Building my own refining company

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Noxx

Noxx

Well-known member
Joined
Feb 24, 2007
Messages
3,365
Location
Quebec, Canada
Hello,
I plan to set up my own refining company. I will buy scrap jewelry. I would like to have your advices on what should I do first.
I did some advertising on classified ads, and I will put flyers near pawn shops.
Thanks for your advices.
 
If you would, post a copy of your ad and I might have some suggestions.

Pawn shops usually sell to the first guy that walks into the door with the cash. Flyers might or might not work. If using flyers, it may be best to have them call for a quote. Just say, "Highest Prices." They buy from the public for about 50 cents on the dollar and end up selling for about 7% to 8% under spot. Don't quote them this way, however. Every day, figure out the exact dollar figure you're paying for all of the different varieties - 8KT, 10KT, 14, 18, 22. Sometimes, you'll have to adjust the prices during the day if the price takes a dump. Watch the market. You'll have to have a touchstone and some acids and learn how to use them. You'll need a scale (best) or you can tie up their scale. Don't forget that, before 1980, manufacturing jewelers were allowed a 1/2 karat leeway in their jewelry. And, probably many made their jewelry 1/2 K under. Take this into consideration in the pricing. Watch out for chains or other jewelry than has multiple parts, like watches. On chains, the clasp is usually the only thing marked. That doesn't mean that the rest of the chain is karat gold. Same with watches. Also, chains sometimes contain solder. It can be a tricky business.

Don't forget jewelers and jewelry repair shops. They buy scrap, also. They work about the same as pawn shops.

I'll add more later
 
Great post, catfish. I sure like the way you're doing things, although some of my experiences are different than yours.

I totally agree that refining your own karat gold is a losing proposition. The idea is to turn the money as fast as possible. This is hard if it takes a week, or more, to refine. A few years ago, we were buying about 200 ozs/month and were getting it refined for 0.7% under spot. You sure can't refine it for that yourself. We melted everything together and drilled and assayed the bars before shipping. We shipped once or twice a week.

That's great that you're only paying 75% to the pawn shops. I don't think you could get away with that in Houston.
 
But when I call pawn shops, what do I told them ?
That I'm running a gold refining company and I would be interested into buying their scrap gold ?
Thanks
 
Noxx,

I would just say you're a casual collector of such items. If you let them know you're after the items beacuse you are a gold refiner, they will think they can jack the price up because they know you WANT them and NEED them for your business.

Fever
 
Well, for lack of a better word, yea.

I wouldn't let them know you plan on liberating these items of their gold content as a gold refiner with a business. Unless you can establish a good relationship with a particular shop. One that would give you honest prices for what you're buying. If they know they have what you want- in this case, scrap gold, and they are one of only two shops in your area, they may try to hike up the price, thinking you will buy anyway because you can't get the stuff in quantity anywhere else.

Fever
 
Ok great. But I don't think they will hike up the price. I'm probably the only one gold refiner here in Quebec. I think pawn shops sell to jewelers and they don't even get 15$/g. Well I will ask them.
 
Ok I called them both. The fist one told me to go Monday to his shop so we could talk and the second one told me he already get 9.5$CAN/g. for 10k gold. Wich gives me a profit of 92 cents per gram :( This 92% spot price.
He also told me that things has changed since there is gold on ebay.
 
I wouldn't buy it to close to spot that you can't make a decent profit.
Remember that spot could drop the next day and then you would be at a loss. Just look to get some of their customers before they get them with your own advertising. Ebay has changed everything, stuff sells for alot more than it should alot of times.
 
OK thanks. I forgot to mension that the guy gets 10.5$CAN/g. for 14k Gold wich is 72% spot. This is much better (for me). But does it still worth to buy ?
 
Noxx,
Nobody can answer that except for you. Can you afford to just sit on it if the market drops? I bought an ounce of ruthenium for $400 at the first of this year. Now it would cost over $1000 from the same place, but the spot price has been dropping from its high. I have no plans on selling, and if it ever goes back under $100 I would just buy more. Gold is pretty much at a high, it could go up, but has a more likely chance of dropping. If you have money to gamble with then buy, but be careful.
I told my stock buying uncle to buy rhodium when it was $450 an ounce,
now it is $6300. He said he doesn't know anything about the metals. I said if the stock market drops all you have is toilet paper, at least with metals you can see and feel your investment. And can at least make some jewelry if the market drops. I know my uncle wished he listened to me now.
 

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