BUYING KARAT GOLD
Catfish is probably the best member to answer your questions. Also, go to his profile and look at his posts, especially his earlier ones. He pretty well outlined his methods in these posts.
The pricing depends on who you're buying from and how much you're able to sell it for. If you buy from the public, the profit margin is much greater than if you buy from pawn shops, coin stores, jewelers, or other buyers. However, both are lucrative if you get your numbers straight. Buying from the buyers is lower margin but higher volume.
Although some would disagree, I think more money can be made on karat gold by simply buying and selling, without refining it. In my experience, the secret is to turn your money as often and as many times as possible per unit time. The refining process slows this down considerably. Also, by turning the metal fast, you are not as affected by daily changes in the market price. If you get to the point where you're doing big volume, that's when you MIGHT consider doing your own refining.
When I bought and sold karat gold, I sometimes quoted how much I was paying, per gram or pennyweight, for 10Kt, 14Kt, 18Kt, and 22Kt, based on a certain percentage of the market price. I never mentioned the market price - only what I was paying. These numbers change daily and sometimes hourly, depending on what the market is doing. You really have to keep on top of it. Another way is to keep silent about what you paying until you have evaluated and weighed the material. Then you say something like, "I will give you X dollars for this bunch of material." When buying from the public, they will usually take what you offer, unless they've been shopping around. If you quote on the low side, you can always negotiate and increase your offering price. A friend of mine, who owns a scrap metal yard, often says, "It's not my job to educate the public." When buying from buyers, they are more savvy and will often ask what you are paying for 10Kt, 14Kt, etc.
You can usually buy from the pubic at somewhere between 50% to about 80% of spot. If you buy from buyers, you will pay from about 80% to 90% of spot. Whatever the traffic will bear. When selling your karat gold, the price you can get depends on volume, the honesty of the buyer (or, refiner), how you have prepared the scrap, and how well you've covered your butt. When selling small amounts, you'll usually get somewhere between 93% and 98% of spot. For very large amounts, you might get over 99%. Always shop around when looking for a buyer. Also, don't forget that, when you buy, you're paying cash and, when you sell, you usually get a check. Catfish may disagree with these numbers. I haven't done this in awhile and different strategies are needed in different markets. As in all things, buy low and sell high but, don't price too low or, you'll price yourself out of the market. There is plenty of competition out there.
You will have to go through a learning curve on how to determine the karat of gold objects. Some gold is not marked and, even that that is marked can be marked wrong. Catfish tests everything, even if it's marked. This is a very good idea.
When I was manager of a refinery in Hong Kong, I once asked the owner of the largest Hong Kong gold exchange what he thought the gold market was going to do. He said that there were only 2 great experts in this field. One thought the market was going to go up and the other thought the market was going to go down. I have never forgotten this. In other words, when buying and selling, never worry about the market. Just make sure the proper buying/selling spread is present, on every deal, and turn your money as fast as possible.
This is only the tip of the iceberg and these things are only my ideas. I'm sure that Catfish can provide much more info than what I've given you.
Chris
Hunchback:
I just got back from buying some karat gold, and saw your post. Goldsilverpro has pretty well told you all the important steps in buying karat gold and also his recommendations on refining it.
I agree with him totally. I have been in this business for a little over two years of buying karat gold and reselling. First as Chris said, you don’t want to refine karat gold for there’s not enough money in it. I will give you my buyer’s name and web site that buys all my gold. He pays 98% world spot for all of it. First you will not get much more for your gold even if you refine it. It would have to be assayed if it has been refined, and then it would have to be at least 99.95% pure. Assaying cost money too. The difference is just not there, when you can sell it in karat form for 98%. You would have to have very large amounts of karat gold to even break even refining it and assuming you could get the required pureness and then find a buyer for pure gold.
Now as far as buying karat gold, you need to be fairly good at testing gold. Just because it is hallmarked as karat gold doesn’t necessarily mean that it is karat gold. There are as many dishonest folks in the precocious metals business as there are in the used car business. I test for visual hall mark stamp of karat gold marking. You have to watch, sometimes it will be marked 14k RPG, HE, GF, KGF, 1/10 12K or 1/20 14k.and other similar markings. When you see any of these markings, this tells you this is not pure karat gold. Don’t turn this type of gold down, for if you are in the refining business, this is the very best for refining. Only you don’t want to pay much for it. I buy gold filled gold items for about $9.00 per ounce. This is about 60% of the actual gold content if it is 1/20 GF, now 1/10 GF is more. I have developed a spread sheet that updates automatically every day in accordance to the gold prices at the World and New York spot buy prices. I base all my buy prices at 60% of 30 day average spot prices. You don’t want to buy on one day’s spot price for the price of gold fluctuates from day to day. I like a running average of about 30 days.
As for as testing gold, this take a lot of experience and hands on. Just briefly how I do it is I put all the scrap in a pile and take a cheap magnet and go through it. This will separate all ferrous from the non ferrous metal. I then take the remainder and check it with a 10 X jewelers loop for hall mark stamp. Identify all pieces as stamped and non- stamped. I then take the non stamp pieces and test them with an electronic gold tester. (This test sets works on a capacitance effect of the gold.) I put all the gold in different groups. As stamped rating and tested rating. I then tell the customer that if these items test for the amount of actual gold as stamped or tested, that I will give them so much money for in cash. Always try to keep your dollar amount offers in total amounts. This is a buying technique. Just the opposite as selling techniques by keeping your selling amount separate and in smaller amounts. (Part of the game).
After a tentative agreement with seller I then take a small rat tailed file and file a notch at least 1/16th inch in the metal. I then take nitric acid and test it for gold pureness. If it is gold plated, rolled or filled it will show up in this test. As I said before, you may still want to buy this gold that tests as gold filled or plated but at a different price.
At the present time I am paying about $400.00 per ounce or $20.00 per penny weight for pure gold. You want to keep your numbers simple and round off if you can. Remember that I said before that I have a spread sheet with all the numbers. The customer is only interested in how much is it for 10k, 12k, 14k and 18k per penny weight/ounce. The spread sheet does all this for you.
If you are serious about this, PM me and I can send you a copy of my excel spread sheet and all the testing info you will need and the equipment also. You can get in to this business with very little capital. The most important thing is to be able to test the gold accurately. You make one bad deal for gold that is plated or filled, and you lost your entire profits for the next three good buys.
Hunchback, as you can probably already tell, I am a numbers guy and when you can turn your money over fast and clear 40% profit, you will do good. Grocery stores only make 2 to 3% on their money but the key is to turn it over fast many times. If you PM me I will also hook you up with my buyer too. They are a small recycler in Dallas Texas and very reputable. My son has been dealing with them for many years and I have for over two years my self and have never had any problems. I always know exactly how much gold I send them and what to expect. It has worked out perfect every time.
I know this is lot to digest, but I strongly suggest you study this business and become very proficient at it before you sink a lot of money into it.
I just bought $164.00 worth of Karat gold this morning, from the same lady I bought $71.00 yesterday. Not bad for about an hours work to make about $140.00. Once your customers learn they can trust you they will call you back and refer you to their friends.
Lots of luck
Catfish
Added
I buy from private individuals at 60% and sometime from pawn shops, but usually at 75%. I make more money from private individuals, but as I said earlier you can get larger amounts from the shops. Some times I buy several ounces from a pawn shop and send it to Dallas the next day. I usually send 5 to 10 ounces of pure gold or 10 to 20 ounces of karat to buyer. They will take any amount, but you got to take into consideration the shipping and insurance cost. This can add up.
Hi William:
I just got back from my normal Saturday morning yard sales run. I hit seven yard sales and purchased the following gold items.
Gold price to day is $672.00 or 21.60 per gram my sell price 98%= $21.17 per gram
Cost Sell
53.4 grams of 10 karat gold jewelry at $5.36 per gram total $286.22 $471.41
1.4 grams of 14 karat gold jewelry at $7.50 per gram total $10.50 $17.28
9.1 grams of 18k 1/10 gold filled watch at $3.38. Total $3.38 .68g=14.40
91.0 grams of heavy gold plate (HGE) Jewelry at 1% total $11.70 1.0g=21.17
24.2 grams of .925 silver at .35 per gram total $5.42 $9.90
Estimated total profit on this one buy is about 534.16
-317.22
---------
$216.94
Please note that I will have to refine the gold filled and plated stuff. I get 90% spot for all my silver as long as it is .925.
I also made one more purchase of old gold filled glasses from a flea market.
I bought 11 pairs of gold filled 1/10 12 karat glasses frames. I don’t know the exact weight but I paid $2.00 per pair. I have been getting on the average of about $8 to $9.00 worth of gold from one pair average. I expect to clear about $75.00 on the glasses.
I purchased all the gold and silver items at 60% today’s 30 day running average 0f $666.50 per oz. except the glasses. I just made the lady an offer. I was prepared to go as high as $5.00 per pair. As my good friend Harold sez “A deal is a deal”.
You mentioned that you still had concerns on selling your gold. I talked to my buyer and she said that if you wanted to call her that would be fine and she herself would tell you what you would get. William, I must caution you again, when you sell gold, it has to produce the expected amount of gold per karat. In short, if the gold is solid karat gold it will produce the expected amount. If you don’t want to do that, then I will be happy to buy all the gold (providing it is pure karat gold) you can sell me at 90% spot of 30 day running average. I will then resell to my buyer at 98% daily spot.
Seriously if you want me to help you on this just say so. I don’t mind. I enjoy it and it is a wonderful hobby. Buying and selling gold is about as much fun as refining gold.
Catfish
