Big profits buying scrap precious metals

logger7

I was talking to a coin and precious metals dealer earlier in the week. He said that most of his profits were from buying scrap precious metals. Dillon Gage used to say they would pay 99% of melt on gold. But due to a court ruling only deal with Texas instate dealers. Why is buying scrap so profitable even with relatively fair buyers?

Kliao

I would think it’s so profitable becase of the large volume they are handeling which turns into high dollar amount of profits.

ricko

Just as @Kliao said, volume increases profit... Think one ring vs. one hundred rings....Cheers, RickO

TwoSides2aCoin

All metal is sharp and can cut deep. I worked on 18-20% margins in metal contracting. In precious metals they're 3%. Want to buy a coin shop ? I'll get back on the roof or sell cars off the showroom floor.

logger7

It depends on their buy prices. If they are paying 60% of melt, that is very profitable.

Kliao

@logger7 said:
It depends on their buy prices. If they are paying 60% of melt, that is very profitable.

It can also be equally profitable at 80%. Just need to buy more material to achieve the same dollar amount of profit. It’s all numbers. If it’s a large well established shop I would expect them to pay a higher rate because they’ll mostly likely gets lots of people wanted to sell.

MsMorrisine

@Kliao said:

@logger7 said:
It depends on their buy prices. If they are paying 60% of melt, that is very profitable.

It can also be equally profitable at 80%. Just need to buy more material to achieve the same dollar amount of profit. It’s all numbers. If it’s a large well established shop I would expect them to pay a higher rate because they’ll mostly likely gets lots of people wanted to sell.

and there's the reasoning behind 3% ... for an established honest shop....

Jinx86

Locally we pay 75% of melt on over the counter small buys. However if they are established with us or bring in volume I have paid 90% over the counter. Members here I have done 95% in personal dealings. Tomorrow I will be melting down about 265ozt of scrap jewelry. I could make it into one bar but for better assays I like to do 40 oz bars. It also allows me to ability to separate certain materials so that I can get paid on the small amounts of Pt and Pd that the lot might hold. Another great money maker in scrap is melee diamonds. Easily overlooked, but can provide great side income if you know what your doing.

Baley

Yup, all those faded dreams and broken hearts go right into the melting pot..

Jinx86

Most of its due to upgrades, resizing, out of style, or just worn out. Wedding sets are small.

logger7

Also occasionally there may be jewelry with pedigrees and other "scrap" worth more than that. And all the gems....an ethical shop would not buy what they can't do an accurate appraisal of, but many do.

philographer

@Jinx86 said:
Locally we pay 75% of melt on over the counter small buys. However if they are established with us or bring in volume I have paid 90% over the counter. Members here I have done 95% in personal dealings. Tomorrow I will be melting down about 265ozt of scrap jewelry. I could make it into one bar but for better assays I like to do 40 oz bars. It also allows me to ability to separate certain materials so that I can get paid on the small amounts of Pt and Pd that the lot might hold. Another great money maker in scrap is melee diamonds. Easily overlooked, but can provide great side income if you know what your doing.

Hopefully there will be a video??

Jinx86

@philographer
I tend to work solo. Limits the amount of videos I could do. That and I dont know if I even like the sound of my own voice. Why subject others to suffering?

logger7

I was at a coin shop today, one that I believe is good and ethical; but when a couple came in with a 1924 St. Gaudens, one of the employees, "Mike", said that because the coin has 90% gold and 10% copper they were only paying on the 90% gold, around $1550. It would have been more honest had Mike said they buy 10% behind the gold spot price. Also the discussion and back and forth mentioned a couple copper spots and likely rub, making the coin an AU58 with copper spots. Worth more than $1550 IMO. However I would not want to be tying up a lot of money on gold and other precious metals.

cohodk

@Kliao said:

@logger7 said:
It depends on their buy prices. If they are paying 60% of melt, that is very profitable.

It can also be equally profitable at 80%. Just need to buy more material to achieve the same dollar amount of profit. It’s all numbers. If it’s a large well established shop I would expect them to pay a higher rate because they’ll mostly likely gets lots of people wanted to sell.

People can only sell what they have once, then the marketplace is empty. No more sellers means no more profits.

jdimmick

I hadn't actually been buying much scrap as of late , monday, a dude brought in a huge bag of 14kt jewelry. Wanted cash, no paper trail, etc, very pushy for me to buy it also, I passed, just felt like something wasnt right, legally couldnt have bought it anyway with no id. Hard to pass up a 2500 profit, but better to be safe and legit.

logger7

Laws and licenses exist for a reason, I have seen shop owners go to jail for circumventing the laws. We are seeing out of state dealers coming to set up at instate shows without following the laws. Just wait until the government does its job as we have an epidemic of thefts and stolen items getting fenced. Cops don't do proper oversight of pawn shops and buyers from what I've seen.

Cakes

I appreciate everyone that posted. I learned something new.