Wednesday, August 10, 2011

Silver Investing - Silver Price Holding Steady While Gold Flying High

I don't understand how the spot silver price can be stuck in such a narrow range while gold is charging full speed ahead - making new high after new high. Silver prices in the last 30 days ranged from a high of $42.27 to a low of $34. 77. But in the last week, silver has stayed in the $37 to $39 range while gold has charged ahead with record setting highs. Something is going on behind the scenes which is not meant to be disclosed to or understood by those who follow the price of silver.

On the positive side this represents a terrific buying opportunity if you believe silver is going to meet and exceed the $50 per ounce mark. If you are one to wander over to eBay and check on silver auctions with the intent to bid, I have some tips for you. I first posted these tips on my gold blog but will repeat them here only tailored to silver.

Tips On Buying Silver 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.

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 21% premium over spot silver for a Silver American Eagle. I would shop around for other silver coins or bars to invest in with lower premiums since the popular Silver Eagle will command among the highest premiums of any silver bullion coin. To be a smart shopper, you absolutely should know the spot silver 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 Peace Silver Dollar, 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 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; and 3) eBay auctions if a good deal or "odd" coin pops up that I want -- in that order.

Thanks for reading. I hope you found this information useful.