Gold Investing - Tips On Buying Gold On eBay

Reuters recently published a blog entry titled "How Americans buy gold and precious metals on eBay". In this short entry it was revealed eBay’s gold bullion sales have jumped more than 60% from 2007 through 2010 with “almost half of the silver and gold buyers in the first quarter of 2011 never purchased these items on eBay before.” You can find the article here.

This comes as no great surprise to me as I have tracked activity on eBay for both gold and silver auctions for some time and even included some "ending soon" auctions on both my Gold Investing and Silver Investing web site pages. Only one fact surprised me in that they stated "There are two silver buyers for every gold buyer because silver is so much cheaper." I would have guessed a 5 to 1 ratio or even higher of silver to gold.

I have purchased silver on eBay in the past but never gold. There are two warnings I would give anyone before bidding on an eBay gold or silver auction:

1. It is important to watch the premiums you will be paying before bidding on a coin or lot. The Reuters blog entry mentions a 9% premium over spot gold for a Gold American Eagle. I would shop around before paying a $143.10 premium for that popular coin. To be a smart shopper, you must know the spot gold price before bidding.

2. The blog entry also mentions the potential purchase price of a coin from a "top-rated seller". There are many, many auctions initiated by sellers that are NOT top-rated sellers. So how do you increase your odds of making a safe bid with a reputable seller? Here is what I would look for...

In the upper right-hand corner of each auction page is the seller's basic statistics area that identifies the seller's eBay name (if they are a top-rated seller, it will display that too), the number of transactions (with feedback) and the positive feedback percentage. To see what I'm talking about, go to Gold American Eagle, scroll down to the eBay auctions and click on any auction. If Top-rated seller is not displayed, I would look for several hundred transactions with 100% positive feedback. I would also try to deal only with sellers in my own country. Just keep in mind that only you can decide if bidding on an item is right for you. I take no responsibility for whatever gold purchases you successfully bid on.

For your information, I don't use eBay much for gold or silver purchases. My personal preference is to use: 1) a smaller, local dealer for small purchases; 2) a large, reputable regional or nationwide dealer for larger and/or riskier purchases; 3) eBay auctions if a good deal or "odd" coin pops up that I want; and 4) TV coin show offerings -- in that order.

U.S. Mint totals for July

Here are the final July 2011 and year-to-date totals
for Gold American Eagles:

one-ounce gold eagles - 61,500, year-to-date 569,000;
half-ounce gold eagles - 3,000, year-to-date 58,000;
quarter-ounce gold eagles - 0, year-to-date 64,000;
tenth-ounce gold eagles - 15,000, year-to-date 265,000.

July final number for Gold Buffaloes is 12,000 (YTD - 91,500) and Silver Eagles closed out at 2,968,000 (YTD 25,271,500). With Silver Eagles averaging just over 3,600,000 per month, we could see the 2011 total top 40,000,000 - as long as the silver planchets (blanks) remain available .

Thanks for reading.