Recycling Profits on Gold and Silver
Source: CNN, Catherine Clifford (5/9/11)
"Despite razor-thin profit margins, PM recycling businesses flourish."
For Don Kilgore, the road to riches is paved in gold and a little silver, too.
The co-owner of Dallas-based American Recycling Associates, which recycles precious metals, has seen his profits swell because of surging gold and silver prices in the last few years.
Even though gold and silver prices have fluctuated recently, the company is still doing well, said Kilgore, adding, "we are swamped every day."
In the last three years, Kilgore has gone to 14 employees from three in just three years, renovated an existing lab and completed construction on a second one last week.
How the company makes money: Each year, ARA buys tons of scrap gold and silver from jewelers, pawn brokers or "cash-for-gold" operations.
The company pays between 98% or 99% of the market value for the jewelry, processes it, and then resells the pure gold and silver at market prices.
The profit margins are razor thin, so ARA must process huge amounts of precious metals. "The amount that we deal with is pretty massive, which is why we do not deal with the public," said Kilgore.
Once the company gets the jewelry, it recycles or "refines" it in its labs. The precious metals are melted down; stones and impurities are removed, and pure gold and silver bars are created.
Those bars are then sold to commodity firms, jewelry manufacturers and even the government at current market prices.
ARA also makes money keeping any extra silver that it finds when processing gold jewelry. Most gold jewelry has a little silver in it, explains Kilgore, adding that the company keeps that silver as a part of its fee.
Kilgore added that he also expects his company to do well going forward. "I have seen more silver come in now more than ever," said Kilgore.