Is your portfolio diversified against market risk and inflation? Expert investors state that everyone should have at least 5% to 10% of their portfolio value invested in alternative assets such as precious metals. Gold bullion is a good option that you can purchase from regulated and unregulated marketplaces and dealers online.
However, the big, regulated dealers stick to a pricing model based on the spot price of gold, plus a small commission. If you look on private marketplaces like eBay and Craigslist, you'll probably find plenty of people selling gold coins, bars, and jewelry.
Some of the listings might even be below the spot gold price. If you see a gold bar selling for 10% less on eBay than with a bullion dealer, it's tempting to take the seller up on their offer.
However, is buying gold on eBay a good idea? What are the risks involved with using this marketplace to purchase your precious metals? This article explains everything you need to know about buying gold on eBay.
In this guide
There are pitfalls
So, should you buy gold on eBay? The answer is a resounding no unless you're willing to risk losing your money. While there are genuine dealers on eBay selling gold, it's a risky transaction. Verified sellers might have more credibility than unregistered sellers, but you're still taking a big risk from ordering through eBay.
You have no way of verifying the legitimacy of the gold bar or coin you're buying. As a result, you could end up purchasing fake bullion. Some fakes are so good that the buyer might not realize it on purchase, especially if they have no experience working with gold. They may only discover the fraud decades later when they want to sell the bullion.
Not only are you running the risk of dealing with a scammer, but you're also going to be giving the seller your personal delivery information. In essence, you're identifying yourself as a gold buyer.
While they may offer a clean deal online, you have no idea of the dealer's reputation or what their customer base thinks of the company. People selling gold on eBay have no obligation to store your private information; they could sell it to criminal gangs or other marketing firms.
What fraud protection does eBay provide?
While some marketplaces don't assume risk in the transactions occurring on their platform, eBay at least offers some protection on your purchase. If you buy a gold bar and the seller scams you, eBay offers you a money-back guarantee, refunding you for your loss.
If you receive a fake gold coin or bar, you can report the transaction to eBay and receive your money back. That's a relief for people that want to purchase through the platform. However, there's always the issue of receiving fake coins or bars, and the buyer might not realize the scam till years later.
Instead of purchasing your gold bullion through eBay, it's a sensible strategy to use an alternative instead. Look for dealers offering a secure and legitimate deal. Rather than buying gold on eBay, here are our top alternatives for your investment.
Reputable bullion dealers
Purchasing your precious metals through a registered, reputable gold dealer is the best option. These dealers don't sell your information to third parties, and they offer market-demand pricing models.
Essentially, you'll pay the spot gold price plus a 1% to 3% commission for the dealer processing the transaction. The only issue with this model is that you have to store the gold yourself. You'll have to keep it at home or open a private vault or safety deposit box for your bullion collection.
Reputable dealers give you a clean, safe deal, but the costs and risks associated with the storage of the yellow metal might detract from the lure of owning gold.
Vaulted is a fintech offering new investors to the gold market the solution they need for the sale, storage, and delivery of their precious metals. The company allows average investors the opportunity to purchase gold online and have the company store it for them.
Best of all, Vaulted offers fractional gold purchases.
You don't have to buy a gold bar; you can purchase a tenth of the bar and keep making payments until you pay off the entire piece. Vaulted allows you to set up automatic monthly payments from your bank account. When you reach a 5-gram threshold on your account, you can request delivery of your gold or have Vaulted store it for you for a small fee.
OWNx is a similar platform for investing in precious metals like gold, silver, platinum, and others.
An ETF is a financial instrument giving the investor exposure to the gold price. However, you don't ever take physical delivery of the gold. If the market crashes, you lose money in your trading account, and you never get any gold. Popular gold ETFs include SPDR Gold Trust ETF and iShares Gold Trust ETF.
Still want to buy on eBay?
If you're dead-set on purchasing your gold through eBay, we recommend you follow these tips to complete as safe a transaction as possible.
Check the seller's history thoroughly
Review the seller's history and profile on the platform. eBay lets you check on the seller's history of sales, what people say about dealing with the seller, and their average satisfaction and review rating. Only make purchases from sellers that have a solid track record of performance.
Message them and judge for yourself
You can message the seller and ask them why you should buy from them. The seller should send you back a list of the benefits of using their services, and they should make sense.
Use a credit card with purchase protection insurance
When making your purchase, do it with a credit card that offers you purchase insurance and fraud protection. However, eBay does offer a money-back guarantee covering your purchase.
Overall, purchasing your gold through eBay isn't a good idea. You are better off completing a clean, safe transaction using a traditional dealer or an online company like Vaulted for your precious metals investment.