The price of gold frequently makes headlines—sometimes it’s skyrocketing, and other times it’s dropping. When it’s on the rise, many of us wonder if we should sell the gold we have for a profit. When it’s falling, some of us think about investing in gold to potentially profit later when its value bounces back.
The reality is, you can make a living buying and selling gold, but I’m not talking about purchasing from jewelry stores or trading on the stock market. I’m referring to buying gold from the public for resale. In this article, I’ll guide you through the process of earning money with gold and other precious metals.
You might assume that starting this business requires a hefty upfront investment, but it doesn’t. A gold business can be launched with just a few basic tools, which I’ll explain further below. Some of these tools, like a jewelry scale, might be available for purchase secondhand. Plus, if you inform friends and family about your venture, they might offer you some jewelry to kickstart your business. By reinvesting any profits 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 steal, you’ll have the funds to purchase it. Now, let’s delve into the specifics.
Terms to Be Familiar With
As someone involved in buying and selling gold, you’ll encounter several key terms frequently in your work. It’s crucial to understand their meanings before you proceed further.
What Is a Hallmark?
In the world of jewelry, a hallmark is a tiny stamp or impression that verifies a piece is made of a specific quality of a precious metal like gold, silver, or platinum.
What Is a Carat (Karat)?
A carat (karat in the US) is a fraction that indicates the purity of a gold alloy out of 24 parts. For example, an 18-carat gold ring consists of 18 out of 24 parts pure gold, or 18 parts gold and 6 parts another metal. Essentially, it’s about 75% pure gold.
Supplies You’ll Need to Begin
Before you jump into the gold business, make sure you have a few essential items ready to go. It’s perfectly fine to buy some of these items secondhand, as long as they’re in good condition.
Gold Testing Kit
The first thing you’ll want to invest in is a gold testing kit. They’re reasonably priced and absolutely essential for your new business. Most of the jewelry pieces you’ll come across won’t have a hallmark, so you can’t simply guess the quality of the metal. The acids in the kit will accurately determine the carat of gold you’re dealing with. Plus, there are additional acids included to test for silver and platinum. Armed with this knowledge, you’ll be able to provide your customers with accurate valuations of their jewelry. Make sure your kit contains a variety of acids to test for 10, 14, 18, and 22-carat gold.
Professional Jewelry Scale
You’ll definitely need a professional jewelry scale for your new venture. While it might seem like an investment, it’ll serve you well for years to come. Avoid using a kitchen scale, even temporarily, as they aren’t approved for trade. Since you’re running a business, it’s crucial to maintain a professional standard. It’s a good practice to check your scale’s accuracy at least once a day and keep detailed records to prevent any legal issues arising from customer or regulatory complaints.
Magnet, File, and Loupe
Since you’ll be relying on a magnet every time someone brings you a piece of jewelry, it’s wise to invest in a quality one. The same goes for your metal file, which you’ll use to scrape away the outer coating of some pieces. Thankfully, neither of these items is too pricey, and they’ll last you for years. You can pick them up at a hardware store or order them online without much hassle. Additionally, having a magnifier loupe handy will help you inspect the finer details of the jewelry more closely.
Buying Gold
Before you start turning a profit by selling gold, you’ll need to purchase some from the public. While close friends and family might offer you a few items to kickstart your venture, ultimately, you’ll need to acquire all the gold you plan to sell. Here are a few pointers to consider as you dive into the gold-buying process.
When a customer brings you an item, it might have a hallmark indicating its carat of gold. Use your magnifier loupe to check for any hallmarks. Consult the graphic above to match hallmarks with carat ratings and purity levels.
Even if an item has a hallmark, you might still want to perform an acid test. After obtaining the owner’s permission:
- Go ahead and make a small scratch through the piece’s outer layer using your metal file.
- Start with your 10k acid from the set above.
- When you’re just starting out, it’s a good idea to practice on your own jewelry. This will help build your confidence for when you’re testing a customer’s item while they’re watching.
Hosting Valuation Parties
A great way to attract clients when you’re starting out is to host a “valuation party.” You could ask a friend to host the event for you. Serve snacks and light refreshments, and encourage family and friends to invite their friends too. Ask everyone to bring along any gold they want to have valued. Some guests might decide to sell their items on the spot, while others might take a business card and contact you later after giving it some thought. It’s a relaxed way to introduce people to your business and potentially drum up some sales.
If you earn someone’s trust and respect, you could have a customer for many years to come. People might prefer selling to you rather than going to a pawnbroker or a “cash-for-gold” store. Some folks feel uneasy about visiting a pawnbroker due to the associated stigma. Creating a relaxed, friendly environment for your potential clients will help put everyone at ease. By offering everyone a business card or leaflet to take home, you’ll also be expanding your client base. Word of mouth has always been the best form of advertising, after all.
Buying Gold Teeth
Gold teeth might come as a surprise when buying gold. Some dentists keep the gold teeth they’ve removed for their retirement. If you come across these, make sure to separate the tooth from the gold before weighing it. If handling teeth makes you feel uncomfortable, consider using latex gloves or hand wipes during the process.
Selling Gold
In the gold business, selling is just as crucial as buying. Here are some things to keep in mind as you sell the jewelry, rings, and coins you’ve acquired.
Timing When You Sell
Since you’ll be purchasing gold or other precious metals below market value, you can sell them quickly for a modest profit. However, it’s often a smarter move to wait until the market improves, as you’ll likely yield a better return on your investment.
Acknowledging the Risk
Like any business endeavor, there are financial risks involved as prices can fluctuate greatly. It’s crucial not to overextend yourself and to be ready to wait for an upswing in the market. Remember, your profit isn’t made when you sell; it’s made when you buy.
Considering Alternate Markets
Paying the scrap metal value for jewelry and watches is acceptable, and it can yield a profit. However, before you decide to sell, explore options like web auctions such as eBay. Take some time to research the piece before listing it for sale. If it has an intriguing backstory, you might fetch a good price for it. A desirable watch, for instance, could fetch more than its scrap metal value. If it doesn’t sell for more at auction, you can still sell it for its metal worth. Additionally, consider selling unique pieces to vendors who have market stalls at craft, jewelry, and antique fairs. Seek out these individuals as they are often on the lookout for new suppliers.
How to Be Professional
The last thing you want in the gold business is to appear amateurish, shady, or unprofessional. Here are a few things to keep in mind as you build your business.
Be Confident
If you feel self-conscious when talking to strangers, think about taking a public speaking course. It can help boost your confidence when interacting with customers. Check with your local city college for classes, or see if there’s a Toastmasters club nearby.
Advertise
Having business cards or leaflets printed is a smart move. List what you buy, like rings, chains, watches, and coins. Avoid including the price per gram or ounce, as it can change with gold prices. Every customer could refer more clients, so leave a few cards behind for them to share. Also, build a list of folks with a steady supply of gold, such as dentists, house clearance experts, or official receivers.
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
You might come across stolen jewelry offers. Always ask for ID from all sellers—either a driver’s license or a passport works fine. Record each seller’s name, ID number, and address. Honest sellers won’t mind sharing this info. If someone refuses, it’s better not to do business with them. Avoid getting involved with stolen goods accusations.
Keep Accurate Records
It’s a smart move to keep records of all your transactions. Just jot down the dates, descriptions, weights of items purchased, amounts paid, and seller contact details in a simple notebook.
Protect Your Property by Protecting Your Privacy
You’ll probably find yourself carrying a hefty sum of cash or valuable gold at times, so it’s crucial to be mindful of the risk of robbery. Even if you feel secure in a public space, heading back to your vehicle or home could present a danger. If someone knows you have cash or jewelry at home, you might become a target for burglary. Avoid sharing your address with strangers, and be cautious about discussing your business until you’re familiar with someone. A phone number on your business card will do just fine—no need to include your address.
Don’t Bring Cash to In-Home Appraisals
If you’re summoned to someone’s home for a valuation, exercise caution. Let them know upfront that you’ll assess their pieces and make offers, but you don’t carry cash during house calls for safety reasons. Most folks will respect this precaution, and those who don’t aren’t the kind of individuals you want to engage with.
Questions & Answers
Question: Where Can I Get a Certificate to Open My Business?
Answer: You should begin at your local chamber of commerce. They’ll let you know which forms you need to fill out.
Question: What Licenses Do You Need to Buy and Sell Gold?
Answer: This article is read by people in many different countries, so the regulations will vary. Before you start, you’ll want to visit your chamber of commerce (or equivalent) and ask what’s required. They’ll be in a better position to advise and assist you in setting up your business.
Question: You Said You Need Little Capital to Buy Gold, but How Does This Work? How Would I Start With Little Capital?
Answer: Once you’ve got your scale and all the other items I talked about in the article set up, start reaching out to your friends and family. See if they want to sell or give you any pieces of jewelry. Some folks might be glad to assist you, while others might just want to clear out their jewelry box without the hassle of getting it appraised. Any profits you make can be reinvested into your business.
Like any business, there will be initial costs, but savvy entrepreneurs just keep reinvesting back into their business. Also, aim to keep your expenses low. Buy, sell, repeat, and steadily build up your capital. When a great deal presents itself, you’ll be ready to seize it quickly.
Question: What Should I Look for When Selecting a Business Location?
Answer: Firstly, if you’re just starting out, it’s crucial to keep your overheads low. So, don’t rush into committing to a brick-and-mortar store. As mentioned in the article, consider organizing gatherings with friends of friends, for instance. There’s very little you need to spend other than perhaps a few bottles of beverages.
Then, as you accumulate more spending capital, consider opting for a freestanding pitch in the city center. These temporary pitches are much more affordable than renting a shop. While you might be outside in winter, think about how many people pass by. By combining this with hosting ‘gold buying parties’ in the evenings, you may find that you never need to shoulder the costs of a high street store.
Question: How Can I Determine the Karat Value of a Gold Item?
Answer: The article talks about scratching a small section and doing an acid test. That’ll let you know the karat of the gold. The price you pay will fluctuate depending on the market value at the time.
Question: When Starting a Business in Gold, Could a Range Like 60% to 75% Work Better if Gold Is High 60% if Gold Is Low 75%?
Answer: Think of this like any other item up for sale, such as a car or a house. You buy at a price where you can turn a profit and where the customer is willing to sell. You set the selling price accordingly.
Question: My Question Is How to Set a Daily Base Gold Purchase and Sell Price.
Answer: It’s up to you. Whether you’re buying a car, a house, or gold, there’s a price the seller will accept and a price you’ll pay based on what you think you can get back when you sell. While there are guidelines for pricing in various markets, there’s always someone looking to sell. That’s where you can make the most profit.
Question: What Is the Standard Percentage to Offer for a Piece of Gold Relative to the Spot Price?
Answer: There’s no fixed price. You’re an independent businessperson, so you set the price according to your judgment. The customer can either agree to sell to you or not. When you sell it later, you’ll decide what price you’re willing to accept.
Question: With How Much Gold Can I Start My Business Buying and Selling Gold?
Answer: You can start with very little, as I’ve explained in the article. Ask friends and family if they have any unwanted jewelry. Then, begin slowly. Any money you make, reinvest it into your business. Some people could start with $10k and never make anything. Others start with just one ring and work hard at their business. If you have a mindset that you will succeed, you’ll find a way.I would encourage you to read a book called The $100 Start-up. It will help you see opportunities.
Question: 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?
Answer: Before you dive into any business transaction with the intention of making a profit, you should consider your exit strategy. Anyone can buy gold, but to turn a profit, you need to purchase at a price that allows for a margin of profit. You’ve heard the saying, “buy low and sell high.
That’s the best-case scenario, but you can also buy low, sell at a profit, and repeat. Some folks hold onto a purchase, hoping its value will increase over the years. Others buy low, sell quickly, and reinvest the profit.
Question: Where Can I Find a Paid Course on Buying and Selling Gold? I’m Looking to Start a Gold-Buying Business and Could Really Use a Mentor. I’m Hoping to Learn the Best Places to Sell Gold for the Highest Amount and Maybe Even Pick up Some Skills on How to Melt Gold.
Answer: I’m not sure about specific courses in this area. You might want to check with your local college or look into online academies to see if they offer anything relevant. My advice would be to start by reading up on the process before considering a mentor.
Question: For a Complete Beginner, Who Actually Possess Very Limited Knowledge in This Field, What Would You Recommend That Person Can Do to Get a Basic Understanding in This Fie
Answer: First, educate yourself by reading about the subject. But don’t feel like you have to know everything before you begin—you don’t.
Next, turn to supportive friends and family. Ask them if they know anyone interested in attending a gold valuation party to help you kick off your business. Bring along some business cards, as I’ve outlined in the article. Doing it this way lets you start in a supportive environment where you can gain confidence. Remember, nobody expects you to be perfect when you’re just starting out.
Another option is to consider getting a temporary job at a place that buys and sells gold. This way, you’ll be interacting with the public but under the guidance of experienced individuals. Once you’ve gained enough knowledge and confidence, you can venture out on your own.
Question: How Much Can I Use to Start This Business?
Answer: Just start from where you are today. If you begin small, you’ll gradually grow your business over time. This process will help you understand the value of hard-earned money. It’s not always easy, but it will make you more cautious with your spending decisions.
Question: Do I Have to Be Registered to Buy and Sell Gold?
Answer: It’ll depend on where you live. Check with your local chamber of commerce to see what permissions and licenses you might need.