Now I do have to give this Gold Party Scam Company some credit, they at least provide some equipment to their representatives. They even provide a company check to pay your customers and host with. I guess paying for the gold with cash goes right out the window, a policy Gold Party LLC suggests, but at least they provide these things, something most gold party scam artists do not.

So lets check out some of the other perks.

• 10% generous commission from all party purchases
• Occasional company generated leads when available
• Commissions paid weekly with income above $500
• Monthly bonus opportunities based on performance
• Opportunity to build your own team

I do not understand who could fall for these gold party scams. It is almost worse then the old cash 4 gold mail in scams. Lets break this down for you.

10% generous commission from all party purchases

This means they pay you 10% for what you buy. If their buy rate is < 50% of spot, then you are not going to be buying much scrap gold and you are not going to be making much commissions. Nothing generous about this.

Commissions paid weekly with income above $500

You will have to be buying $5000 worth of scrap a week to even get a pay check. That is a lot for one person to generate for only $500. But wait, they may have a solution for you.

Opportunity to build your own team

To do what? Take away more of your profits? Maybe they have a secret system to get people on your team and work for free? I mean they got you to work for a slave wage while they did basically nothing right?

Occasional company generated leads when available

Occasional in this case actually means never. So you are on the hook for 100% of the marketing of your gold parties. Any reputable company(only paying you 10%) would guarantee leads and pay you when they fail to deliver.

Monthly bonus opportunities based on performance

Hey that sounds good right? I mean maybe if you get out and work hard they will reward you. But reward you with what? They have already shown they do not see your effort as valuable to them at only paying 10%, I doubt they are going to further reward you with anything but a bag of peanuts.

I DO NOT understand why people fall for this type of gold party scam. If you are not working for yourself, you are simply putting money into someone else’s pocket.

So what can you expect if you are working for yourself? We have already wrote on how you can do gold parties on a shoestring budget. But lets say you have a bit more. Lets say you have already purchased your gold party toolkit and now you have $5000 you either borrowed or have to invest.

Marketing Your Gold Party – No different then generating your own leads from the scam company above.

Purchasing Scrap Gold– We have $5000 and lets say we buy that in one week at 60% of spot.

Shipping Scrap Gold– We ship to a decent refiner which smelts our gold and sends us a check.

Payout – We then receive our check from the refiner (and assuming gold spot stayed the same) it is $7760 at a moderate 97% refiner rate (there are better rates then that, just check out our recommended refiners list).

So our first week payout for Gold Party Scam Company – $500

Our first week payout for our own business dealing with less volume – $2760

Don’t fall for these gold party scams that promise you a small percentage of the profits while doing all of the work. We are the only gold party company willing to teach you how to create your own scrap gold buying business. The rest just simply want you to generate wealth for them as they sit back doing nothing and pay you in peanuts. Let Gold Party LLC show you how to get started in the gold party business making real money today. If you are not working for yourself, you’re just making someone else rich.

Hey Gold Party LLC! I was wondering if I could do both parts of the process myself. I could buy the scrap gold and then refine the gold myself so I can skip sending it into a refiner and just do the entire thing for my own business.

Thanks Griffin

Now my canned response to these has always been something like: Sure this would be possible, but not very probable. Doing the refining is a very expensive and messy process.

But something caught my eye today. I saw a video of a man melting down some scrap gold in a small crucible and simple set up. Here just watch the video for yourself.

Now personally doing all that is really not my cup of tea. I mean if you like working with high voltage and burning red metals, then hey that all good. Not my idea of fun. But I realized how easy the process looks on the video. I also realize that I have seen videos like this hundreds of times and never connected the possible confusion with the video content and the question.

So lets get one thing straight right now. What that man is doing is not smelting gold, but melting gold. That is right, there is a huge difference in the two. And that is where I think this question stems from. I can see someone seeing a video like this and thinking to themselves that this could be done. They could do something like this in a small warehouse or better yet down in their basement.

But let us stop right there and say no!

There is a big difference between melting down some gold and smelting the gold.

Melting Gold.

Melting gold is what you see on the video. You heat some scrap inside a crucible until it liquefies. You then take that liquid gold and pour it into a cast to make yourself a nice bar. And here lies the problem, the bar is only going to be as pure as the gold you put into it.

What?

Yes we all know that gold jewelry comes mixed with other metals. It needs this mix to create enough strength to keep the jewelry from breaking easily. So roughly:

• 22K means 92% gold and 8% alloy
• 18K means 75% gold and 25% alloy
• 14K means 58% gold and 42% alloy
• 10K means 42% gold and 58% alloy

(please no emails to tell me my numbers are not exact…I said roughly)

So what exactly will you get if you melt your gold in a crucible like the man in the video? You will get a scrap gold bar of some percentage in the middle of that chart. What you effectively did was exchange one form of scrap for a different form of scrap. Or in other words…..you wasted your time.

Smelting Gold.

Smelting gold is a whole other animal. Yes you are going to have to melt your gold in a crucible just like the man did in the video. Then you are going to have to call in a chemist. Because now you are going to have to extract that alloy out of your red hot melted gold. I doubt you are going to want to stick your hands in there to get the alloys out. And you are going to have to extract it to the point of leaving it at 99.99% at a minimum and 99.999%(yes that is 3 nines) preferably.

So how are we going to do this?

How about the easiest way to smelt gold?

So tell your chemist to bring an oxidizing agent such as Sodium Nitrate. We can mix that in our crucible and that will lock the alloys together so we can extract them easier. Again unless the scientist wants to reach his hand into the molten metal, we are going to need to extract it chemically. Silica will dissolve the alloys out for us just fine. And that is a pretty abundant material.

So there we are done. What did we get? If we were lucky? Maybe 93%. I suppose if we really practice we may get to 95%. Ouch not much better then 22K scrap. That is not going to work.

Miller Process For Gold Smelting

OK how about using the Miller process? Sounds like a good idea. Lets check on how this is done.

The Miller process is an industrial-scale chemical procedure used to refine gold to a high degree of purity (99.95%). It was invented by Francis Bowyer Miller. This chemical process involves blowing a stream of pure chlorine gas over and through a crucible filled with molten, but impure, gold. This process purifies the gold because nearly all other elements will form chlorides before gold does, and they can then be removed as salts that are insoluble in the molten metal.

Well using chlorine gas sounds a bit dangerous to me. And I can’t be bothered if I only get 99.95% pure. I cant even sell that for much more then scrap prices. What is a more common method for better purity?

Wohlwill Process For Gold Smelting

The process was invented in 1874 by Emil Wohlwill. This electrochemical process involves using a cast dore ingot, often called a Doré bar, of 95%+ gold to serve as an anode. Lower percentages of gold in the anode will interfere with the reaction, especially when the contaminating metal is silver or one of the platinum group elements. The cathode(s) for this reaction are small sheets of pure (24k) gold sheeting. Current is applied to the system, and electricity travels through the electrolyte of chloroauric acid. Gold and other metals are dissolved at the anode, and pure gold (coming through the chloroauric acid by ion transfer) is plated onto the gold cathode. When the anode is dissolved, the cathode is removed and melted or otherwise processed in the manner required for sale or use. The resulting gold is 99.999% pure, and of higher purity than gold produced by the other common refining method, the Miller process, which produces gold of 99.95% purity.

Uggg! They did this in 1874? I am not going to be able to set this up in my basement. Plus I am going to have to do that first method just to get to the 95% purity bar I need to begin the Wohlwill process. That is not very feasible.

So as you can see, even though it is possible to smelt your own scrap gold, it is not probable. To make it even worth your time, you would need to step it up to smelting many pounds of scrap gold a day. This is why finding a reputable refiner is a key to making scrap gold buying business work. These people are the professionals and there are only a handful of them that are even worthwhile. The majority of those that advertise as a gold refinery, are simply middle men willing to send your gold to the real refiners. So when you find a good refiner, hold onto their number, because they are few and far between.

Today’s question comes from Edwin

Greetings Tek,

Thank you for your informative web site…i already referred someone to it…my question is how much money do you think is needed to start…especially at the party?

Thanks,
Edwin

Well Edwin, that would be a fairly ambiguous number we could come up with answering that question. That fact that there are so many variables when a person decides to enter into the scrap gold buying business, the number could drastically swing many decimal places. I know people who have started with a very limited budget and have done really well. Your imagination and ingenuity can often compensate for limited funds.

There is however a start-up cost of any new business and the gold party business is not immune to those costs. Your question also focused on “gold party buy money” which is a unique aspect of the scrap gold buying business. So I will do my best to try and break it all down.

Scrap Gold Buyers Essential Tools.

Now in our section of building your Gold Party Toolkit, we list some essential items to have on hand for any scrap gold buyer. This suggested kit would include:

• gold testing equipment
• scale
• rare earth magnet
• jewelers loop
• calculator
• storage media
• portable safe
• jewelers tools

Now we still very much hold that this is a minimum amount of tools one should acquire if they are serious about starting their scrap gold buying business. However if you are on a very shoestring budget for start-up costs, then they certainly could be acquired over time.

Now lets see what is absolutely necessary. You will not be able to test gold without gold testing equipment, and you will not be able to have an accurate weight measurement without a jewelers scale. Now we always suggest for you to use a good electronic gold tester. We have even reviewed the popular ones in our gold tester review section. However electronic gold testers are somewhat expensive if we are talking about and absolute rock bottom shoestring budget. So if you noticed our gold tester reviews we included the old standby acid test. You can get a complete acid test kit for $25. We do not recommend using acid tests in front of customers, but you can always buy a good electronic gold tester later. A jewelers scale will cost you $15 for the most inexpensive scale that we can recommend.

Shoestring Budget Total: $40

Marketing and Promotion

Marketing and promotion for your gold party business is a tricky monster. Some people spend thousands of dollars on professionally designed marketing materials and thousands more on professional marketing firms to get them clients and customers. Others get away with using our marketing materials and products spending < $100. It is all relative to how fast you are able, and willing, to scale your gold party business. Some people like to have everything right out of the gate, while others like to ease themselves into expanding their business.

Sticking to our shoestring theme here, lets discuss the cheapest option; using your imagination. This is where your ingenuity really pays off.

Now if you have the talent and right tools for it, designing and printing your own marketing materials is an option. However if you are anything like me, it would turn out like something I did for my 5^th grade lemonade stand. That is real cute when I was 10….embarrassing in front of potential customers. Plus heavy grade paper is not cheap, nor is the ink for my printer. These items would cost me hundreds anyways so for most of us, this option is better left for the professionals like Printing for Less.

But we still need to market our business and create a buzz for our gold parties. There are a million different ways you can do this, and not every way will fit every business. You are going to have to find out what works for you, from getting on your social media sites and leveraging their power, to hitting the pavement and shaking hands. Since we are on a shoestring budget here, this one will cost us $0.

Shoestring Budget Total: $40

Gold Party Event Expenses

Now you have the tools, you have a guest list and you are ready to make some money. We could rent out a conference room with a caterer and bar with enough buy money to purchase the entire building. But that cost capital and we are on a shoestring budget. So we will use our kitchen for our first party with chips and dip.

So that leaves us with the buy money. And this is the crutch of Edwin’s question. What is the rule of thumb when having cash on hand for the buy at a gold party? Well I would love to give you a number like $300 per guest, but that is just not the case. Your guests can be unpredictable and you will have no idea the amount of scrap gold one person can lug to your party. And the cardinal rule of buying scrap gold at a specified event time like a gold party is: NEVER RUN OUT OF BUY MONEY!

So we are on a shoestring budget and we do not want to break the gold party cardinal rule. So what do we do?

You plan ahead. You causally ask each party attendee how much scrap jewelry they are planning on bringing. I find the best way to do this is either on an RSVP card, or through email, or on your website if you have one. Have them say how many rings, necklaces, bracelets etc they will be bringing. Obviously don’t ask them for the weight and karat, that is your job. But this will give you an idea of what they will be bringing so you can plan accordingly.

The number of $100-$300 per guest is actually pretty realistic unless you have “stealth inquired” as mentioned above. You will have some, like I mentioned, that come pushing a wheelbarrow full of scrap through your door and then some that pull out a small miss-matched earring. So for a small party of 10 guests $3k should be more then enough, and $1k could scrap you by.

Shoestring Budget Total: $1045

But we are really talking shoestring here. And we want to even start off smaller. Plenty of people have entered into the scrap gold buying business by scheduling one appointment at a time. They will meet at coffee shops to complete their transactions. This is a lot more work then scheduling a gold party, but can be a way to work your business from the absolute ground up.

So your imagination is the key to your start up costs.

Of course this is not breaking news for those of us in the gold buying business or for those that have been investing in gold.

But what does it mean for the scrap gold buying industry?

Well of course skyrocketing gold prices affects how we do business. We are going to be buying at a higher price, with clients more willing and eager to part with their scrap gold jewelry. And don’t we love customers that are happy about making money that in turn makes us money? I know I do. It is one of the perks to this industry.

However it should also affect how you retain payment from your refiner. Gold Party LLC has always held the position that a portion of your payouts from the refiner should be taken in gold bullion and coins. That is just a smart investment strategy. However with gold being bullish and the dollar being a big grumpy bear; you should obviously be asking for a much higher payout in gold bullion and coins then in cash if possible.

So what should that percentage be? Well obviously that is a a personal decision and comes with many factors. One big one being the need we have to keep a certain amount of cash on hand. But if you have been going on a 20/80 (gold to cash) it may be time to up that to closer to 50/50 if you are able.

So as a scrap gold buyer, what is your gold investment strategy? Do you have one? If you don’t, you really should.

Read more about Susan Kingston and her success.

Also you can check out her business site at Atlantic Gold Now.

So the question is can we claim that scrap we hold as inventory even when it is held for a short period of time. Or even should it be? The question comes as a debate between the owners of a scrap gold buying business. The company has a dilemma of whether they should claim their scrap gold as inventory or not. And is answered from a debate perspective.

Q: I have a company that buys gold from people (jewelry, coins, etc). They then send this gold to a company out of state who in turn sends them a check for the value of the gold in the item. My company does not want to recognize the value of any items that they have on hand at the end of the year as inventory. They say they only hold onto these items for a max of 30 days before they send to the out-of-state purchaser. I think they should. What is your opinion?

You can also pipe in on the discussion if you want here.

A: The length of time that a business holds or carries items does not matter. It doesn’t matter that they’re held for 30 days. They could be held for much longer and still qualify as inventory. What matters is that the items are held for the purpose of resale. See this inventory lesson for a clear definition and explanation of what counts as inventory.

In this case the items’ “sales values” are determined by the purchaser after evaluating the quantity of gold existing in each of the items.

Also, these (possible) inventory are not sold as-is. Instead, they are changed (albeit by the purchaser) – the items are dismantled and the gold extracted.

In my opinion it would be difficult to count these items (coins, jewelry, etc.) as inventory. Not because scrap gold could not be counted as inventory. But because the gold is essentially valued only after it is sold. Think of it this way: how do you determine what the carrying amount of the inventory is when the purchaser (not you) determines their value, and only after they are shipped out of your warehouse?

So I would agree and recognize them as a purchasing expense.

Either way, I would recommend consulting a professionally qualified accountant for expert advice.

Do you think the coins and jewelry could qualify as inventory? Send us your comments.

History

First we are going to have to give a little history. Early 2008 our company decided we wanted to do a educational series dedicated to helping others get into the scrap gold buying business. For reasons we now deeply regret, we decided to have the website coded in ASP.NET(a proprietary Microsoft language). Not that it is a bad platform, it was just overkill for what we were doing here.

So fast forward to 2010. In that year Gold Party LLC went through some restructuring as an organization, including cutting ties with the original developer of the Gold Party LLC instructional website. The plan then was to eventually port the old webfiles to a more manageable language software (and of course updating the look). Basically we were going to take the scratch the old website and develop a new one with PHP to make it easier to manage. We had actually created a new template (the one we are now using) to accomplish this goal. However like all things set for change, this one was put on the back burner many times because of other pressing issues.

Where it all fell apart December 2011.

So right after Christmas of last year a majority of the Gold Party LLC team was set for a month long consulting job in Asia and New Zealand. Sometime around the end of November we had a hard drive failure. It just so happened to be the one that held the back up files for the old “running” site. This was not that big of a deal at the time because we also had backups done from our webhosting company.

Also back in the beginning of December we noticed a problem with the website as it had gone done and we requested a server restart from the webhost with the backup files they had stored. All of which they accomplished fine. . The team left overseas as planned, including our main tech guy. We do have one part time tech guy, but anything more then basic maintenance was outside of his job scope and the instructional website is not his priority, in fact he had no training on it at all.

So sometime after New Years we get an email from a part time tech guy about the educational site being down with some error codes displaying. No problem we tell him just have our hosting company restart the server with the backup. No go. The only backups have all failed because of a Microsoft licensing issue according to our webhosts. We go back and forth for a week with us blaming them and them blaming us. In the end it really doesnt matter, what mattered was getting it back up.

So we decided to go and implement our plan of the website overhaul we had stated the year before. However our one main backup of the old files died with the hardrive and the other copies are scattered around on different computers with the only person not overseas that could deal with them, clueless on where they were and how to properly develop the new site. OUCH!

So Our Plan.

So our only plan of attack was to create the new site with our tech guy emailing our part time guy with the details and some Skyping when available. This created some difficulties to say the least. The site was live and being developed slowly a little every day. Things were missing and links were broken etc. But we are moving it forward.

So we apologize for any problems this has cause you, and thank you for being patient with us. As of today, 30 January 2012, we are about at 70%. Hopefully we will be complete by the time we all get back home. We should be back up no later the February 5th (hopefully).

Gold Party LLC