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David Geller

Set Aside Some of That Gold For the Shop

There are good profits and shop savings to be had from buying gold off the street.

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MANY JEWELERS ARE surviving the current slowdown by “buying off the street” and they’re having a banner year as a result. My recommendation is that you get on the bandwagon as most jewelers are getting keystone from their customers’ gold when sold to a refiner. That’s great money. But you know you could also use some of it to bankroll the shop.

Why do this? Cost. Think about it. Gold’s at about $900 an ounce and if you buy sizing stock or findings you’ll easily pay 20-40 percent more than $900 an ounce for the supplies. After all, the gold suppliers have to make a profit too.

But if you buy from your customers at about half price (or $500 an ounce) you’ll be “buying low” as I believe it will be a long time before you’ll see $500 gold again. So don’t cash out all of the gold for cash.

There are two choices for getting you a lower “buy-in” for findings and saving you lots of cash flow.

Send some of the off-the-street gold to a refiner, get a credit and leave the credit with them and order your findings as you need. Stuller, Roseco and Hoover & Strong are just three names that come to mind. You’ll get the parts you need without spending precious cash. Bill against your in-house credit.

In addition or in conjunction with the credit, buy some stock with your credit and keep it handy. Buy sizing stock, round wire and solder. In addition, stock up on findings you use a lot to keep from placing lots of phone orders. Shipping every day of the week gets expensive in the way of Fedex/UPS charges.

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When I had our store, we kept on hand $25,000 of findings and sizing stock at all times. Some example of the findings we kept on hand were:

  • 14K yellow and white gold jump rings. A dozen of each size available.
  • Same thing for lobster claws. When the lobster got to be a large size, we stocked six of each.
  • A dozen of each size low base heads, and once it hit 1.25 carats in size, six of each size.
  • Three of each size 14K four-prong Tiffany-style heads, along with six prongs. etc.

Buying off the street lets you buy $900+ cost findings for $500 an ounce. By using your scrap as credit you save cashflow and you’ll have more everyday items in stock and hopefully reduce your shipping costs, along with your ability to do repairs faster than normal.

This story is from the November 2008 edition of INSTORE.

David Geller is a 14th-generation bench jeweler who produces The Geller Blue Book To Jewelry Repair Pricing. David is the “go-to guy” for setting up QuickBooks for a jewelry store. Reach him at [email protected].

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