Why are premiums on eBay so high compared to PM dealers?

[09webbad]

I’ve noticed that newer varieties of gold and silver coins and bars go for more on eBay than brand new from PM dealers? To me this doesn’t make sense, shouldn’t it be the other way round?

A great example is the silver Britannia. Why pay £25-£28 for a 2018 1 oz when you can get a brand new 2020 from a PM dealer for £21 or less shipped? Seriously, what is the advantage to paying a greater premium on eBay over a trusted dealer?

[blindguy]

in the states ebay charges 10% to sell on ebay and paypal charges 4% for payments. even with this on ebay i sometimes find better deals then from the pm's dealers.. two weeks ago on ebay i bought on ebay silver .999 rounds shipped to my door for $15.87 a ounce.  far less than the pm dealers are charging.  jim

[09webbad]

Maybe it’s just a UK thing. If only I could buy $15.87 rounds shipped, they’re all over £20 shipped on eBay and less from dealers. 
What makes everything even more confusing is that in the UK, PM dealers have to charge 20% VAT included in the price! 

I think I’ll stick with buying from dealers and on this forum 😆

[blindguy]

i also buy a lot from auction houses in the states. just bought 6 2016 queens beast lion with the shipping for $44 each. in my state we have no taxes at all on pm's. you vat tax is not fair and should be done away with.  jim

[Pete]

1 hour ago, 09webbad said:

I’ve noticed that newer varieties of gold and silver coins and bars go for more on eBay than brand new from PM dealers? To me this doesn’t make sense, shouldn’t it be the other way round?

A great example is the silver Britannia. Why pay £25-£28 for a 2018 1 oz when you can get a brand new 2020 from a PM dealer for £21 or less shipped? Seriously, what is the advantage to paying a greater premium on eBay over a trusted dealer?

Often the new release of coins is priced very well and as they sell out then premiums do tend to rise.
Older coins with limited availability will rise because someone out there wants to buy a specific date.
Have a look as an example of the 2 oz Queens Beast series and compare the latest coins against the Lion and Griffin.
The Lion and Griffin were regular price when they were first on the market.

Another example is the Britannia dog privy 2018.
Available a year or so ago for around £22 each some sellers are asking nearly £100.
Nothing special at all about this coin only that no-one is selling so those who are can, chance their luck.

I am looking for some Mexican Libertads that are regular bullion but key dates like 1997, 1998 are impossible to find below £100 and some others like 2002 and 2005 are £50 each.
You can buy Libertads earlier and later years for under £20. All about the mintages and how many are appearing on the market.

Back to eBay - not all punters out there are aware of the dealers and sources we on the forum are very familiar with.
Part of the learning curve.

[RacerCool]

23 hours ago, blindguy said:

in the states ebay charges 10% to sell on ebay and paypal charges 4% for payments. even with this on ebay i sometimes find better deals then from the pm's dealers.. two weeks ago on ebay i bought on ebay silver .999 rounds shipped to my door for $15.87 a ounce.  far less than the pm dealers are charging.  jim

This exactly. The seller has to pay a lot in fees to sell on eBay and with PayPal. I sell on eBay and it's a struggle not charging too much but also trying to make something off it and not take a net loss.

[adamthetaller]

I'd assume it's partly fees and risk (eBay seem to go with the customer is always right philosophy) on the seller's side and partly the fact that people will pay the prices.

If people still fall for the 'chance to own a historic/limited edition etc..," newspaper ads they'll fall for overpriced eBay stuff... Heck, when I started out I got a couple of overpriced bits from there myself before finding this place!

[blindguy]

how does the govt in the U.K. treat the taxes on the sales on the forum? the seller advercise on the forum that he has gold or silver for sale. through the ad on the internet a buyer contacts the seller and buyes the pm's. do you have to pay taxes? i think you call it vat tax.

[Tattoedamat]

As the others have already said the amount the sellers have to pay in fees to eBay and Paypal al-amin the price has to be higher just to make any money.

And yes the average Joe public hasn't got a clue how much stuff is.

 

Jim we don't pay vat selling stuff on here but is we sold a massive amount and the HMRC found out, and it was taxable then yes we could get nailed for capital gains if was applicable.

@LawrenceChard could probably give a better insight as a bullion business seller

[Bimetallic]

18 hours ago, RacerCool said:

This exactly. The seller has to pay a lot in fees to sell on eBay and with PayPal. I sell on eBay and it's a struggle not charging too much but also trying to make something off it and not take a net loss.

That explains the cost side for sellers, but why do buyers pay those higher prices if established dealers are cheaper?

[StackerNoob]

9 minutes ago, Bimetallic said:

That explains the cost side for sellers, but why do buyers pay those higher prices if established dealers are cheaper?

Often buyers simply want one coin. Postage fees can be extortionate from some dealers so for single items it can be cheaper to go on ebay

[blindguy]

11 hours ago, Tattoedamat said:

As the others have already said the amount the sellers have to pay in fees to eBay and Paypal al-amin the price has to be higher just to make any money.

And yes the average Joe public hasn't got a clue how much stuff is.

 

Jim we don't pay vat selling stuff on here but is we sold a massive amount and the HMRC found out, and it was taxable then yes we could get nailed for capital gains if was applicable.

@LawrenceChard could probably give a better insight as a bullion business seller

the U.K.'s tax system seem unfair to collectors and stackers to me. if a govt wants their people to save real money for a rainy day do not tax them to death.  if any of you from the U.K. get sick of paying taxes you would be welcome to move to south dakota. here no taxes on pm's, no state taxes and the cost of living here is cheap.  rapid city just got its 12 case of the virus but i do not think that is bad for a area of 200,000 people.  so welcome to south dakota!!   jim

[Tattoedamat]

That's why the rich offshore their money

[LawrenceChard]

11 hours ago, Tattoedamat said:

As the others have already said the amount the sellers have to pay in fees to eBay and Paypal al-amin the price has to be higher just to make any money.

And yes the average Joe public hasn't got a clue how much stuff is.

Jim we don't pay vat selling stuff on here but is we sold a massive amount and the HMRC found out, and it was taxable then yes we could get nailed for capital gains if was applicable.

@LawrenceChard could probably give a better insight as a bullion business seller

Because major dealers can buy directly from mints, do so in volume, and because it is a competitive business, they are bound to have lower prices than ebay sellers, at least for new products. 

Anyone who wants to sell them on ebay needs to source them from the major dealers, then has to pay ebay (or Amazon) and PayPal commissions, and expect to make a profit. Therefore prices for new products need to be at least 20% higher than major dealer prices. There is no mystery there. 

Where there is a mystery is why people choose to pay these higher prices on ebay or Amazon. There are some reasons which partially explain why. First ebay gained an early reputation for being a cheap  place to buy and sell. In it early days, this was probably mainly true, but I believe there were initially no selling fees. Similarly, Amazon was the cheapest place to buy most books in its early days. 

Both companies have advertising and P.R. campaigns, probably best called propaganda which try to maintain what have become illusions. Part of this propaganda is "free shipping". 

The second main reason is human gullibility, stupidity, ignorance, because many people simply believe that they heard many years ago, or read in some newspaper, blog, or other social media, without engaging the grey matter between their ears. 

By the way, if you only ever look at the first 2 or 3 results on Google, you are probably also selling your soul to the highest AdWords bidder, and paying too much. 

When it comes to secondary market products, then things change slightly, because the major bullion dealers no longer have any particular price advantage, and the market is more fragmented, and more local. Most "small" dealers have websites, and many will buy and sell bullion and collectable coins online or instore, without "platform" fees.  

I believe ebay is still a useful platform for private sellers, particularly with more specialised, unusual, or rare items, and of course there are other trading forums such as TSF. 

Tax? All governments need to raise revenue. Naturally, some choose different ways to do it. North America has sales tax, Europe has Value Added Tax. Most of us don't like paying them, but they are better than the other great certainty, death! 

On that cheerful note... 

[RacerCool]

16 hours ago, Bimetallic said:

That explains the cost side for sellers, but why do buyers pay those higher prices if established dealers are cheaper?

Maybe because the established dealers charge higher prices because buyers will still buy.

Makes sense to me, anyway.

[Bimetallic]

20 hours ago, LawrenceChard said:

Tax? All governments need to raise revenue. Naturally, some choose different ways to do it. North America has sales tax, Europe has Value Added Tax. Most of us don't like paying them, but they are better than the other great certainty, death! 

On that cheerful note... 

@LawrenceChard Yes, all governments need to raise revenue, but it's bad economics, bad policy design, to tax investment. It's also bad economics to tax money equivalents. For both of these reasons it's bad policy to tax precious metals. Your government seems at least dimly aware of this since they exempt some bullion. They should exempt all bullion, like Australia, New Zealand, Singapore, and most American states do, for example. I'm surprised that you have such an obedient perspective on taxes, and that you haven't lobbied your parliament to fully exempt investment precious metals.

[LawrenceChard]

22 hours ago, blindguy said:

the U.K.'s tax system seem unfair to collectors and stackers to me. if a govt wants their people to save real money for a rainy day do not tax them to death.  if any of you from the U.K. get sick of paying taxes you would be welcome to move to south dakota. here no taxes on pm's, no state taxes and the cost of living here is cheap.  rapid city just got its 12 case of the virus but i do not think that is bad for a area of 200,000 people.  so welcome to south dakota!!   jim

The topic heading was about premiums on ebay compared with PM dealers, so I directed my answer to that, and only briefly touched on your point about tax.

I think the U.S.A. started something back in 1933, with Executive Order 6102, which was not repealed until 1974. This was not about tax on gold, but a prohibition on owning it, which is more draconian. At least with taxation, you get some element of choice.

The U.K. did something similar in 1947, with the Exchange Control Act 1947, extended by the Exchange Control (Gold Coins Exemption) Order, 1966. This was rescinded in 1971.

You could blame the French for VAT, or TVA:

"VAT was originally a French idea, started in the 1950s".

"It is hugely efficient tax, it's a great tax from a revenue raising exercise. It has swept the world. More than 130 countries have now adopted it from Belgium to Burkina Faso. One of the few holding out is America, but academics are talking about Obama introducing it over there."

The UK joined the EU in 1973, and had to introduce VAT as a condition of membership. Initially, this included VAT on gold.

A believe that some European countries had different tax rules and rates for gold coins, which is partly why they harmonised matters starting from 1st January 2000.

I agree with your point about tax on investments. Most taxes fall into one of two broad classes:

(1) Acquisition or Income.

(2) Consumption or Purchase.

VAT is intended to be a tax on consumers buying consumer goods, in which case, it should not include investment products.

I would be delighted to see the UK, and possibly the EU, extending the Investment Gold Scheme to Investment Precious Metals, including Investment silver, Investment Platinum, and Investment Palladium.

I am sure there is a TSF topic about VAT on silver, etc.

Perhaps TSF members should start lobbying their MPs about it, and maybe a petition?

 

[LawrenceChard]

On 04/05/2020 at 13:16, Bimetallic said:

That explains the cost side for sellers, but why do buyers pay those higher prices if established dealers are cheaper?

As I already said:

The second main reason is human gullibility, stupidity, ignorance, because many people simply believe that they heard many years ago, or read in some newspaper, blog, or other social media, without engaging the grey matter between their ears. 
Or, you try asking some of them!

[blindguy]

I think you need to take a closer look at ebay. Last night two 2 ounce .999 fine silver rounds, so 4 troy ounces of .999 fine silver sold for $63.09 with free shipping. If you dismiss ebay as a place not to shop the only loser is you as you will miss out on some deals. And as far as the bad stories I hear about ebay I have bad stories about buy from some major bullion dealers also.. So if you do not buy on ebay, great more deals for me!!!   Jim

[Goldhooked]

On 07/05/2020 at 15:44, blindguy said:

I think you need to take a closer look at ebay. Last night two 2 ounce .999 fine silver rounds, so 4 troy ounces of .999 fine silver sold for $63.09 with free shipping. If you dismiss ebay as a place not to shop the only loser is you as you will miss out on some deals. And as far as the bad stories I hear about ebay I have bad stories about buy from some major bullion dealers also.. So if you do not buy on ebay, great more deals for me!!!   Jim

I agree.  I have found some cracking deals and some of my cheapest silver has come from eBay.  You’ll never find a continuous supply of large volumes for cheap (although I did grab just under 7kg of 0.500 half-crowns for well under spot price once!) but with some spare time to fill there are usually some hidden gems to be found.

[LawrenceChard]

On 07/05/2020 at 15:44, blindguy said:

If you dismiss ebay as a place not to shop

I certainly don't dismiss ebay as a place not to shop!