prepared to wait for an upturn in the market. You don't make your profit when you sell, you make it when you buy.
Considering Alternate Markets
Paying the scrap metal value for jewelry and watches is fine, and you will be able to earn a profit. Before you sell, however, consider web auctions like eBay. Do some research on a piece before putting it up for sale. If it has an interesting history, you could earn well from it. You may get more for a watch than its scrap metal price if it is a desirable object. If the watch doesn't sell for more at auction, you can then sell it for its metal value. You might also consider selling more unique pieces to vendors with market stalls at craft, jewelry, and antique fairs. Seek these people out, as they are often looking for new suppliers.
How to Be Professional
The last thing you want to do in the gold business is come off as amateurish, shady, or unprofessional. Here are a few things to keep in mind when building your business.
If you're self-conscious when interacting with strangers, consider taking a public speaking course; this will help you become more confident when speaking to your customers. Contact your local city college for courses.
It is a good idea to have business cards or leaflets printed stating what you buy (e.g. rings, chains, watches, and coins). Do not include the price you pay per gram or ounce, as this will vary over time as the price of gold fluctuates. Every customer could refer more clients to you, so always leave a business card or two behind for them to share with friends. You should also build a list of people who have a regular supply of gold (e.g., dentists, people who do house clearances, official receivers, and so on).
The three Ds—death, divorce, and debt—are the main reasons people choose to sell gold jewelry and other items below market value. As sad as it may be for the person selling, this is good news for you. They need to sell, and you want to buy, so it is a win-win situation. Don't ever be judgmental about someone's position; always be professional and respectful.
How to Stay Safe
Buying and selling gold can be a risky business if not done carefully. Avoid getting in trouble or being victimized by taking the following precautions.
Always Ask for ID
It's possible you may be offered stolen jewelry. Ask for ID from all sellers. Either a driver's license or a passport will suffice. Record each seller's name, ID number, and address. If they are honest, they won't mind giving you this information. If you lose someone's business by asking for this information, then you're better off not buying from that person. You do not want to be accused of handling stolen goods.
Keep Accurate Records
Keeping details of all transactions is a good idea. A simple notebook with dates, descriptions, weights of objects purchased, amounts paid, and seller contact details should suffice.
Protect Your Property by Protecting Your Privacy
It is likely that at times, you will be carrying a large sum of cash or valuable gold, so it is important to be aware of the risk of being robbed. Although you may feel safe if you are in a public area, going to your vehicle and returning home could pose a problem. If a potential thief knows you have cash or jewelry in your home, you could be opening yourself up to being burglarized. Do not tell strangers where you live, and be careful discussing what you do until you know a person well.
Don't Bring Cash to In-Home Appraisals
Be cautious if you are called to someone's house to give a valuation. Tell them on the phone that you will look at their pieces and give them offers but that you do not carry cash on your person during house calls for security reasons. Most people will understand this, and those who don't are not the type of people you need to be dealing with.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
Questions & Answers
You said you need little capital to buy gold, but how does this work? How would I start with little capital?
Once you have your scale and all the other items I mentioned in the article in place, start asking your friends and family if they want to sell or give you any articles of jewelry. Some people may be happy to help you and others may just want to get rid of it but can't be bothered to get it valued. Any profits you make will be put back into your business.
As with any business, there will be start-up costs, but smart people just keep reinvesting it back into their business. Also, keep your overheads low. Buy, sell, repeat and keep building up your capital. When a bargain comes along, you will then be in a position to act quickly.Helpful 41
What should I look for when selecting a business location?
Firstly if you are just starting out, the most important thing is to keep your overheads low. Therefore, don't commit yourself to a brick and mortar store. In the article, I mention organizing parties with friends of friends for example. There is very little you have to spend other than perhaps a few bottles of beverages.
Then, once you get more spending capital under your belt, opt for a freestanding pitch in the city center. These temporary pitches are much cheaper than renting a shop. Although you may be outside in winter, think how many people are passing by. If you do this and continue with 'gold buying parties' in the evenings, you may find you don't ever need to pay the rents and rates of a high street store.Helpful 23
What licenses do you need to buy and sell gold?
This article is read by people in many different countries, and so the regulations will be different. Before beginning, you will want to go to your chamber of commerce (or equivalent) and ask what is required. They will be in a better position to advise you and assist you in setting up your business.Helpful 49
Where can I get a certificate to open my business?
You should start at your local chamber of commerce. They will tell you which forms you need to complete.Helpful 70
Concerning starting your own business, you said you don’t make your profit when you sell, you make it when you buy. Can you explain that for me?
Before you go into any business transaction where you plan to make a profit from it, you need to be aware of your exit strategy. Anyone can buy gold but to earn a profit from it, you need to be purchasing at a price that will allow you to earn a profit. You've heard the saying, 'buy low and sell high'.
That is the best case scenario, but you can also buy low, sell at a profit and repeat. There are people who will sit on a purchase and hope it increases over the years. There are also people who buy low, sell quickly, and make another purchase.Helpful 5
© 2011 Mary Wickison