How to Start a Gold Business

by Andra Picincu - Updated October 16, 2018
Gold jewelry can be bought and sold

Gold has been considered a secure investment for centuries. It's a symbol of wealth and prosperity, offering better returns than most financial assets. In 2017, the rate of return was approximately 13.1 percent. Millions of people worldwide buy and sell gold to diversify their portfolios and protect their investment against inflation. If you wish to start a gold buying business, there are a few things you should know to make a profit and comply with the law.

Types of Gold Investments

There is more than one way to invest in gold. Depending on your budget and preferences, you can start a gold jewelry business, buy and sell gold for profit, invest in gold mining or work as a gold dealer. Another option is to invest in gold exchange-traded funds, doré bars or bullion gold bars. Numismatic coins are an affordable choice and can be purchased from a variety of dealers.

Decide whether you want to invest in paper gold or actual gold. Exchange-traded products, such as closed-end funds and exchange-traded notes are considered paper gold. Their value has no real linkage to gold demand or production and can shift dramatically over time. Real gold, on the other hand, is a safer investment.

A relatively simple way to make money is to purchase gold jewelry and sell it to scrap gold buyers. They will melt it down and recycle it for profit. The value of scrap gold depends on its purity and weight. If you choose this option, you can either sell directly to jewelry stores or attend a party of gold where guests are paid in cash for their jewelry.

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Beware that gold parties are not legal in all cities and states. If you live in South Carolina or Virginia, you can get fined for hosting or attending this kind of event. Plus, you risk getting scammed by scrap gold buyers. Even those who are honest may charge some hefty commissions.

Start a Gold Buying Business

If you're looking for a safer investment, you can start a gold buying business. This business model involves purchasing gold jewelry and raw gold from the public and selling it later for a profit. In addition to retail space, you will need the following equipment:

  • A professional jewelry scale.
  • A gold testing kit.
  • A magnifier loupe.
  • A metal file.
  • A magnet.

Even though you can run your business from home, it's recommended not to do so. Your house is more vulnerable to theft compared to a commercial space. Additionally, you want to look professional and earn your customers' trust. Whether you buy and sell gold at home or in-store, invest in a quality metal safe and hire security personnel.

Decide what kinds of gold you wish to buy, whether it's rose, white or yellow gold. Take the time to learn about gold valuation and assess the market. Determine how and when you're going to sell the gold. In general, the older it gets, the higher its value becomes.

Define your target customers and come up with a marketing plan. Consider setting up a website to display your products and connect with potential clients. You can even buy and sell gold online.

Legal Requirements

Before you start a gold buying business, research the laws in your state. You will need to register your business, get a tax ID number and purchase insurance. Depending on your location, you can apply for a license and permits online or at a local office.

The exact legal requirements depend on your type of business. A pawn shop, for instance, is subject to different laws than a gold mining business or a gold jewelry store. Discuss your options with a tax advisor or a lawyer. They can help you start a gold buying business without taking unnecessary risks.

About the Author

Andra Picincu is a digital marketing consultant with over 10 years of experience. She works closely with small businesses and large organizations alike to help them grow and increase brand awareness. She holds a BA in Marketing and International Business and a BA in Psychology. Over the past decade, she has turned her passion for marketing and writing into a successful business with an international audience. Current and former clients include The HOTH, Bisnode Sverige, Nutracelle, CLICK - The Coffee Lover's Protein Drink, InstaCuppa, Marketgoo, GoHarvey, Internet Brands, and more. In her daily life, Ms. Picincu provides digital marketing consulting and copywriting services. Her goal is to help businesses understand and reach their target audience in new, creative ways.

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