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Gold Buying Biz ins and outs

Discussion in 'Making Money' started by Getwhatchuwant, Oct 9, 2011.

  1. Getwhatchuwant

    Getwhatchuwant Jr. VIP Jr. VIP Premium Member

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    Finally! Something I can contribute to BHW!!

    I have been a DM in the gold buying biz for a year and managed 9 stores.


    There is A LOT to buying and reselling gold and I am going to give you the ins and outs of doing it the legit way and then some ideas to do it the BH way.
    I stayed away from the BH way because I am not interested in potential fines or jail time but I know some of you are hustlers and can do it no problem!

    The FIRST thing you need is some cash. If you do not have that or you cannot get that then this will not work for you. The Gold biz is all about cash and you will need a few hundred if not thousands of dollars to start!

    Anyway, some things to know. If you are in the US most states consider the buying and selling of gold a Pawn business even if you dont pawn anything. As such you have to comply with the local rules and regulations that Pawn shops do.

    For example, Hold times- In Florida you have to hold the gold 2 weeks before you can send it off to sell. I think in California the hold time is A MONTH!! The Price of Gold can move wildly in that time, think about how much you payout. If you payout 70-80% and then gold drops by a hundred dollars an ounce you might break even or maybe lose money if you pay too much.

    Getting Id, signatures and reporting- Most cities or counties REQUIRE you to report what you purchased DAILY with a full description of each item and then get a valid picture ID and signatures. You then upload the file with all the documents and send it to the local precinct. If they find the item is stolen you will likely have to sell it back to the rightful owner for what you paid. In SOME cases they take the gold with no payment and then advise you to be a "victim" when they prosecute the offender and file for restitution. This process can take months or years and the chance of a low life like that paying you back is slim, BEWARE!

    Testing- There are alot of Black hat customers to watch out for. They do bait and switch tactics, acid switch tactics and sometimes the even find metals that will pass an acid test. You have to learn what you are doing to be sure you dont pay for worthless junk! There are some machines out there that test for you but the price can be very high. For a top of the line tester that will spit out the actual gold content the cost can be around $10K or more. Acid testing is much cheaper and it is as reliable as the person doing the test. We were about 95% accurate. Some failures include buying at the wrong Karat i.e. bout it at 14k but it was 10k or being tricked by a blackhatter. Most of that was avoidable by just following your gut and having some fail safes built in.

    Fail safes- a)Once you have started the testing of the gold NEVER relinquish possession of the gold. Customers sometimes want to hold it again, there is NO good reason for that unless they are not accepting your offer. If anyone picks up a piece, RETEST it! You will find that often someone will switch the good piece you just tested with a FAKE that looks the same.
    b)Have a Control piece handy. Some people dont bother switching the gold, they switch the acid on you instead! You turn your head and they have a duplicate bottle with water that they switch with the real acid. Next thing you know you are testing ALL your pieces with water!! This does not just affect the customer who cheated you but ALL the customers that you test later. They way to stop that is by having a control piece you carry.
    A control piece is simply a piece of FAKE jewelry that you test FIRST before testing the customers gold. If your FAKE piece passes the test then you know the acid you are using is worthless.

    Obviously I doubt many of you reading this are going to want to invest big $$$'s on getting a location, setting up a biz and I am even more sure that you wont want to comply with the local regulations so here are some Black Hat gold buying methods.

    A) If you do set up a shop get an Auctioneer Licensee instead of a 2nd hand Metals Dealer License. I am not sure about other states but In Florida you can skip the gold hold period and I am pretty sure you dont have to get as much detail from the customer. I am unsure if or how often you have to report purchases to the local police.

    B) Dont want to set up a store? Buy Gold "for personal use" or as a "collector" by posting ads on CList or other classified sites.

    C) DONT resell to local shops! They pay 50% or less. If you have a large amount of gold or are a real ball buster as a negotiator you MIGHT get 60%!
    Instead find a refinery! They are the ones that melt the gold and resell it. Here is on online that pays out 90% or better: hxxp://usgoldbuyers.com <- I am NOT affiliated with them!

    D) Create a "backlink" network..LOL... What I mean by that is get in good with employees of other gold buying stores or pawn shops. Let them know that you will pay a referral fee for any business. Trust me they have customers walk every day, these customers can be YOUR customers.

    I am sure there is something I have missed but feel free to ask away!

    Thank, rep or even some free SEO would be nice if you found this useful!

    :D
     
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  2. angelas111

    angelas111 Jr. VIP Jr. VIP Premium Member

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    i used to do well and i paid 65% of scrap value. sometimes a little more if it was a nice piece that had retail value. i have a mizar tester that has never failed me. the only problem is when you get very old pieces that are heavy gold filled. those can be tricky even with acid tests.
     
  3. Getwhatchuwant

    Getwhatchuwant Jr. VIP Jr. VIP Premium Member

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    I agree but I alwasy cut into the piece. The customer was aware that when i started testing that I was going to do that, to many GF or heavy GP items can ruin your biz.
     
  4. Getwhatchuwant

    Getwhatchuwant Jr. VIP Jr. VIP Premium Member

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    Its very profitable if you do it right. Low overhead is key. The big guys rely on reputation and advo but pay way less because they have to.

    As for cutting the gold, what I do is give them an estimate 1st. If I know the Karat I will give them the price based on weight and the karat of the item. If I dont know the karat yet I estimate based on 14k which is the most common in the US. Alot of other countries are 18k and up and generally the brighter it is the more pure it is.

    Anyway, to your question, once I estimate I let them know that is YOUR cash as soon as it passes the test, but the FINAL test is me cutting into it. I also have them initial and sign a very small waiver stating that they agree I can do it.
    The ones that get angry are the ones that thought the gold was real and when you cut it you found it was plated now they have a GP necklace that has been cut in half.
     
  5. angelas111

    angelas111 Jr. VIP Jr. VIP Premium Member

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    gold plate will never pass. too think. its the gold filled ones to watch out for.
     
  6. Roparadise

    Roparadise BANNED BANNED

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    You mean something like gold on the outside thats several mm thick,with another metal on the inside thats heaver,then nothing below that to even out the weight? Or am I totally off with this?
     
  7. Getwhatchuwant

    Getwhatchuwant Jr. VIP Jr. VIP Premium Member

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    You are 100% right and the stigma with selling your valuables is gone too.

    One of the things I like to tell the average Joe Client is "This is such a wise decision! How many things can you buy, use for 10 years and then sell for more than what you bought it for? You cannot even do that with real estate anymore!"

    But look around do some classified posting and dont be afraid to speak to the employees of gold buyers or pawn shops.

    Dont approach them like "I want to steal your business" Approach them like this "I know you have a certain % that you are willing to pay. If you find a customer that does not like your offer, give them one of my cards. If I am able to but the item I will give you a referral fee of xx%"
     
  8. Getwhatchuwant

    Getwhatchuwant Jr. VIP Jr. VIP Premium Member

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    I am not sure about the machine but with acid, if it is really thick plating it can fool the acid test, that is why you have to cut.
     
  9. Roparadise

    Roparadise BANNED BANNED

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    But would it work for a highschool ring,its somewhat thick,and when i sold mine they just did acid test.
     
  10. billygood

    billygood Senior Member

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    I don't have the gut's to try owning a shop, my hobby is stamp and coin collecting, I stick to buying coins, and just silver coins or silver plated coins. it's real simple with a C/L ad and I meet everyone at my banks parking lot. if a deal works out then I get the cash right from my account with them and I take the coins to my deposit box. I only do this 2 or 3 times per month. ( I have real work to do but hobbies are fun )

    Very important note: you need to already have a banking relationship with the bank, since you want to be directly under the cameras when doing everything. Also, you want to make sure that after you leave the bank, you take a real long way home and live in a gated community or secure condo. I know too many other guys that have been jumped on the way home here in Florida. Always expect a set up that you will get robbed.

    if you want to do this, this web site is your morning review http://www.coinflation.com/silver_coin_values.html I never pay more that 50% unless the coin look amazing, and even then I might only go 60%.

    Oh about bait and switch ... happens all the time. they come with regular coins and mix everything up. first sort everything into coin size ( dimes, quarters, half's and dollars ), then slowly care carefully sort out the silver coins and bag them into a zip locks. give them back the ones that are face value only ( no silver ). at that point take out your note pad and count the coins. calculate the price your willing to pay and haggle. hold the silver bag in your hand and when you get to 50% stop. Also if you don't know the coin, don't buy it PERIOD.
     
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  11. Getwhatchuwant

    Getwhatchuwant Jr. VIP Jr. VIP Premium Member

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    Class Rings- NEVER buy white gold class rings, most of the time they are fake! As for the other ones you cant cut them in half because they ARE thick but you can take a file and file into them, you can get a good test that way.

    Coins- Good tip on buying coins great advice for those that want to start small, here is a tip. Coins made pre 1964 contain 90% silver but just the dimes, quarters, half dollars and dollars. You can start small by buying a quarter for a dollar or two or you can stay "Hey I like old coins, I will give you this new quarter for that old one." then resell it for $5 or $6...rinse and repeat. Dimes will be much less due to much less weight and half dollars are about double and full silver dollars about triple or more.
    As billygood said there is more to it but if you focus on pre 1964 sUS silver coins (excpet nickels) 99.9% of the time you are right on. If you want to do more, follow the link he provided and become an expert, aside from that you can do pretty well just knowing the basics. Oh and like Billygood said, 50% is about what you want to pay, that is what they will get anyway if they try to sell it at a store.
    Less risk too, not too many people can "identify" a stolen quarter since they are not unique.

    If you have a friend that works as a cashier somewhere tell them to keep a lookout for pre 1964 dimes, quarters, half dollars and dollars. Offer to pay them $1 for a quarter and 25-50 cents per dime that falls into that range. Then you will be buying at about 25-30% and can flip them quickly.
     
    Last edited: Oct 10, 2011