How to start a gold for cash business

Updated March 23, 2017

Throughout the first decade of the 2000s, the price of gold rose steadily, growing more than fivefold in less than 10 years. This led to massive interest from both investors and individuals who owned jewelery and other objects made from gold. Whether the price of gold is up or down, small-scale gold brokers--businesses that buy scrap gold from individuals and resell it--fulfil a need, allowing individuals to cash in on a valuable commodity. To start a business trading cash for gold, an individual must have a solid knowledge of the commodity and of its market.

Learn to identify gold. Before you can start up a business buying gold, you'll have to be able to tell fake gold from the genuine article. Gold has a number of identifying characters and can be positively identified using a variety of chemical tests. Invest in a small amount of scrap gold, a book on gold identification and a testing kit, and then spend time sharpening your identification skills.

Find a broker. While each gold for cash business is different, the business model is essentially the same: the owner will purchase gold from individuals at one price and then resell the gold at a higher price to another party. Generally, this is done by purchasing small quantities of gold and then selling the gold in bulk at a premium to a broker. Contact scrap metal yards in your area for information on who buys and at what price.

Write up a business plan. Gold for cash businesses provide individuals a service. Rather than attempting to negotiate with a pawn shop or a scrap metal yard, consumers can go to a gold for cash business and sell their gold in a simple straightforward transaction. However, you have a number of options in structuring your business. While many gold brokers have storefront offices, this isn't always necessary. According to ABC News, some brokers throw parties in which individuals are invited to bring scrap gold they wish to sell, with the broker paying cash for it at the event. Develop a business plan that meets your needs and those of the community you wish to serve.

Advertise your service. In order to remain in business, you will need a steady stream of clients. A strong marketing plan is therefore key to your professional survival. When developing advertising materials, consider both your market and your strongest selling point. If you're advertising to a low-income community, emphasise the high price you offer. If you're pitching your business to a more upscale audience, emphasise convenience.

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About the Author

Michael Wolfe has been writing and editing since 2005, with a background including both business and creative writing. He has worked as a reporter for a community newspaper in New York City and a federal policy newsletter in Washington, D.C. Wolfe holds a B.A. in art history and is a resident of Brooklyn, N.Y.