How does a professional gold buyer earn money when he buys “scrap gold” from jewelers?

[theinsecure]

Hi all I’m Dean,
I live in Belgium, Antwerp to be precise. I run a small construction business with 7 employees. I am seriously reconsidering my career for over a year now. Long working hours from home (kids and wive) a lot of stress…. Over a year I’m doing my research into the gold buying business.

I’m looking if I can gradually make a living out of this. I don’t have to earn tons of money the main point is to have more time with my family and maybe I can build a new company with me as the only “employee”

I’m studying the market I came across a dealer who buys scrap gold (as advertised) in a video he says the following:

: “ We buy our scrap gold mainly from private costumers, and over 150 jewelers that are regular costumers. Then we melt the gold down and sell it into blocks to jewelry manufacturers”

I can understand how he makes a profit from private costumers, but how does he make a profit from jewelers?

I suggest they sell him the unwanted “jewelry” but how is it possible to make a profit out of this? Or is this all a lie he is telling?

Also an other question that I have: he is selling his gold to jewelry stores, I assume because there is a higher profit in it?

For the interested people I can put the prices from the local refinery where I plan to sell the gold. It would be great to hear your thoughts about the buying prizes.

I thank you!

 

[nickvc]

Dean most big gold buyers work on very small margins especially if buying from the trade as they normally get very good returns from the refinery because of the volume they can put through them , what they buy from the jewellers will be scrap they buy or produce from their own workshops , as to selling to jewellers unless the buyers are making jewellery that makes no sense as any bars will be unusable so will need refining before it can be used for making new product but it could be possible if the jewellers get good returns from the refinery to return usable product..
Basically think about buying gold in volume as working as a bank, huge turnover small profit you can’t make too many buying mistakes or your profit has gone.

 

[kurtak]

: “ We buy our scrap gold mainly from private costumers, and over 150 jewelers that are regular costumers.

He is not talking about buying gold from jewelry stores (NOT the jewelry they have on display & for sale)

He is talking about buying gold from jewelers that make & repair jewelry so he is buying the "scraps" of gold the jeweler has from the process of making &/or repairing jewelry

He is then refining the gold he buys from them - turning his refined gold back into products that the jeweler can then use to make &/or repair more jewelry - the jeweler pays him a premium on the product he sells back to the jeweler because he turned it from scrap back into a usable product - such as wire &/or solder, tubing, sheet or casting grain

Kurt

 

[snoman701]

volume.....period

and most professional buyers do not refine, only recover. they offer limited refining operations usually limited to stone removals.

there used to be a better margin, but anymore most buyers that you ship to, or you go to and witness the melt will pay you 98% on Au

 

[Barstool miner]

Hi all I’m Dean,
I live in Belgium, Antwerp to be precise. I run a small construction business with 7 employees. I am seriously reconsidering my career for over a year now. Long working hours from home (kids and wive) a lot of stress…. Over a year I’m doing my research into the gold buying business.

I’m looking if I can gradually make a living out of this. I don’t have to earn tons of money the main point is to have more time with my family and maybe I can build a new company with me as the only “employee”

I’m studying the market I came across a dealer who buys scrap gold (as advertised) in a video he says the following:

: “ We buy our scrap gold mainly from private costumers, and over 150 jewelers that are regular costumers. Then we melt the gold down and sell it into blocks to jewelry manufacturers”

I can understand how he makes a profit from private costumers, but how does he make a profit from jewelers?

I suggest they sell him the unwanted “jewelry” but how is it possible to make a profit out of this? Or is this all a lie he is telling?

Also an other question that I have: he is selling his gold to jewelry stores, I assume because there is a higher profit in it?

For the interested people I can put the prices from the local refinery where I plan to sell the gold. It would be great to hear your thoughts about the buying prizes.

I thank you!

Hello Dean, You should look into Recycling Electronic PC boards, As all the electronic Circuit Boards are LEAD FREE . The Solder they use are an Alloy Of TIN and SILVER . Tin metal sell for over $10,000.00 per metric Ton on the London Metals Exchange. There are electronic Circuit boards in electric gadgets ( toasters, vacuum cleaners and such. Many hundreds of thousands end up in Land fills all over Europe.

 

[theinsecure]

first I want to thank you guys for all your helpful reply’s.

So if I’m correctly reading they do it as followed:

He Buys scrap metal from the public and what he buys from the jewelers is either scrap metal that they also bought from the public. And scrap from the process of making jewelry. he can buy from them with the same price as a known big refinery because he refines the scrap himself and by doing so he can resell to the jeweler 24k gold.


For example he pays 45,21USD per gram of 18k gold.

The question then is does he sell the pure gold at spot price, over spot, or slightly under spot price? If it’s on spot or over spot then is it correct (correct me if I’m wrong) jewelers don’t make profit on the gold (buying cheap, selling higher) but they make a profit by crafting the jewelry?

 

[theinsecure]

Also:

If you refine scrap gold yourself, and you can sell it as 24k to jewelry stores (end users) that means also that you can pay beter money to the public, the if you just buy scrap to sell refiners correct?

Because you act as the refiner urself you can pay the same money to the public or even slightly better to guarantee the best price on the market.

 

[4metals]

To do this successfully you will be melting the material brought in to you and analyzing and paying based on an XRF result. To do this you will need a furnace to melt the metal and the XRF for the analysis. If you can get in from jewelers as scrap 150 - 200 oz a week and pay out at 98% based on assay, you can probably get a rate from a refiner around 99.5% so you will make a gross profit of 1.5%. Smaller guys don't pay out on silver but your refiner will pay you for it. I knew a guy that had a small induction furnace in a van and a portable XRF, and he went to jewelers and melted while they waited and paid them before he left.
In Antwerp, the diamond capital of the world, you could also do some refining as snowman said by offering chemical stone removal, a process where you chemically dissolve the gold, recover the diamonds and return the diamonds and charge for the service. This is usually done faster by a smaller refiner so turn around makes a viable service because the big houses take too long.
It will cost to set this up but if there is no competition, or little competition, and you can get the needed volume of feedstock, it can be a viable business.

 

[Lou]

One other thing too, if you end up getting good at stone removals, word will get out in the diamond/scrap buying community that you are both fast and fair. You may then quickly find yourself doing A LOT of stone removals. I quit doing stone removals 8 years ago and I still have old customers or their acquaintances beg me to do their stone removals. I used to be able to (sometimes!) do same day stone removals (even on platinum with a pressure vessel). It wasn't uncommon to have a guy wait 6 or 7 hours for me to do several hundreds of carats of stones for him.

As an interesting side note: one of my customers was always beating me up on price so I finally told him enough was enough. Never did another ounce for him, but he always asked. Years later, he passed away and his son came to visit: he had left me a few surprising items and a very interesting note which suffice to say, made me think a lot better of him. I guess on some lots he had every single stone counted and figured to a nicety...

 

[4metals]

A one man operation could do about 3 reactions as large as 100 oz each in a day. I always preferred to put the lots up in acid overnight with a heated mantle and a timer and come back in the AM to cold acid. Much easier to handle but not if the customer wants to babysit his stones. But if a lot came in early enough to get the reaction started and all of the acid added, it would be done by noon the next day.
But if you can develop a reputation of being fast and fair you can do well. I would think especially in Antwerp.

 

[snoman701]

The problem is, the value of the stones has went to crap. Whereas mixed melee used to sell for 200 an ounce wholesale, it's down to 40. With the volatility of the gold market, and intake down considerably to what the last bull market brought in, the melt shops just don't want to hold karat until they have a good batch for a stone removal. The last 50 oz batch I did took a guy who does good volume about a year to put together, but it was all loaded jewelry, not stuff with 1/10 total carat weight. He only made money because the market went up.

There's still work out there, but only really established shops are seeing 3, 100 oz lots a day on stone removals. I mean, do a reverse image search with midstates stone removal room, multiple shops are using the same image, which I assume to be midstate's equipment.

 

[4metals]

Midstates reactors are 20 liter on the tippers and 12 liters on the tabletop and one 5 liter. Those only hold 100 oz for the 20, 50
oz for the 12 and 25 (pushing it) for the 5. Those 4” conical head flasks with condensers make good reactors for stone removal.

Today a lot of jewelers will cut the shanks and get the gold value quickly and accumulate the parts with stones. This does allow for smaller reactors.

 

[Lou]

The problem is, the value of the stones has went to crap. Whereas mixed melee used to sell for 200 an ounce wholesale, it's down to 40. With the volatility of the gold market, and intake down considerably to what the last bull market brought in, the melt shops just don't want to hold karat until they have a good batch for a stone removal. The last 50 oz batch I did took a guy who does good volume about a year to put together, but it was all loaded jewelry, not stuff with 1/10 total carat weight. He only made money because the market went up.

There's still work out there, but only really established shops are seeing 3, 100 oz lots a day on stone removals. I mean, do a reverse image search with midstates stone removal room, multiple shops are using the same image, which I assume to be midstate's equipment.

When I was doing it, sorted, clean, etched melee was $150-250 ct wt and up depending on if they were color/size matched...

I found the best way to do a stone removal was in hot acid with a sonicator. First I degreased them with acetone and sonication. I originally would string all the rings on a piece of Ta wire and put them in concentrated nitric acid. The 10K and some of the 14K ones would fall apart to gold powder. After that, moved to hot aqua regia. The silver chloride crust was removed more or less as fast as it was formed.

 

[theinsecure]

first I want to thank you guys for all your helpful reply’s.

So if I’m correctly reading they do it as followed:

He Buys scrap metal from the public and what he buys from the jewelers is either scrap metal that they also bought from the public. And scrap from the process of making jewelry. he can buy from them with the same price as a known big refinery because he refines the scrap himself and by doing so he can resell to the jeweler 24k gold.


For example he pays 45,21USD per gram of 18k gold.

The question then is does he sell the pure gold at spot price, over spot, or slightly under spot price? If it’s on spot or over spot then is it correct (correct me if I’m wrong) jewelers don’t make profit on the gold (buying cheap, selling higher) but they make a profit by crafting the jewelry?

Does somebody have an idea about this question? Thanks

 

[theinsecure]

@Lou @4metals i want to thank you guys about that topic I’m doing some research about the stone removal

 

[4metals]

Does somebody have an idea about this question?

Back in the day before most major jewelry manufacturers moved out of NYC, we were able to sell our gold back to jewelers for a dollar over spot. Gold was $300 an ounce back then so I assume it has gone up proportionally. Our accountant said we were nuts because it was not a lot of money and gold fluctuated daily in price. Jewelers make their money from their fabrication skills not from a gold markup. If you check the gold
contained in a piece times the fix you will always see it is more as fabricated jewelry.

Having jewelers to buy your gold is a good thing and often necessary if you are not shipping to an outside refiner and processing in house. It all hinges on what you or your competition can charge, if it’s 2% or better you should be good, if it’s tighter than that it is more difficult.

 

[billgold]

I think most gold buyers these days just accumulate the material and sell it to the refiners - at least around here.