Buying Gold and Silver on eBay Safely - Part 3 - Are You Paying Too Much?

Have you been thinking about buying gold and silver on eBay?

Learn how to avoid the common pitfalls of buying gold and silver through auction sites in this 3 part series of articles. In part 1 you learned how to pick out scams from the listing details. In part 2 you learned how to determine the weight and purity of gold and silver.

In Part 3 you will learn how to determine the market price of an auction item so you don't over bid.

It is vital that you know the market price of what you are buying. Even though the TV announces the price of gold and silver - you will not be able to purchase it at that price. The quoted price is typically the "buy" price - what a dealer may offer you to purchase it. The real selling price may be 10-15% higher than the buying price.

This is known as the buy/sell spread and it depends on several things. The larger the size of the bar or coin being sold, the smaller the spread. If you buy more of the same item - the spread is also smaller. Basically, the more volume you buy at one time the less you will pay per ounce.

Before you bid, make sure you find out the price of gold and silver at your local bullion dealer. You will want to know the price of the most common sizes and quantities you are interested in bidding on. For example, find out the prices for a 1 ounce bar, a 1 ounce Gold Eagle, as well as a variety of sizes of gold bars in 20, 10, 5, 2.5 and 1 gram weights. For silver, get prices for the U.S. Silver Eagle and silver bars in 20, 10, 5, and 1 ounce weights. With these prices in hand, you will know whether a bid is a good deal or not.

Many sellers start an auction for authentic gold and silver at a dollar to entice early bidding. The bids quickly reach market value, however. These sellers hope that a bidding war will take place and the lucky winner will pay more than market price for their item.

Make sure you consider the cost of shipping when deciding your maximum bid.

If you are buying gold and silver on eBay as an investment - then I recommend you only bid on the larger quantities of gold and silver. If you are bidding on less then 5 grams of gold or 5 ounces of silver then the shipping fees may drive your final cost way beyond market value.

For example, if you purchase 1 grain of gold for $3 which has a shipping cost of $7, the total cost is $10.00. The market value of a grain of gold is about $2.50 (based on a melt value at $1200 per ounce). However, when you add in shipping costs, you just paid 4 times the market value!

Stick to well known bullion products when searching through auction listings.

For coins, this would include the U.S. Gold or Silver Eagle, South African Krugerrand, Canadian Maple Leaf, etc. Select bullion bars from well known refineries (for example, Johnson Matthey, Silver Towne, P.A.M.P. Suisse. This is important as this makes verifying the value of the item easier. If you want to liquidate your precious metals at a later date - your items will be easier to sell as well.

Verify the reputation and feedback of the seller.

If anything is unclear about the auction, contact the seller before you bid. Check for references, their physical address, and the types of feedback comments they receive. Pay close attention to the item condition, its purity, weight and the cost to ship the item to your location. If you are spending a lot of money - consider using an escrow service.

Protect your self when buying gold and silver on eBay by arming yourself with the right information. Know who you are buying from and what you are buying. Avoid being duped by vague or misleading titles and descriptions. Be prepared to walk away from an auction that will cost you more than the price you can get from your local dealer. There are deals out there - you just have to bid carefully.

Discover why you should invest in gold and silver today. How high can gold and silver prices go? Find out more about buying gold and silver at http://BuyGoldAndSilverToday.com.