Start Your Own Business Buying and Selling Gold
The Price of Gold
The price of gold is always in the news sometimes, it's soaring and at other times plummeting. Like most people, you might be asking yourself if you should sell some while it's high to get the best price or if you should invest in gold just in case it goes higher.
If you want to earn a good income, now is the time to buy gold. I don't mean buying from jewelry stores, I am referring to buying from the public. On this page, I will take you step by step through the process to start you on your way to making money from gold and other precious metals.
Although you may think you'll need a lot of money to start this business, you don't. It can be started with just a few simple tools which I have listed below. Some of these you may be able to purchase used, such as a jewelry scale. Let friends and family know what you're doing, and they may give you some jewelry to start your business off.
Use your profit to reinvest it back into your new business and make your profit 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.
A 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. You will be using this to verify what carat gold your customer is trying to sell you.
Your kit should contain different acids that will test for 10k, 14k, 18k, and 22k.
These are reasonably priced and crucial to your new business. The acid will tell you which carat of gold (silver or platinum) you're dealing with. With this knowledge, you can then give your customer, a correct valuation of their jewelry. The majority of jewelry you'll be offered won't have a hallmark, and you can't guess at the quality of the metal.
A Professional Jewelry Scale
A professional jewelry scale is also a necessity. Although initially more costly, it will provide you with years of reliable service.
Do not use a kitchen scale for your new business, they are not legal to use. You're running a business, make it look professional. Even if you are just starting out, run a professional business.
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. These could be coming from a customer or from an official body such as trading standards.
Purchase a Magnet and File
Because you will be using a magnet every time someone brings you a piece of jewelry, it pays you in the long term to buy a quality one. The same goes for the metal file which will be used to scrape away the outer coating of a piece.
Both of these items aren't expensive and will last for years. You can find these at a hardware store or purchased online.
When the customer brings you an item, it may have a mark on it to tell you what carat of gold it is. Using your magnifier loupe, check for any hallmarks.You may still have to do an acid test.
After asking the owner's permission, make a small scratch through the outer layer with your metal file. Then begin with your 10k acid from the set above.
Be Professional to Gain Respect
If you are just starting out and lack confidence, practice on jewelry you may already have. This will give you confidence when you're testing a customer's piece in front of them. The more you do, the more confident you'll become.
If you aren't comfortable speaking to new people, having confidence will come as you develop your skills in your business.
If you are self conscious, consider taking a public speaking course such as Toastmasters. This will help you feel confident and set you up well when dealing with the public.
Testing Gold Using an Acid Kit
How to Advertise Your Gold Buying Business
It is a good idea to have business cards or leaflets printed stating what you buy, for example, rings, chains, watches, or coins. Do not put the price you pay per gram or ounce because that will vary as the price of gold fluctuates.
Put your phone number but do not put your home address for security reasons. If this is where you will be buying from then once you have spoken with them on the telephone you can give them details.
Buying Gold Lockets
Death, Divorce, or Debt
These are the three reasons people often choose to sell 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, it is a win-win situation.
Don't be judgmental about their unfortunate position, be professional and respectful. Every customer, could refer more clients to you. Always leave a business card or two behind for them to share with friends.
Have a Gold Valuation Party
Either you or a friend could organize a valuation party. Have them invite their friends and ask them to bring any gold they wish to have valued. They may take your offer on the night or they may simply take a business card, go home, and think about it and telephone you later.
Serve snacks and light refreshments, and you could also give your party planner a fee or gift for organizing the party. You may find that people will be happy to sell to you whereas they would have felt uncomfortable 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 keep the gold teeth for their retirement. If you are presented with any, you will need to knock the tooth away from the gold before weighing.
If you feel squeamish about it, use latex gloves or hand wipes when working with the teeth.
Purchasing Gold Pocket Watches
Paying the scrap metal value for jewelry and watches is fine and you will be able to earn a profit. But before you sell, consider selling the watch or jewelry at auction or on eBay. Do some research on the piece before putting it up for sale. If it has an interesting history, you could earn well from it. You may get more for the watch than the scrap metal price if it is a desirable object. If the watch doesn't sell for more, you can then sell it for its metal value.
Ask for ID When Buying Jewelry
It's possible you may be offered stolen jewelry. If you have any doubts, ask for ID from the person. Either a driver's license or a passport. Write their name, ID number, and address. If they are honest, they won't mind giving you this information. If you lose the purchase by asking for this information then you're better off. You do not want to be accused of handling stolen goods.
Keeping details of all transactions is a good idea. A simple notebook with date, weight of objects and amount paid and their contact details should suffice.
Staying Safe When Buying and Selling Gold
It is likely you will be carrying a large sum of cash or valuable gold and it is necessary 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 burgled.
Do not tell strangers where you live and be careful discussing what you do until you know the person.
Likewise, be cautious if you are called to someone's house to give a valuation. Tell them on the phone, you will look and give them a price but that you do not carry the cash because of security reasons. Most people will understand this and those who don't, are the type you don't need to be dealing with.
Build Your Contact List
You should start to build a list of people who will have a regular supply of gold, for example, dentists and people who do house clearances, official receivers etc.
Also, start to source where and whom you can sell to. All rings and jewelry may not go for scrap metal. There are places to sell such as eBay, and to others who sell on market stalls and craft fairs. Seek these people out, they will often be looking for new suppliers.
Selling Your Gold
Because you will be buying your gold or other precious metals below market value, you can sell them more 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.
As with all businesses ventures, there is a financial risk, prices fluctuate often 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.
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.Helpful 46
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 32
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 33
Whats a standard percentage to offer for a piece of gold relative to spot price?
There is no standard price. You are an independent businessman. You will set the price how you see fit. The customer will either sell to you or not. When you then sell it, you will decide what you are willing to accept for it.Helpful 4
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 17
© 2011 Mary Wickison