Investors always look out for the price of gold. They look for different ways on how to buy and sell precious metals. Sometimes it soars, other times it drops. When the price is increasing, you may wonder whether it’s the right time to sell your assets and make profits. And when it is plummeting, you might consider buying more precious metals to make more profit when the price rises.
If you’re still wondering whether people can earn a living from buying and selling precious metals, then you should read this 7K Metals review to find out. We’re not talking about risky stock market trading or purchasing from jewelry shops. We’re sharing in-depth knowledge of money-making from the business of precious metals like gold.
Some Terms You Should Know
Before you venture into the buy and sell of precious metals business, you must understand certain terminologies.
Hallmark
This is an impression or stamp on the metal that shows the quality of its composition.
Karat (Carat)
A karat is a fraction of the alloy’s purity. It is divided into 24 parts. So, when you see 18 karat gold, it means 18 parts out of 24 parts of pure gold.
Sometimes, it is a combination of metals like gold and silver. In that case, it will be 18 parts of gold and 6 parts of another metal. This is when you can say that the item is 75 percent pure gold.
Steps In Buying Precious Metals
Bullion dealers like to uphold their reputation. And to become well-known, you must master the nitty-gritty of the business, which includes sourcing for metals, testing them, and making estimates. If you understand these steps, you’re on your way to beating the competition.
Sourcing
Since you are new in the market, you need to establish a relationship with a reliable wholesaler. When you buy in bulk, wholesalers will offer you huge discounts so you can increase your profit margin and expand your business. As your business grows, you can then raise enough capital to buy from the market-makers (those who purchase from the mints).
However, it is best to start from where you are. If you can’t purchase from wholesalers yet, start with pawnshops, auction houses, and retail showrooms. Local auction stores may have scrap jewelry or new ones for sale. You can also find out whether your state auctions deposit boxes where you can source high-quality metals at an affordable price.
In this age of online shopping, you may want to refrain from buying gold and silver online. Scammers hang around sites like Craiglist and eBay with fake identities. After making payments, you will wait forever for your bullion to arrive. They can even deliver fake metals to you. Therefore, it is better to find a local supplier that you can trust.
Testing
If you buy from market makers and major distributors, testing may be the last thing on your mind. These levels of suppliers are affiliated with analysts who test the authenticity of the bullion. However, buying from pawnshops and auctions require testing using the following methods:
Acid Test
Sometimes, precious metals may not have hallmarks and even if they do, you still need to be sure that they are not fake. To do an acid test, get a gold kit containing acids for testing different karats of gold. You may want to watch videos on DIY acid test for beginners.
Electronic Test
This method is best for low-karat articles. But sometimes, it can misinterpret an alloy-plated metal for the original article.
X-Ray Fluorescence Test
An x-ray fluorescence test is highly reliable but very expensive. It uses a spectrometer to identify whether a metal is genuine or not. You can get the result within ten seconds.
Estimating
Estimating is the last step in buying precious metals. This is where you try to determine the worth of the metal. In business, the aim is to buy at a cheap price so you can sell and make gains. Therefore, if you’re purchasing scrap metal, make sure you know its value and how much it will cost to refine it. This will help you to fix your selling price.
These days, some mobile apps and websites help to estimate the value of precious metals. If the metal is closer to 24-karat, its value by weight will be high. Here’s a manual method of calculating gold’s value using the spot price:
Gold purity (in karats) x current spot price x (the price per gram that you are paying your supplier) / 31.1
How to Sell Precious Metals
It is important to understand how to buy and sell precious metals. We’ve seen the steps involved in buying now let’s find out some things to consider when selling precious metals.
Timing
Timing is everything in business. Since you’re buying at a cheap price, you may want to sell quickly and make a little profit. But if you hold back for a while, you will make more gain when the spot price increases.
Prepare for Risks
The prices of metals fluctuate and this is something you should prepare for. Don’t wait until things get better in the market before you purchase. You start making profits when you purchase, not when you sell.
Safety Tips for Buying and Selling Precious Metals
When you buy and sell precious metals, take the following precautionary measures:
Request IDs
A seller may offer you stolen articles and set you up after collecting your money. Always request an ID from sellers. Take note of the seller’s name, address, and ID number.
Record Purchases and Sales
Bookkeeping is an integral part of every business. Your books should contain dates, item description, weight, amount, and contact detail of the seller or buyer.
Protect Your Privacy
There are high chances that you will be robbed since you may have gold and large sums of money with you. Robbers may avoid attacking you in public places but they can trace your home and burgle it. Avoid giving your address to strangers and be careful of the things you discuss in public.
Conclusion
Becoming a successful buy and sell precious metals dealer is not one of the easiest things to become. We shared steps to take when buying precious metals, some factors to consider when selling, and some safety tips. If you are consistent, you will soon become a big-time broker.
