NEW YORK (CNNMoney) -- 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."

Gold and silver prices, which closed Tuesday at $1,540.40 an ounce and $42.59an ounce have declined in the last week.

Nevertheless, American Recycling Associates (ARA) has still been making a mint. In the last three years, Kilgore has gone to 14 employees from three in just 3 years, renovated an existing lab and completed construction on a second one last week.

His good fortune is not surprising. The entire precious metals industry -- which includes miners, recyclers, refiners and smelters -- is benefiting as gold and silver values soar, said Carlos Sanchez, a precious metals analyst at CPM Group.

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.Dan Zanes: King of 'Kindie' rock



Bye bifocals! New specs change focus



Making buildings safer with earthquake shock absorbers



Gas prices hit smaller companies

More Business News