Gold might be down from its record highs in the late 2000′s, but it is still priced in a lucrative range. With a cash for gold business, you can make some good money by purchasing scrap gold and turning it into a usable product. Knowing how to start a cash for gold business begins with having enough cash on-hand to make it happen. With gold prices around $1,000 per ounce as late as 2014, you’ll need a secure way to manage these high cash amounts and to deal only with customers that you trust.
You’ll also need to plan for a quick turnover of the gold that is purchased. Because gold is traded on the stock market, the prices can be extremely volatile. It isn’t uncommon for the price of gold to change more than $10 per ounce on any given day. If you have several ounces of gold you’re trying to liquidate, then that’s money that is lost.
1. Secure The Tools Of The Trade
Most gold is stamped somewhere with the purity level it contains. A 10 karat piece of gold, for example, is just 41% pure. If you find the stamp, then you’ll know what the gold rate will be that you’ll need to pay instead of purchasing the scrap gold at 24 karat rates. If you can’t find the stamp, then you’ll need to test the gold to determine its purity. Nitric acid is usually used, but it stains and burns the fingers.
2. Get Your Location
A cash for gold business can be run virtually anywhere, but it shouldn’t be run out of a home. Thieves know that these businesses need to have fast access to cash and will target a home-based business like this rather quickly. Find a secure, high traffic location where your service is highly visible. Have a marketing presence locally as well so that people will come to you when they have some scrap gold to sell.
3. Determine Your Permits
Insurance is mandatory for this type of business so that you’re insured against losses. You’ll also need to have a business license and if you sell any products, you’ll likely need a sales tax permit as well.
4. Set Your Prices
The price of gold can change every minute during an open trading session. You’ll need to have a way to monitor the price of gold on a consistent basis. Use the spot prices as your main benchmark, add in your commission to this rate, and then promote that price. Commissions may be anywhere from 2-10% depending on what type of gold is being bought and sold.
5. Secure Purchasers For The Scrap Gold
From time to time, you’ll have gold pieces that come into your store that are worth more if they stay intact. For these pieces, consider having what is known as a “gold party” in your community where people can stop by and shop your new items. Otherwise you’ll need to have a relationship with a precious metals dealer for your scrap gold. Ask about their commission on the sale and then cash out the gold when prices are profitable for you.
6. Consider Supplemental Business Options
A cash for gold business is often a supplementary business to other coordinating ideas. A jewelry store, for example, might include a cash for gold opportunity to encourage sales. An antique store might offer the service to attract a certain type of clientele. Think about what your strengths are as an entrepreneur and how you can combine those strengths with a cash for gold business and then make it happen.
7. Have a Place To Store Scrap Gold
If gold prices are dropping on you and you don’t feel like selling the precious metals for a loss, then you’ll need a secure place to store your gold on hold. It needs to be separate from your liquid cash assets. Consider hiring a third-party administrator for these storage needs so that your inventory is held off-site in a secure vault. There is an associated cost with doing this, but it is also a lot easier to manage gold in this manner.
Knowing how to start a cash for gold business comes down to finding scrap gold to purchase and then resell for a profit. If your community doesn’t have a business like this already, then it could be a good chance to make some quick cash. Follow these steps and you may just find profits are waiting at your door.
