Has anyone gone into the gold buying business?

[Woody Woodpecker]

And I don't mean Goldlink

I mean one of those "WE BUY GOLD" thingies....

(and we plan to buy silver, platinum, and diamonds)...

Any suggestions and recommendations?

We have a great location and very high visibility and traffic site. No gold buying within about 5 mile radius. High end neighborhood too.

[MineralMan]

1. Good luck with that.

It's a difficult business, actually. You'll need a large stash to get started, and nerves of steel. Do you have a gemologist in the group? If not, you'll need one.

Also, be aware that karat stamps for gold can be purchased very easily. You'll need to do specific gravity tests to make sure you're not getting a lower grade of gold than is marked on the pieces.

Again, good luck.

[Woody Woodpecker]

2. We have the acid test

and we have a very strong magnet for that purpose.

We have not decided if we will take in diamonds.

We have decided to do gold/silver/platinium.

[MineralMan]

3. The acid test is OK, but not as reliable as a spectrometer.

Cheaper, of course. Silver and platinum require different test methods, too. The magnet thing is fairly useless, since people aren't trying to cheat you with magnetic materials, although nickel is also magnetic.

Diamonds are a different matter. A thermal conductivity tester is a good thing, and will identify real diamonds in comparison with anything else...but...the value of a diamond is dependent on so many other factors that without the ability and knowledge needed to grade diamonds, you're likely to make bad decisions.

And then, there is the fluctuating market, the cost of refining (and the discount refiners require), and the difficulty of calculating an appropriate discount you require when buying gold. The margin is a lot lower than you think, and customers are more knowledgeable than in the past.

Being successful in that business requires a lot of knowledge, and it's not knowledge that's easily obtained quickly. For example, if you don't know the jewelry market, you may convert a piece of jewelry into scrap gold that is worth far more than its metal value.

I'm not saying it can't be a good business, but it's one of those businesses that can end up losing money very easily, and it's a business that requires a handsome amount of money to start, since there's a significant time lag between buying and getting paid.

Take some more time, perhaps, and investigate the business thoroughly. It could save you from a potential disaster.

[Woody Woodpecker]

6. Fortunately we have an extremely reliable contact

in our family that they have made modest living buying gold - my second cousin is a jeweler in Wilmette, IL and we talk from time to time, and I recently asked him if the timing was right - and he said it's a good time to get into this business as it will go up.

Our family have been in the jewelry business for many years, and my father-in-law is a former jeweler, and still likes to dabble with watch buying and selling in New York and via eBay (although G-d knows why).

We have been in the IT industry for more than two generations, and with our services rapidly being "outsourced" by other needs, and a possible dissolution of one of our businesses due to a tiff between my dad and his business partner. Long story short, we may lose a major revenue stream, so we need to replace it with another.

[MadHound]

4. Suggestions for you if you want to make money in gold

First of all, wait a few months. It looks like the price of gold may have peaked and is on the way back down. It might bump up due to EU problems, or it might drop through the floor. I suggest that you wait and see what happens.

Second, make sure what you are doing, that you have the proper equipment and expertise. A lot of people have lost their ass, and assets, because they simply didn't know what they were doing and got burned.

Third, if you want a safer way of getting into gold, I suggest investing. Not in gold itself, but rather in a mutual fund of gold dealers. These gold dealer funds make money when the price of gold is either going up or coming down, just so long as gold is moving, because dealers make their money from fees.

Good luck, whatever you do.

[Woody Woodpecker]

5. Our location is in a boutique store

Where the owner is a old friend of ours and has a very nice vault for our purposes.

We do not intend to store anything in her store except for the equipment to test and weigh the gold/silver and whatnot.