Buy Scrap Gold
Would you like to start a cash for gold business? The good news is buying and selling gold is very hot right now, but the bad news is you will have a lot of competition (depending on what part of the country you are from). Having plenty of experience is a major plus as well as educating yourself on how to buy gold for the right price.
Contents
Steps
Calculating What to Pay for Scrap Gold
- Find the purity level. Look at the stamp on a piece of jewelry, for example, and this will indicate whether it is 10, 14 or 24 karats (it is only measured up to 24 karats). If there is no stamp you or a jeweler can use nitric acid to find out the real karat of a piece. There are nitric acid kits available to purchase online at such sites as Amazon in order to do this yourself. To convert karats to a percentage, divide the karat number by 24 and then multiply it by 100.
- This tells you what percentage of the material is gold. A 10 karat piece of jewelry is 42% gold, 58% other metals. You are paying for the gold, not the other metals.
- Calculate the current value of scrap gold. Determine the Spot Price of gold (what one ounce of gold is being transacted and delivered for at a particular moment in time) by looking it up online at sites such as jmbullion.com or monex.com. Divide this number by 31.1 to get grams or by 20 to get pennyweights. Then multiply this number times the Purity Level (percentage of gold)and you have the value of the gold.
- Here is simple example: A. Spot Price: $1000/31.1 = $32.15/gram of 24K. So one gram of 24K is worth $32.15 under a $1000 Spot Price. If the gold is 14 karats, determine purity by dividing 14k/24k = 58%, so one gram of 14k would $32.15 x 58% = $18.64.
- Calculate how much you want to pay. Find out what local jewelry stores are paying for scrap gold and offer to beat their price. Check out your local competition and price yourself accordingly.
Obtaining Licenses
- Obtain a license. In the U.S. you need a license to buy and sell gold in order to be a scrap gold buyer. If you buy and sell without a license you are in violation of your state's laws. First you will need a general business license that you can obtain from your state's Department of Taxation and Finance. They will inform you of the specific license you need to buy and sell gold.
- Work with someone who has a license as a Broker/Buyer. If you feel you need to learn the business first to see the potential and expand, then you will not need your own license. To find a company in your local area, do an internet search under "pawn brokers, gold buyers and recyclers."
- Keep good records. You must keep a written or computerized record of every transaction you make buying and selling gold. The state department of Taxation and Finance will tell you what information you need to include in this record, as it varies by state.
Advertising Your Service
- Advertise that you are in the business of buying scrap gold. Tell friends, relatives and co-workers and post the information on your social media sites. Describe how your service is superior such as in pricing, cash payments, or home pick-up.
- Other marketing ideas to consider are creating a website; blogging; or buying print, online, local television or radio ads. You can design your own website using templates from such sites as Web.com that will give your business a lot of legitimacy. Start a blog using WordPress.com and comment on other related blogs as an expert on gold buying. Your local newspaper, cable TV station and radio stations will assist you in designing ads for your business. You can also run banner ads on sites of stores for women's clothing, for example.
- Obtain marketing plans from a broker. If you are purchasing gold on another company's behalf they should be sharing their marketing techniques and plans. Some may even pay for your local marketing efforts.
- Increase your revenue. You could advertise online and accept gold that customers mail in. Continue to expand your local and regional marketing efforts. A marketing investment should pay for itself with increased sales.
- Another source to find gold to buy is at garage and estate sales. Many sellers price their jewelry low to make sure it sells, or they don't know the current value. Check your local classified ads in your town's newspaper each week to find sales.
Tips
- When working as a broker for someone else, you will be given paperwork to fill out. Each sale must be documented, and the store you are working for should give you this.
Things You'll Need
- License: Get a license or work with someone who has a license
- Cash: Not a lot, but enough to buy some gold initially.
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