Last Updated on June 16, 2020
Most of us have, at one point or another, handled articles of gold. There could even be some who still have plenty of gold sitting around, wondering what they should do with it.
Perhaps it’s a golden gift item you received from a friend, but one that you’ve since grown out of love with. It could even be some gold dental work or a piece of inherited gold coin that you no longer find useful.
If you’re enterprising enough, you might probably have considered selling your gold items but weren’t sure how to proceed. When we talk about making money off selling gold, we’re not necessarily referring to the wealthy merchants operating well-established jewelry outlets.
Anyone can begin small and go on to build a gold business empire. Deciding to sell that old golden necklace that you continue stashing away in your drawer is an excellent way to leap into the lucrative gold business.
Read on for more insights on how you can make money selling gold.
What Is the Value of Gold?
Even before you take a plunge into the lucrative but unpredictable gold industry, you should first understand the value of gold and the factors that affect gold prices.
Essentially, how much gold is worth largely depends on the prevailing market prices of gold bullion. Gold bullions refer to gold in the form of ingots, bars, or other specialized coins. Most gold bullions consist of pure gold, making their values higher than those of gold alloys.
As of January 10th, 2020, gold was retailing for $1,543 per ounce or $49.63 per gram in the USA. Gold is priced using the Troy ounce which is equivalent to 31.1034768 grams, as opposed to the avoirdupois ounce that contains a mass of 28.35 grams.
But what makes selling gold a promising venture is the bullish outlook of the entire gold industry. Contrary to popular perception, the value of gold isn’t necessarily affected by the instability of an economy. Like most other precious metals, gold prices tend to rise during periods of economic uncertainty.
Over the past 12 months, the prices of gold have surged by over 30%, and 433% over the past two decades. That makes now the best time to take advantage of this booming business.
The prices of gold also depend on the number of karats, which is the official unit of measuring gold purity. 24-karats represent the purest and most valuable gold, and common logic dictates that the higher the karat, the costlier the gold item. The price of gold bullion, be it in bars or coins, is equal to the cost of 24K gold.
However, professional gold merchants have a more efficient way of determining the value of gold by leveraging the metrics enshrined in the London Bullion Market Association. The association runs a globally-recognized electronic system known as LBMA Gold Price, which offers acceptable market prices for gold at different periods.
According to the system, gold prices are grouped into two major categories, namely Gold futures prices and Gold spot prices. In gold futures prices, the worth of gold depends on the contracts that spell out the physical delivery of specified quantities of gold at particular dates in the future.
To predict the value of gold using this metric, you’ll need to factor in the forces of supply and demand as well as the projected costs of transporting and storing the commodity.
In gold spot prices, traders can establish the worth of gold depending on the amounts due for immediate delivery. It takes into account the average net worth of all the currently-traded gold futures, measured over one month.
What Makes Gold So Valuable?
The first thing that makes gold such a valuable commodity is its scarcity. It’s not only the world’s rarest naturally-occurring compound, but it’s also the most precious. These traits qualify it as a dependable currency unit, as the world will never have enough of its supply.
Gold is also one of the oldest measures of wealth and forms of investment. In ancient times, the commodity was synonymous with royalty, a fact that made it even less available, hence more valuable.
The deep sentimental attachment humans place on gold also accounts for its net worth. And unlike conventional bonds and stocks, gold is reasonably more transportable. Not to mention, it cannot be counterfeited. Various alchemists have previously claimed that it’s possible to manufacture gold, claims that are refutable considering that the purity of gold lies in its chemical and not physical characteristics.
Lastly, as precious as it is, gold is one of the easiest commodities to recycle. That not only contributes to environmental sustainability, but it also makes it possible to recycle gold without losing a significant portion of its original worth.
Find the Value of your Gold
After learning about the basics of the gold trade, it’s now time to get down to business. First things first, can you already tell the purity of gold? If you can’t, then you’re not ready to take the leap yet.
There are numerous ways you can tell real gold from a fake one. First, you may want to check for a stamp. Real gold commodities have purity markings either on their backs or insides. Usually, the stamp is a karat number, such as 24K, and is normally made in a rectangular shape with its corners cut off.
The following are what these numbers mean:
- 375 = 9 carat/37.5% gold
- 585 = 14 karat/58.5% gold
- 750 = 18 karat/75% gold
- 916 = 22 karat/91.6% gold
- 990 = 22 karat/99% gold
- 999 = 24 karat/99.9% gold
But the presence of a stamp isn’t necessarily an indication of the genuineness of gold.
Here are more ways you can ascertain the purity of your gold:
1. The Lighter Test
In this test, you hold your gold item over the steady flame of your lighter or other sources of heat, keeping it within a reasonable distance from the heat. If the gold is genuine, it should get bright hot after some time but not darken.
Fake gold, when exposed to heat, may brighten but after a few minutes of exposure, the color will always become darker. If the item isn’t pure gold but is only gold-plated, the gold plating will melt and reveal the inner metal.
2. The Magnetic Test
Gold is a non-magnetic material. Therefore, any substance that gets attracted to your magnet is unlikely to be pure gold. However, note that if the gold item is an alloy featuring other magnetic metals, it may portray some magnetic properties.
3. Other Tests
Another common gold purity test is placing the item in water and observing for any immediate or long-term reactions. Real gold is denser than water; hence it will sink as opposed to floating on it. And due to its relatively high position in the reactivity series, pure gold doesn’t rust.
Lastly, if you have a piece of gold jewelry, you should check if it turns your skin in any way. Genuine gold doesn’t turn the skin green or black.
Once you’ve known how to determine the purity of gold, the next step is to acquire the necessary tools that you’ll require in your business.
Some of these tools include:
1. A Gold Testing Kit
You’ll need a gold testing kit, depending on the method you intend to use for testing the purity of your gold. When buying the right gold testing kit, insist on kits that also enable you to evaluate the presence and quantity of other metals, such as silver and platinum. That way, you can easily measure the value of gold from an alloy of gold and other materials.
2. A Jewelry Scale
A professional jewelry scale is another indispensable tool in the gold business. Most budding traders are often tempted to improvise their kitchen scales due to the inhibitive costs of professional-grade jewelry scales. While they come with hefty price tags, high-end scales are one-off purchases that will serve your business for years.
Besides, kitchen scales aren’t legally accepted in the mainstream gold industry. Not to mention, using industry-acceptable gold-weighing scales is an excellent way to add a touch of class and professionalism to your business.
3. A Magnet and File
Whenever you buy gold, the magnet test is one of the immediate purity tests you can conduct on it. Therefore, invest in a high-quality magnet as well as a file that you’ll use to scrape away the worn-out outer coating of most articles of gold you purchase.
Calculators are highly-resourceful tools in any reputable gold outlet. Calculators come in two varieties, namely, Price for Gold calculators and Scrap Gold calculator. A Price for Gold Calculator gives rough estimates of the amount to expect when you sell a piece of gold, depending on the market averages and other parameters, like purity and weight.
On the other hand, a Scrap Gold calculator is useful in determining the value of scrap gold. The good news is that most reputable gold merchants have these calculators built into their websites for accessibility and convenience.
How and Where to Purchase Gold
You can promote your gold buying services using many of the conventional product promotion methods out there. You could go the traditional way of issuing leaflets and business cards clearly detailing the articles of gold you’re buying, ranging from chains and rings to coins, watches, etc. You may also advertise your services online through your social media platforms.
However, avoid quoting the price per gram or ounce in your advertisements. That’s because numerous other aspects influence gold prices. Also, it’s okay to add your phone number and email address on your advertisements but for your safety, don’t include your home address.
When advertising your gold buying services, you should also know the demographics to target. The first demographic includes those who have recently been through rough patches with their finances and need to sell off some of their items to bounce back.
Examples include the bereaved, divorcees, and people in heavy debt. You can either locate them through your rigorous advertisement campaigns or on online auction sites, such as Ebay.com.
You may also consider organizing a gold valuation party. Once you have a venue, reach out to as many people as possible. Build a rapport with the attendees by creating a friendly environment while still making sure you maintain a degree of professionalism.
As you offer your valuation services, there will be a few people who are ready to trade their gold items. Issue business cards as you also remind your guests to spread the word out there.
There’s also the option of buying gold teeth from dentists and previous wearers. As people age, they eventually lose interest in their gold teeth and would be ready to sell them at significantly reduced rates compared to their initial purchase prices. Retired dentists may also have piles of gold teeth lying idle from their previous practices.
Lastly, keep an eye on owners of gold pocket watches and other scrap gold. Usually, these are people who inherited their gold items and no longer desire to hold on to them. Just like numismatic gold coins, most scrap gold items come with some historical significance.
Therefore, do a background check before putting them up for sale. You may discover an interesting historical fact behind them that may positively impact their overall cost. But you must also remember that if the article of gold is too rare, you may experience challenges finding a suitable buyer.
Here are some important things to bear in mind whenever buying gold:
1. If starting out, insist on buying gold from online auction sites, the general public, or the government (for old coins). Avoid jewelry stores.
2. Always ask for ID when buying gold. Note down the name, ID number, passport or driver’s license, as well as the contact address of those selling gold to you. That’s a recommended security measure in the event it emerges that the gold was stolen.
3. Also, build a comprehensive contact list. Some of those people who sell gold to you, such as dentists, might turn out to be your future customers.
Ready to Sell Your Gold?
Once you have enough gold stock, you can decide when and where to sell. Naturally, you’ll want to check the prevailing market averages and compare prices across different markets.
The conventional wisdom is to sell your gold when the prices are at an all-time high. Naturally, that’s when the demand for gold far surpasses the supply for it. As we already mentioned, gold prices oscillate a lot.
They can rise and plummet in a matter of minutes, depending on how bullish or bearish the market looks. Therefore, put up your gold for sale as soon as you can rake in sizable profits. But just like buying, selling your gold isn’t as easy as ABC.
First, you should begin by valuating your gold bullions, coins, jewelry, or other articles of gold you intend to sell. This is where you will use the scrap gold calculator.
Where to Sell Gold
Next, research on the places that sell gold near you, as they will be your main buyers. Some of these include local jewelry stores, gold exchanges, pawnshops, and coin stores. Try to establish the reputation of a store before trading with them.
A reputable retailer should have a couple of customer reviews on accredited platforms, such as Yelp. Online community forums, like Quora, are also crucial resources to rely on when digging up on a company’s consumer ratings.
Besides reputation, insist on gold buyers that deal in a broad collection of gold items, from jewelry to coins, bracelets, etc. The buyer should also be able to accept gold from any country and ship to any location.
Not to mention, the retailer should accept flexible payment options and be able to send your earnings within 24 hours of receiving and approving the merchandise. If you’re lucky enough, you might even find a client that offers Gold Price Maximizer.
Selling your Gold Online
This is a plan whereby if the price of gold increases within 30 days of selling it, the merchant sends you the balance. Generally, experts recommend selling your gold online, as doing so comes with a host of benefits.
First, you enjoy better price competitiveness, considering online merchants compete nationally and internationally to protect their reputations and guarantee customer satisfaction.
Selling gold online also provides an extra layer of security. You can negotiate with your clients via mail, chat, or conference calls, as opposed to driving around with the actual items.
Examples of online dealers that may buy your gold include the following:
- Money Metals Exchange
- Express Gold Cash
- Liberty Gold and Silver
Most of these buyers are famous for their reasonable offers, same-day payment, and flexible payment methods. They also enjoy high ratings on business review platforms and accept a wide range of gold items.
The unpredictable nature of the gold trade makes it one of the most profitable industries. If you’re thinking of taking your chances with this career, don’t reconsider. It may be tough at first, as starting off requires significant capital investment. However, it will only be a matter of time before you recoup your ROI and rake in millions in profit.