The other day, I gave you my crash course on buying silver. And I promised to follow up on that, with some tips on how to bid at online auctions. That's what I want to show you today. It's a great way to pick up silver at bargain prices.
High streets across the country are suffering a savage blow as more and more trade moves online. And it's hardly surprising... in the virtual marketplace competition is cut-throat. This is where savvy punters go for the best prices. Retailers might feel the pain, but if we're smart about it, we stand to gain.
And there's nowhere like online auction house eBay for bargains. If you've been wary of buying stuff this way, then I want to use today's Right Side to make you feel like a seasoned pro.
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Bear in mind, I'm not here to promote eBay over anyone else. But it's the most popular auction site, it's easy to use and it's what I tend to use when I'm picking up cheap silver.
Before we start, the first thing to do is open up eBay and find some things to look at. Go to All Categories', then Antiques' and drill down to Silver', then Solid silver'. Find something you like and click on the picture of the item. Let's get cracking
Important question: Do you trust the seller?
If you're careful, online auctions can offer protections that you'd never get from say an antique dealer in the real world'. You just need to choose your dealer wisely.
Once you've found an item of interest and gone into the details, look at the right hand panel and you'll see the seller's alias and rating. Click on the name. See how many deals they've done and when they first started trading... two, or three years and more than 200, or 300 trades will do.
If you're happy with that, move on to see other people's comments about the seller...
Look at the percentage of positive feedback. 98% to 100% is what we're looking for. In the Latest Feedback' box, click on see all'. You can view the actual feedback from previous customers. Select Feedback as a seller' (as we're only interested in what he or she is like as a seller). If other people have bought similar stuff and have been happy then chances are you'll be happy too.
Ever tried asking customers off the street if they trust the local merchant? Probably not. But that's basically what you're doing here by seeing what people are saying.
And don't take on all the risk yourself
As I said, I'm not here to promote specific services for anyone. But it strikes me that using PayPal on eBay is the easiest and most secure way of doing business. When it comes to paying, the best thing to do is set up a PayPal account. It takes payments directly from your debit, or credit card or straight from your bank account when you link to it.
This way, you've got certain protections like if the product never arrives (we all know what our postal service can be like!), or if the item was mis-described at the auction. This backstop certainly makes me feel a lot more comfortable. And touch wood, I've never had to make a claim. If you encounter a problem the seller will normally deal with it promptly so he keeps his rating clean there's no need to go to PayPal arbitration'.
PayPal is owned by eBay and I guess that's why it fits so well with the system. But bear in mind, if you use it then you sacrifice the normal protections from the debit/credit card. And because it operates out of Luxembourg, you can't pursue claims in UK courts. But frankly, the biggest problems you're likely to encounter on eBay are covered... that's why I prefer to use it.
How I like to go about my bidding
Because I know the maximum price I'm willing to pay on any item (I've already worked out what the silver is worth), I don't need to get involved with any fancy last minute swoops' or snipes'. That's where bidders hold back their bid until the dying seconds of the auction and hope to snatch the deal.
I put in my maximum bid.' Let's say it's a silver serving spoon, and I reckon it's worth £115 (see my silver guide on how to calculate that). So I put in a bid just over a hundred quid. Now that doesn't mean I'll have to pay £100. It just means that the system will automatically outbid anyone else until it reaches £100 (and I'm out).
And if I lose, that's okay. One of the most common mistakes in a real-world' auction is for the bidder to get carried away once the price goes over their target. This way you avoid the problem.
Always put in an odd number, something like £103.04 it means that if someone else has bid a straight £103, you'll be just ahead of them.
Useful tip: Leaving your bidding until the last minute and thus playing your cards close to the chest ties up too much time and misses another nuance...
Most bids start at 99p (eBay encourages the seller to start low). Let's say the bid for something worth £100 stays around £10 for ages as everyone plays the game' and holds off bidding. All that time countless new buyers are registering interest on the item - they hope to get a last minute bargain.
But if you help bid the price up early (remember there has to be someone like-minded in the running to bid the price up with you) to say £70, it'll keep the item off the radar of other potential bidders. They'll look elsewhere.
It really isn't a dumb move to put your bid in early. Certainly not if you know what you're happy to pay and it means you can dissuade other punters from taking a shine to your item.
Take a swipe at inexperienced sellers
Quite often silver sold online comes from sellers that don't know what they're doing. Someone's come across some bits they don't want and listed them on eBay. They expect their items to find the right value in the marketplace.
But if they're not listed properly, they won't get the right price.
Often sellers don't put in the weight, or the size of the item, or they don't show a photo of the hallmarks. These are the classic pitfalls for sellers. Most buyers just turn off.
But as you get better at this game, you learn how to estimate things. And as a silver weight' buyer you don't care too much about all the hallmarks. All you need to know is that it's described as sterling silver (remember, you've got protection if the seller has mis-described the item).
Last week I bought a Mappin & Webb silver fruit pedestal for half its going rate. Why? Because the fool selling it barely gave any details about the item no size and no weight! As a result I hardly had any competition on the bidding. I estimated a minimum value (given the basic description) and won the auction.
This happens all the time on things like unwanted christening sets (usually a mixture of spoon, fork, napkin ring and beaker) and the like. I know roughly what they weigh and I put in a cheeky bid. More often than not, there is a great bargain to be had.
One thing I like to do is to look at recently listed items' in my category and find any listing that isn't fully described. Immediately I put in a low bid once the bidding has started the seller can't edit the wording on his listing without making it look clumsy.
Still tentative? Then start low...
If you're still not convinced, then fair enough. But I hope this has given you some pointers on how to go about things with online auctions.
Everyone develops their own way of doing things on eBay and other similar auction sites and this is only my way. Perhaps you've got some better ideas. If so, please let us know below.
If you're at all concerned, then why not start off bidding on a couple of small items? Learn the ropes, so to speak.
Just keep in mind the ultimate goal. That is to buy silver at less than its intrinsic worth and avoid having to pay VAT on top.
This article is taken from the free investment email The Right side. Sign up to The Right Side here.
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Bengt graduated from Reading University in 1994 and followed up with a master's degree in business economics.
He started stock market investing at the age of 13, and this eventually led to a job in the City of London in 1995. He started on a bond desk at Cantor Fitzgerald and ended up running a desk at stockbroker's Cazenove.
Bengt left the City in 2000 to start up his own import and beauty products business which he still runs today.
Bengt also writes our free email, The Right Side, an aid for free-thinkers on how to make money across financial markets.
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