How do I get started refining? Where do I buy karat gold scrap?

Lately, I've become very interested in gold refining and the kind of profit that can potentially be made by refining scrap karat gold into gold bullion. I feel like I understand the process, and I would not be afraid to just jump right in and start making mistakes, but I can't find any gold anywhere.

Apart from owning your own pawn shop or "cash for gold" type of store, where does someone like me even begin to look for scrap gold that can be profited from? I've heard that thrift stores are a good start, but that hasn't been my experience so far. Today, I went to three different thrift stores in my area and didn't find any gold. I've yet to try flea markets or yard sales, but I just haven't had the opportunity to go to any yet.

Is there something I'm missing? Besides flea markets, yard sales, and... ebay (shudder), where else could I look for scrap karat gold?

Welcome to the forum.

This question can be about any form of scrap.
I’m sorry but there is no easy answer to that question, you have to do the leg work and look and ask around about who has scrap, what they are paying and can you either buy from them or can you pay slightly more.
If you are looking to buy direct from the public then you have to advertise but that of course can place you at risk, that is why shops that buy have security, cameras and insurance.
You could ask around at work and through friends and pay a little more than the others around pay to start but it’s going to be a hard slog if you have large well established competitors.
There are many posts here on the forum dealing with this question and no one has a simple answer unless you are lucky enough to have the right connections to start.
Karat scrap is by far the easiest form of material to refine by and large and it is very price sensitive due to that fact, if your local buyers are getting a good deal from their collectors or refiners the margin becomes very slim if you buy from them.
Most auctions especially here in the UK sell gold jewellery but it rarely goes cheap as assessing its value is very easy and you simply bid allowing for the auction house charges until it becomes a no go, maybe you may have more luck your side of the pond.

You don't make profit refining gold unless you have an ISO facility that has controls in place so people are going to believe that your gold is the purity you are saying it is. You don't make a premium by refining gold to greater purity.

Yes, there are those that sell their gold back to jewelers, and it might make them a couple dollars, and that may be all you are looking for.

The refining of gold is done so that the small seller, without analytics or fire assay, can sell their gold knowing that they aren't being cheated by the final assay.

At any given point, the large refineries can buy any grade material, and refine it at a purchase price that is high enough that you don't have room to operate. As an added bonus, they turn it in to a investment grade bar, or even better, a product that commands a premium.

You don't make profit refining gold unless you have an ISO facility that has controls in place so people are going to believe that your gold is the purity you are saying it is. You don't make a premium by refining gold to greater purity.

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Well Sno, if you really believe that this is the only way to be profitable we are all just spitting into the wind here!

We have many members who got into refining on "the fringes" and have done the legwork and learned the skills to either have a profitable "hobby" or even earn a living. It isn't as simple as putting an ad in the local paper to buy gold containing scrap, it involves developing a supply chain and developing a market to sell your product. But, if an aspiring refiner wants to get into refining, it can start slow with an easy type of material to process and find a niche, find what he or she can do well and also acquire easily, and just try different scrap types. In the beginning some just keep all of the precious metals they acquire, and some sell to larger scrap buyers who will buy a few ounces of pre refined gold so they can buy more chemicals and equipment. After developing the skill set to refine and the ability to acquire scrap, any prospective refiner can decide what they want to refine and make their decisions.

Study here on this forum will give a prospective refiner both the knowledge to do the processing and some insight into acquisition of the material to refine.

This might be a good thread for those members who have carved out a niche in refining to give their opinions and insight because anyone who follows this forum knows that we have members doing exactly what I described with out ISO certification or good gold delivery status!

I just noticed that threeninesfine is a new member and maybe isn't totally familiar with some of the tools available through this forum. So to start I would like to welcome threeninesfine to the forum, there is an amazing collection of information here for you to absorb.

First go to the library, a lot of good threads are organized there for study.

You can also download a copy of Hokes book for free, the link is in the library.

A member called Lino1406 sells an e-pamphlet with refining methods for people operating a scrap yard which may be a good source for you to look.

And Chris, aka, Goldsilverpro also sells an e-book which should be a go to source for someone aspiring to start out in refining.

I started out very slow, refining my collection of scrap I got from picking trash off my job. I moved to buying small lots of computer parts from a small recycle center. I had some severe health issues and had to slow down to a crawl for a long while, but I kept studying techniques and identification of gold bearing scraps, while reading most anything I could find related to refining. As my health started to improve I made new contact with old friends in the coin collecting business and found out that one of them had been a gold and silver buyer for 30+ years. Since his buyer wouldn't buy gold filled material I now buy it from him. It has proved to be quite the hand full for a small hobby refiner but I get by and make a decent profit most of the time. I am in the middle of processing my second pound lot already this month. I spoke with him today and he wanted to be sure I could handle this next lot as it will be 1000 plus grams. At 50 cents a gram you can bet I will be ready. I went from selling 6 or 7 grams every six months or so to moving an ounce plus a month for the past few months and it is growing still. By many standards that isn't much, but for a hobby that I only work when I feel like it (still some health issues) I think that is pretty decent.

As for selling my gold I deal with a buyer that started out at 97% of spot so long as it would pass his XRF for four nines. So far I have never missed that 99.99 mark. My last sell went even better and due to the number of grams vs. the purity I now get 98% of spot. And I didn't have to ask for it, he volunteered it.

Looking back at where I started and what I am doing now, it still amazes me. I never started this to make a profit, but I sure won't turn it down.

4metals said:

You don't make profit refining gold unless you have an ISO facility that has controls in place so people are going to believe that your gold is the purity you are saying it is. You don't make a premium by refining gold to greater purity.

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Well Sno, if you really believe that this is the only way to be profitable we are all just spitting into the wind here!

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:lol: :lol: :lol:

The context of my response is somewhat important. He asked:

threefinesnine said:

Lately, I've become very interested in gold refining and the kind of profit that can potentially be made by refining scrap karat gold into gold bullion.

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While one can point out the glaring lack of precision in my statement, within the context of karat scrap, I think it's pretty accurate. Yes, there are niches as you say, but not many.

Here's how the karat scrap game works...in a couple scenarios:

Scenario 1:

I had a yard sale. A gentleman showed up asking if there was any jewelry. I told him no, and I refine, so if there was, it wouldn't be less than spot. He tells me he is a gold buyer, buys it all from garage sales...great, I give him a card, tell him I pay 92% on karat (low), 80% on GF and 90% on Sterling. He has since sent me multiple text messages trying to sell me gold filled in 50 gram lots, the occasional piece of karat, etc. From his point of view, he pays a couple dollars for something that's worth 50. He also buys and sells other stuff...so he does well. From my point of view, if I had bought everything he offered me thus far, I would have made about $25.

Scenario 2:

An previous pawn shop owner is well connected to people like the guy mentioned in scenario 1. He pays 87% of melt on karat scrap. Sells at the same rate I do, which is 98% of melt on gold basis only. He buys a couple thousand a week because he's got the cash and the people that feed it to him, it keeps him in better than beer money. Average purchase price of $300ish, deals with a lot of seedy individuals. Scenario 2 really covers a lot of people in the annual gold sales of up to $100,000 I'd say.

Scenario 3:

The melt shop. This is where I, the pawn shop owner, the jewelry shop owner, etc dump their metals. They pay 98% on gold basis. They collect for free, the silver and pgm's that are in the karat scrap. They sell their gold at 99-99.5%, but there's melt loss, assay loss, shipping and insurance, etc. Basically they make 1/2%. They also buy just about anything precious metal they can make a buck on. Annual sales of at least 1 million...average purchase say $10,000. Dealing with lots of people that deal with seedy individuals...meaning lots of people that expect to get cheated on every deal.

That gives you a really basic rundown of how the karat scrap game works.

If you want to be involved with karat scrap, figure out where you want to insert yourself in the equation.