Making money buying and selling scrap gold and precious metals can bring in substantial income. Whether you have an existing business or want to set up a new business, this type of business is a proven income generator.
In the current economic environment, this type of company makes more sense. Start-up costs are minimal, and with a good online training course, you won’t have to endure a long learning curve. You will get a quick return on your capital and time investment.
The economy has taken a big hit and many find themselves in a situation where they have to come up with quick cash. They will sell their gold and their jewels; even pawn your other assets to meet current demands.
This business may take place in a store or other physical location or it may be established through solicitations through Craigslist or advertisements in local newspapers. Some even host “gold parties” where prizes and profit sharing reward you handsomely for your effort.
Advertising your business can take the form of area flyers, handing out business cards, creating a website targeted to local traffic, and working with local businesses.
Scrap gold, silver, and jewelry can be found at real estate sales, flea markets, garage sales, church sales, and fundraising events hosted by many organizations. Even a box of computer CPUs can generate several thousand dollars once refined. Scrap gold and silver, such as industrial scrap, dental scrap can appear anywhere.
Competitive buyers typically bid 40 cents on the dollar, allowing you to bid much higher and still maintain a reasonable profit margin. However, knowledge is needed to identify which types of parts will fetch the best money and the factors to consider and test meticulously to be more than 99% sure of the quality you are offering to buy.
Some of the information you require at your fingertips is:
1. Metal test formulas
2. Tables of Weights and Measures
3. Top paying refiners
A word about the word “karat” as in 24 karat gold. “Karat” is a variant of “karat”. The FTC has standardized the karat markings used within the United States and items of 10 Kt or more require a “K” or “Kt” stamp. Decimal marks are also an option.
Scrap karat percentages of gold value must be clearly determined through foolproof testing methods and using proper formulas and accurate weighing scales. Purity is commonly measured and the karat nomenclature is used. 100 percent pure is 24 karat gold and it is the softest gold. It is not usually used to make jewelry due to this softness issue.
18K gold is 18 parts gold to six parts alloy. This marked it 75% pure. Because it is more difficult and can take more punishment, it is often used in jewelry. There are 16 karat, 14 karat and even 12 karat gold stamps. The FTC (Federal Trade Commission) requires that no gold jewelry sold in the United States be less than 10 karats.
When adding multiple karat designated pieces, multiply the weight by the karat and divide by 24. For example, if you have 20 grams of 18 karat gold, you have 15 grams of pure gold (20 grams x 18 karat = 36/24 = 15 grams).
Gold Carats Purity Other Added Metal Equivalents
24 Karat Gold 100.00%… Decimal Equivalent = 0.000% Parts of Gold = 24 in 24
22 Karat Gold 91.60%… Decimal Equivalent = 0.084% Parts of Gold = 22 in 24
18K Gold 75.00%… Decimal Equivalent = 0.125% Parts of Gold = 18 in 24
14 Karat Gold 58.5%… Decimal Equivalent = 41.500% Parts of Gold = 14 in 24
10K Gold 41.7%… Decimal Equivalent = 58.300% Parts of Gold = 12 in 24
Grams and pennyweights are the common ways to measure the weight of gold. When it comes to troy ounces, one pound is equal to 12 troy ounces. This is the European measurement standard where the measurement system is based on fractions of 1,000, which is the number of grams in a kilo.
Then there is the avoirdupois weight system that we Americans are familiar with, where one pound equals 16 ounces. This is commonly used in the United States to weigh just about anything except precious metals.
When weighing gold, use grams and pennyweights as the standard for measurement.
Below is a weight conversion table:
1 gram (g) = 0.643 dwt = 0.0032 oz t = 0.035 oz av
1 cent (dwt) = 1.555 g = 0.05 oz t = 0.055 oz av
1 troy ounce (t oz) = 31.103 g = 20 dwt = 1.097 av oz
1 avoirdupois ounce (oz av) = 28.3495 g = 18.229 dwt = 0.911 oz t
Gold test kits use acids to determine the purity of gold. A test kit will have different acids for 10K, 14K, 22K, and 24K gold. A portion of the gold piece is scratched on a test stone where the time it takes for the acid to dissolve the impurities will be noted. If the solution leaves the scratch intact, it means that the object being tested is larger than the test acid used.
For bulkier items, like chains and coins, that could be plated, it’s best to make a deep notch and test the inside of the metal.
Platinum and white gold tests
Similar to gold, a scratch test is used. You’ll want to leave a large, thick visible deposit to test about 1 ½ inches long. A drop of the test solution should be placed on the scratch and the color should remain bright white if it is genuine.
If the scratch is 18K gold, the material should change to a light bronze color in about 3 minutes. For 14K white gold, the stone residue should be gone within 15 seconds.
How to find scrap silver
Real silver, when found, is called sterling silver. You’ll find it by looking for marks like “.925” or the word “sterling” stamped on the item. There are many other brands from Europe or around the world that you should familiarize yourself with by buying a course on scrap metal trading or reading books on the subject.
You can purchase a silver test kit through a jewelry supply house to confirm that you have an authentic silver price. This is done by using a silver testing solution and a testing stone. A test solution is used with a test stone, file or plate so that it does not leave acid marks on the silver. Silver or low quality items will turn green when nitric acid is applied due to the high copper content. On the contrary, if it is made of sterling silver, the piece will turn a cream color. A small file cut is incised in an inconspicuous place so that the rest of the piece is protected from the acid test, however a stain will remain.
90% to 100% = Creamy Color
77% to 90% = Gray Color
65% to 75% = Light green color
refiners
You will want to locate the best paid refiners to work for. Refineries take a small percentage for their services and you’ll want to look for those that are reliable and pay the highest percentage.
License
Ask if a license is required in your state to conduct this type of business. You may want to have a legal structure for your business to avoid potential litigation issues and use the tax benefits that come from running your business. A simple LLC formation for a cost of around $100 will do the trick. You will want to obtain a federal tax identification number in addition to registering your business with the state.