“Dealer” and “broker” get used interchangeably in this industry, but they’re not quite the same job. A dealer buys inventory outright — gold, silver, coins, scrap jewelry — and resells it, taking on the price risk themselves. A broker mostly arranges transactions between buyers and sellers, or between a client and a dealer, without necessarily holding the metal. Most people who search “how to become a gold broker” end up building a dealer business anyway, because that’s where the margin is. Either way, the setup steps overlap almost completely, so here’s the full path.
Step 1: Pick your niche before you pick anything else
“Precious metals dealer” covers several very different businesses, and the one you pick determines your licensing, your capital needs, and your supplier relationships:
- Bullion and coin dealing — buying and selling bars, rounds, and government-minted coins at or near spot price, where your margin comes from volume and small spreads.
- Scrap and jewelry buying — the “cash for gold” model, buying secondhand jewelry and chains for melt value and reselling to refiners.
- Brokering — connecting buyers and sellers or clients and dealers, often for a commission, without carrying significant inventory yourself.
Trying to do all three from day one usually means underfunding all of them. Pick the one that matches the capital and network you actually have.
Step 2: Set up the business itself
Before any licensing conversation, you need a real business entity — most dealers form an LLC or corporation rather than operating as a sole proprietor, partly for liability protection and partly because suppliers and licensing agencies expect it. From there:
- Get an EIN from the IRS
- Open a dedicated business bank account
- Get basic bookkeeping in place before your first transaction, not after
Skipping this step is the most common reason applications get delayed at the licensing stage — agencies want to see a registered business entity, not a person’s name on a form.
Step 3: Work out what you’re actually required to register for
This is where most first-time dealers get stuck, because there’s no single federal “precious metals dealer license.” What applies to you depends on volume and location:
- Federal: if you buy and sell more than $50,000 a year in covered precious metals, stones, or jewels, you’re a “dealer” under the Bank Secrecy Act and have to register with FinCEN, build a written anti-money-laundering program, and keep records that let you verify counterparties.
- State and local: most states require a dealer registration, secondhand dealer license, or pawnbroker license, and it’s usually administered locally — sometimes by a state agency, sometimes by your city police department or county sheriff, depending on where you are. The requirements are genuinely different state to state; Texas runs registration through its Office of Consumer Credit Commissioner, while California routes the same activity through local police and sheriff departments under its Secondhand Dealer and Pawnbroker statutes. Check your specific state and city before assuming either model applies to you.
- Bonding: nearly every jurisdiction that licenses dealers also requires a surety bond, typically in the $5,000–$25,000 range, to cover customers if you misrepresent an item or commit fraud.
Step 4: Line up working capital and a bond
Precious metals dealing is capital-intensive in a way a lot of new entrants underestimate. You need enough cash to:
- Buy inventory before you’ve sold it
- Cover your surety bond
- Absorb price swings between the day you buy and the day you sell, since spot prices move daily
Plan your starting capital around your niche — scrap buying needs less per transaction than holding bullion inventory, since melt-value purchases turn over faster than a bullion position you might sit on for weeks.
Step 5: Build supplier and wholesale relationships
You can’t run a dealership on retail purchases alone. You need a wholesale account with:
- Refiners — for scrap and jewelry buyers, a relationship with an accredited refiner is how melted-down material actually turns into cash, and refiner accreditation (the kind tracked by bodies like the London Bullion Market Association) is a reasonable proxy for who’s reputable.
- Mints and wholesale bullion distributors — for coin and bar inventory, so you’re not buying retail and reselling at a loss.
- Other dealers — a lot of day-to-day liquidity in this industry comes from dealer-to-dealer trading, not retail counters.
These relationships take longer to build than the paperwork does. Start reaching out to refiners and wholesalers while your license application is still pending, not after.
Step 6: Set up operations that survive an audit
Once you’re licensed, the ongoing obligations don’t stop:
- Recordkeeping — most jurisdictions require you to log the seller’s ID, a description of each item, and often a photo, for every transaction, so stolen goods can be traced.
- Security — a safe, insurance on inventory, and camera coverage aren’t optional extras; they’re what a licensing inspection and your insurer will both expect to see.
- Pricing discipline — decide how you price against live spot, and be consistent, since inconsistent pricing is the fastest way to lose repeat customers in a business built on trust.
Step 7: Build credibility in an industry that runs on trust
Licensing gets you legal. Trade association membership and a track record are what actually get you customers and supplier terms. The National Coin & Bullion Association (formerly the Industry Council for Tangible Assets) is the main trade group for coin, currency, and precious metals dealers in the US, and membership signals to both customers and suppliers that you’re operating inside industry norms, not outside them.
Common mistakes
- Registering federally but skipping the state or local layer, or the reverse — both apply, and they’re independent of each other.
- Underestimating working capital and running out of cash mid-inventory-cycle.
- Skipping the wholesale relationship-building until after licensing is done, which adds months to actually opening.
- Pricing off stale spot data. Precious metals prices move throughout the trading day; quoting off a number that’s hours old either costs you margin or costs you customers.
Getting licensed is a few weeks of paperwork. Building the supplier network, the capital cushion, and the reputation that make the license worth having is the part that actually takes time — start on all three at once rather than treating them as sequential steps.
Further reading on industry standards and compliance: National Coin & Bullion Association.