How to Start Your Own Business Buying and Selling Gold

Updated on March 11, 2020
Blond Logic profile image

I meet with business owners both locally and internationally and share what I learn to help readers generate more income.

With a right tools, attitude, and work ethic, any smart businessperson can make money buying and selling gold.
With a right tools, attitude, and work ethic, any smart businessperson can make money buying and selling gold. | Source

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.

This is a list of gold hallmarks and their equivalents in carats and purity percentages.
This is a list of gold hallmarks and their equivalents in carats and purity percentages.

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 a gold testing kit. 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.

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.

When buying, you'll come across rings, coins, watches, jewelry, and even teeth!
When buying, you'll come across rings, coins, watches, jewelry, and even teeth! | Source

Buying Gold

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.

Inspecting Jewelry

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

One good way to get clients when you are first starting out is to organize a "valuation party." You can also hire a friend or party-planner 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. In fact, some dentists save gold teeth they've pulled for their retirement. If you are presented with any, you will need to 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.

Certain items like lockets that have a lot of character or history are often worth more at auction than as scrap gold.
Certain items like lockets that have a lot of character or history are often worth more at auction than as scrap gold.

Selling Gold

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.

Be Confident

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.

Advertise

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).

Be Respectful

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

  • 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.

  • 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.

  • 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.

  • 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.

  • How can I determine the karat value of a gold item?

    In the article it explains about scratching a small section and doing an acid test. That will tell you the karat of the gold. The price you pay will fluctuate depending on the market value at the time.

© 2011 Mary Wickison

Is This the Business for You?

Submit a Comment
  • Blond Logic profile imageAUTHOR

    Mary Wickison 

    2 weeks ago from Brazil

    Read as much as possible both online and offline for the best practices. Start small and keep reinvesting in your business.

  • profile image

    Evans Kholisani Zulu 

    2 weeks ago from Njube, Bulawayo, Zimbabwe

    I love this. I really want to invest in this! I would love to be guided from A-Z until successful. Is it possible?

  • lukinteractive profile image

    Lukasz 

    8 weeks ago from Warsaw

    Thanks for your valuable knowledge.

  • dougwest1 profile image

    Doug West 

    15 months ago from Missouri

    Buying and selling gold can be profitable, I have done it for decades. A word of caution, the improper marking of gold, in other words, it is a lower purity than it is marked is extremely extremely common. Before you start spending big money on scrap gold jewelry, do some experimentation with known pieces to get your testing skills up into good shape.You would be surprised how much off quality gold jewelry (it doesn't test the marked purity) is sold by high-end jewelry stores. Buying and selling gold is just like any other business, if you learn the ropes you can succeed - good luck and do you homework.

  • Blond Logic profile imageAUTHOR

    Mary Wickison 

    23 months ago from Brazil

    Thanks, James,

    You're right both Craigslist and eBay can offer some great deals.

    Thanks for your contribution.

  • profile image

    james parkhurst 

    23 months ago

    I can say is a great article on this business...I've been buying and selling gold for 6 years now albeit with parental assistance in the beginning (I was dealing with silver 2 years before that and copper 2 years earlier still)

    my best buy was a white gold Rolex president for £3,000 that I flipped for £5,000 (it was very beaten up)...I'd say the only thing that isn't covered is the potential to scope out deals online as I have bought from Craigslist and even eBay to find good deals

  • Blond Logic profile imageAUTHOR

    Mary Wickison 

    3 years ago from Brazil

    A good rule of thumb is what you and your customer are happy with. It is likely your customer will know the current prize of gold and will think they should get that price. You will need to check the price and then allow yourself your profit margin. The price can fluctuate greatly and it will be your decision to buy or sell and at what price.

  • profile image

    Scott 

    3 years ago

    Is there a good rule of thumb on what to pay for metals in order to make a profit?

  • Blond Logic profile imageAUTHOR

    Mary Wickison 

    3 years ago from Brazil

    This would depend where you live. I would suggest you start with your local Chamber of Commerce or the equivalent in your country.

  • profile image

    Mariya 

    3 years ago

    What kind of documents or certificates I need if I want ti sell gold and silver online?

    Thank you!

  • Nicole Young 07 profile image

    Nicole Young 07 

    3 years ago from Chicago Illinois

    You are welcome Blond logic, I just want people to be totally observant in attending gold parties because they usually weighed together all jewelry, regardless of the individual karat, and then you will be paid based on the the lowest karat value so it may make sense if you separate your pieces of jewelry according to karat. But I totally agree with you, honesty is the best policy, be it in business, situation or personal matters. What you reap is what you sow.

  • Blond Logic profile imageAUTHOR

    Mary Wickison 

    3 years ago from Brazil

    Hi Nicole,

    Yes, that is good advice. Regarding the gold parties, from a business point of view, these are still a good way to buy gold. Remember this post is how to set up a business.

    The scales should be checked often, I would suggest every day and the data recorded. It is best to avoid all possible comebacks and the best way to do it, is to be honest and straightforward. Good record keeping is a necessary part of all businesses, this one included.

    I agree with you that much of the advertising is misleading but that is why the market is ready for someone who is honest. Plus, this will lead to positive word of mouth advertising which is always the best kind.

    Thank you for reading and your insightful comment.

  • Nicole Young 07 profile image

    Nicole Young 07 

    3 years ago from Chicago Illinois

    Gold is a good investment and if you plan on having a buy and sell business, here are few tips in selling gold which I learned from David Goldstein of Biltmore loan and jewerly, for the last 20 years, the price of gold is at its highest during the month of September, so you may want to consider selling gold during this month. In addition, be wary of rogue buyers and advertisements that are too good to be true, avoid gold parties if you want the best value of your gold because scales used in gold parties are not verified periodically by the US Department of Weights and Measures and make sure to always check the price of gold.

  • Blond Logic profile imageAUTHOR

    Mary Wickison 

    8 years ago from Brazil

    Thank you,

    It actually requires a small amount of start up capital, because after your first deal, it can be self funding.

    Thanks for stopping by.

  • nenytridiana profile image

    nenytridiana 

    8 years ago from Probolinggo - Jawa Timur - Indonesia

    It is great! I think it is a good business and of course required a large capital. Good work blond logic!

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