Have you ever wondered how “American Pickers” and pawn shops make their money? They buy and sell gold!
And it’s not just TV “magic.” I made $9,000 in profit last summer buying gold at flea markets and selling it to a jeweler. Here’s how I did it, and how you can do the same.
Last summer, I bought a junk box from a flea market. Inside was a bag of costume jewelry with six gold rings mixed in.
I Googled three local jewelers in my area, picked the jeweler with the best online reviews and visited him. He made me an offer for the rings, and I took it.
When I told him how I found them, he said, “People throw away gold all the time.”
The jeweler then told me he would pay 80% of the melt weight of any more gold I brought to him. So, if I brought him $100 in gold, he’d give me $80 cash.
Over the next few months, he paid me $14,000 cash. After subtracting the cost of buying the gold items, I was left with about $9,000 in profit. Not too shabby!
Here’s how to try it for yourself.
Look up your local flea markets by Googling “[your city] + flea markets.”
Make sure there are at least 60 or more vendors. Avoid small markets -- they’re often more social meetings than markets.
Go to the market first thing in the morning. The crowds show up before and after lunch, so going early guarantees you’ll have time and space to search (and haggle), and find your items before anyone else does.
The key is to profit from vendor laziness. Flea market vendors sell hundreds of pounds of stock; they don’t have time to go through bags of costume jewelry. But you do.
The first thing you need to know is how to identify whether or not something is gold.
Look for “10k” and “14k” markings. Avoid items marked HGP, HGE, GR or EP -- this means the gold is plate. Plate gold isn’t pure, and purity is what pays.
Why? Two reasons.
First, I only buy clearly marked gold. If the gold has unusual markings, I avoid it.
Second, I buy real gold mixed in bags of costume jewelry. If the gold is fake, I’ve only spent $2-$10 on the bag, which makes it easy to absorb the loss.
If you want a quick way to test the gold before you buy it, bring a magnet with you. Hold the magnet next to the item; if it reacts, then it’s not gold.
Your gold’s value is based on its composition -- how much gold is in your item.
To find the current value of one ounce of gold, use a tool like Kitco. Take that number and multiply it by your item’s purity.
For example, as I write this post, gold is worth $1,183.50 an ounce. If your items are 14-karat gold, multiply $1,183.50 by 0.583 (58.3%, the purity of 14-karat gold) to get $689.98 -- the value of an ounce of 14-karat gold.
Divide this number by 28.3495231 to get the gold’s value per gram, the way most jewelers will measure it. Your 14-karat gold is worth $24.34 per gram.
So a 14k gold ring that weighs 5 grams holds $121.69 worth of gold.
Gold buyers notoriously underpay, so avoid them. Find a local jewelry store or gold shop for a better rate.
In my experience, if you have $100 in gold jewelry or coins, gold shops will pay you between $70 and $75.
Every trip is different. I’ve had weekends where I make $1,000, and weekends where I make nothing. Generally, I go through six medium bags of jewelry before I find gold.
Take your time. Don’t get overwhelmed. All you need to do is find two gold rings or a pair of gold earrings, and you’re making money.
Focus on buying earrings and rings. Necklaces are easy to counterfeit and are often gold plate.
Don’t be afraid to walk away from deals. Don’t buy something just because it seems like a good deal. If something seems too good to be true, it usually is.
Your Turn: Have you bought and sold gold before? Tell us about your experience in the comments -- or if you’re curious about the process, ask your questions!
Jesse Gernigin helps people make money and increase their income. Jesse is an author, entrepreneur and success coach. His latest gig is as the head writer of www.livegoldrich.com where he shares how to make more money, travel for cheap and live the life you want.