Refining for a living? Need advice.

[mortarman]

I've been out of the army for a few months now and have struggled to find my niche as a civilian. I've been considering refining/minting PMs for a living, but need to get a better idea of what I'm getting myself into.

What are the downsides to the job? How difficult will starting from scratch with very little capital be? What are reasonable initial capital outlays to begin with?

I'm attempting to replace $4K/month in income, but will be forced to bootstrap the entire operation as the only job I could find where we now live was as a janitor at Walmart (very rural Michigan). We've been forced to sell all of our PMs to cover our expenses as my wife is now pregnant with our second and I would be a liar if I said these last few months haven't been the toughest of my entire adult life. I appreciate any advice y'all can give and thanks in advance.

[NHsorter]

My advice is to keep your day job & use all of your spare time to build up your business. Start slow, if you get super busy, then start doing part time at Wal-Mart to free up more refining time. This way you are taking less risk. From what I understand, refining can be tricky and you should get some good experience with it before you jump in as a business. Check out www.goldrefiningforum.com it looks like a great site. Best of luck!

[93_Confirmed]

This is a timely thread. I've been discussing the idea of starting a local refining operation with another RealCent member here in NJ. We're in the early stages of research so I'm hoping Doc or Nate will jump in and give their (much valued) two cents on the topic.

[Nickelmeister]

I'd like to know what you guys mean by a "PM operation"... a gold buying store-front? A melt and assay shop? Or a full-fledged refinery?

[93_Confirmed]

I was referring to a small scale refinery that mints silver bullion.

[OneBiteAtATime]

I cannot speak to the original question, but I can guarantee that if you're willing to work your a$$ off, you could find decent work as a farm hand in rural Michigan. If you aren't married to Michigan, go where the work is. Dakota's, Wyoming, Texas.

Secure your family first, then chase your dream.

When my business went south, I took work that was degrading, infuriating. Way too many hours for not nearly enough pay. PRIDE doesn't taste so good.

[SilverDragon72]

This is a timely thread. I've been discussing the idea of starting a local refining operation with another RealCent member here in NJ. We're in the early stages of research so I'm hoping Doc or Nate will jump in and give their (much valued) two cents on the topic.

Either one of those 2 would be able to give you some good tips on refinement! They both make excellent hand poured items!

[natsb88]

We're really talking about three different businesses here.

Gold/silver buying - Run a storefront operation and/or mobile buying events (the kind of things Realcenters love to hate) to purchase coins, bullion, scrap gold/silver jewelry, etc. from the public. Assemble those goods into large lots and sell them to a refiner. There are several members here that have physical coin shops and scrap buying can be a big part of that business, if not the business entirely. You will need some basic testing equipment, you will need to register or obtain a license depending on the state and local laws, you will need a lot of practice and knowledge, you will need a storefront or a mobile operation, and you will need a pretty good chunk of change for buying. State/local laws may require you to hold items for 30 days (or more) before sending them to a refiner, and Patriot Act and anti-money laundering laws will require you to collect and store a bunch of information about people who sell to you. Some municipalities have additional reporting requirements (like sending reports/pictures to the police department) to try to catch stolen goods. Generally if you buy something stolen, you forfeit it to the police and are out your money. In addition to floating inventory for a holding period, you will also need enough purchasing power to be able to accumulate several ounces of gold and a couple hundred ounces of silver before shipping it off to a refiner if you want to get the best payout rates. You would have to evaluate the area you want to work in; are there existing coin shops, jewelry shops, or gold-buying shops that would present competition? If not, it could mean you wouldn't have any competition, or it could mean that others have tried but there is not enough material in that area to sustain a business.

Refining - Processing scrap gold into 9999 fine gold and scrap silver into 999 silver (generally speaking). It involves lots of equipment, lots of potentially dangerous chemicals, lots of melting, lots of testing, lots of knowledge. It's a high-volume low-margin business. It does not scale down well. At least not as a profitable business. There is lots of existing competition paying very high rates already and it would take a lot of capital to get started.

Somewhere in between those two would be what Nickelmeister mentioned, a melt and assay shop. Basically melting down scrap lots and using an assay process to determine the exact composition. You can then sell the assayed bar to a refiner at a better rate than just sending in bags of loose scrap jewelry.

Minting - Taking 999 silver/gold in bulk/raw forms and converting it into finished products. Standard weights, hallmarks, etc. This can be as much of an art as it is a business. You have to develop products people want and you have to market them effectively. You have to source material, manage production, advertise your products, and take and ship orders. Poured and stamped products involve furnaces, molds, post-processing like polishing, marking with custom stamps, etc. You can get set up for a few thousand or less, but there is a limited market for high-premium low-volume and relatively unknown products. You'll spend a lot of time and money establishing a recognizable brand. If you want to get into actual minting, like making rounds and bars, you'll need a coining press. Take a look on eBay. On the low end, well-used old stuff is going to run at least $20,000 plus the cost of upkeep and inevitable repairs. A nice shiny new press will be $50,000 - $60,000 on the low end. Then you'll need custom dies for each design. If you want to make your own blanks and recycle your rejects, you'll need a furnace to melt it down, a way to cast it into long bars, a rolling mill to roll it to the correct thickness, a punch press to knock out blanks, a rimming machine to raise the edge and apply reeding, a tumbler/polisher to get the desired surface finish...lots and lots of equipment meaning lots and lots of capital. And after all that, if you try to charge more than $1 - $3 per bar/round over your raw material cost, people will scoff at the "premium" and go somewhere else. There is lots of existing competition (GSM, NWT, AOCS, QSB, Silvertowne, Sunshine, just to name a few) in the minting market.

None of these are something you can get into overnight on a sustainable living wage scale without a lot of existing capital to work with or some significant financial backing. It is much more realistic to work a steady job and begin to build up a side business that you could eventually turn into a full time venture. I have been dealing in metals for five years, started acquiring equipment to make my own stuff two years ago, and just started releasing my own products in the last couple of weeks. And I still do not yet make enough from all of that for it to be my only source of income.

[Nickelmeister]

To add to Nate's excellent answer, buying scrap gold/silver is the only path that can be efficiently scaled down. Even still, you would need to have a substantial minimum amount of working capital. I'd say at least $10K for a small/local "wheeler-dealer" (the type who gather up material and then sell to a primary buyer like me), up to several hundred thousands to properly float a full store-front operation.

[neilgin1]

Nat, you're a good man.

Mortarman, thank you for your service brother, times like this i wish i was wired in and could REALLY help a brother out.

God bless you....now is the time to lean on Him, neil

[fasTT]

To add to Nate's excellent answer, buying scrap gold/silver is the only path that can be efficiently scaled down. Even still, you would need to have a substantial minimum amount of working capital. I'd say at least $10K for a small/local "wheeler-dealer" (the type who gather up material and then sell to a primary buyer like me), up to several hundred thousands to properly float a full store-front operation.

I have to agree with Mark. $10, 000 in your pocket, a good avenue to be able to sell what you buy and a whole lot of time building your business might get you there. But it will not be a full time living at that point.

I started my business after working at a high paying job for many years and bought and sold silver and gold as a hobby. The profits were kept as silver and gold and I worked at my job, paid down debt, saved as much as I could until I got to a point where I could retire from my industry and jump in with both feet. Up until early last year, I was working at three different businesses trying to get to this point.

Now, both Mark and I run similar sized gold buying operations and deal directly with the Royal Canadian Mint. We have the market and resources to buy on scale and purchase from dealers at very low margin to make it work at this level.

Even if I were to add another zero to my annual sales, I would highly doubt that I would venture into refining. I have invested almost $100,000 in melt and assay equipment. If I was exclusively doing wholesale work, it would take me over $5 million in sales to recoup that cost. If I ventured into the refining aspect of it, to get to a level of competitiveness with the mint, you could add a zero to that number.

[Sheba]

Mortarman I have no advice on your post ... but wanted to jump in with others and say 'thanks' for serving. God bless you and your wife and family ... congrats on the second little one on the way. I do hope eventually, you will end up doing what you really like and have been asking for advice about. Best regards!

[Elcid69]

Mortarman, first, thank you for your service, ever think about a move to the "Great State of South Carolina". Home of Michlein , BMW, Boeing and the home of the right to work states? As they say "Come on down".

[mortarman]

I appreciate the advice and the support. That pretty well summed up my concerns. Thanks and regards.

[TXBullion]

Great answers from nate, mark and daniel, thanks

[NHsorter]

This is an awesome thread. I should delete my first reply cause it just looks stupid after the awesome posts following it.

[johnbrickner]

I don't knowJack about the above but, what I do know is find a mentor. Work for your mentor however they tell you. Be willing to do all their grunt and less savory jobs. You've got nothing to lose and everything to gain. All you have to do is ask. If you are turned down, you've lost nothing and are still exactly where you are now. But if they say yes, You're on your way.