Things to Know Before Starting Your Gold Business –
Gold investment is a thriving industry with a mammoth $182 billion total worth. For this reason, investing in your own gold business can be highly profitable. However, gaining a reputation in this domain can be undoubtedly overwhelming without a sound understanding of the market.
Just as it takes the knowledge of how to open a gold IRA account for guaranteeing financial security in retirement, it takes the know-how of sourcing, testing, and estimating, to earn a name in the gold business. This guide offers you some must-have actionable insights that you can immediately implement to get an immediate edge over your competitors.
Sourcing of the Bullion
Before you set your feet in the gold business, you need to cultivate meaningful relationships with gold wholesalers. They are your desired source of getting the required amount of gold to run your enterprise. Before you get the opportunity to work with market-makers, you need to increase your profitability. Hence, start small and then think of scaling.
In the beginning, you need to frequent retail showrooms, auction houses, and pawn shops as a source of precious metals such as gold. Keep an eye out on the auctions to grab an opportunity of getting scrap jewelry. Try to discover safety deposit box auctions to acquire low-cost, high-quality metal from unpaid bank accounts.
Beware of scammers and fraudsters. Try to avoid e-commerce platforms, and only check for local suppliers.
Testing for Authenticity
Testing if the metal is authentic is an integral part of the gold business. Unlike materials bought from wholesalers, distributors, and prominent market players who conduct independent investigations to test the authenticity of the precious metals, you must test auction metals and bullions acquired from pawnshops.
Consider utilizing electron testing, acid testing, or X-Ray Fluorescence (XRF) testing to get your job done.
As hallmarks in jewelry and coinage are easy to fake nowadays, you need a thorough test of your bullion. Employ an acid testing kit to hand-test your gold, silver, or any other precious metal. To cut costs, follow DIY acid testing methods that utilize low-cost materials.
Electron testing is a far superior method that focuses on testing low-carat metals (lower than 15-carat). You can get one of these electronic testing kits from sites like Amazon for around $200.
The last alternative is the XRF test. It is a relatively pricey option but gives better accuracy than electron testing because the latter can misinterpret gold-plated materials as genuine pieces. Using the XRF method, you can detect the authenticity of an article in less than 10 seconds. These pieces of testing equipment can cost you several thousands of dollars or even more. Although it is an expensive option, obtaining an XRF kit is by far the most reliable testing process.
Estimating the Value of Gold
Finally, it is imperative to know about deciding a bullion’s value. As a businessperson, it is a skill you must possess to profit from your endeavor. The sole objective is to buy low and sell high. For this reason, estimating the actual value of the scrap metal you buy, refine, and sell becomes crucial. This trusted formula to estimate the price per gram of gold (PPG) gets used widely in the industry:
- Recent spot price x purity (in carats) x (PPG you’re paying the supplier) / 31.1 = market gold PPG
Thus, you can manually calculate the market value of your gold based on the spot price.
Alternatively, you can seek the help of mobile applications or online services to determine your metal’s value. Remember, the closer the value is to 24-carat gold, the more worth it holds by weight.
Before you can make seven-figure annual sales and deal directly with the industry leaders, you must make efforts to nurture your professionalism in the precious metals business. Visit your local auction houses, estate sales, and pawn shops as a start. Then by meticulous testing and estimating, you can establish your name as a trusted gold investor.
There is no shortcut to achieving a respectable position in the precious metals business. But no matter how challenging or prolonged your journey is, if you can acquire a chunk of the market for yourself, the efforts will be worth it. And eventually, you will be able to establish yourself as a professional broker or wholesaler.