How to Safely Buy Gold Coins on eBay July 04 2015
With the price of gold at a five-year low, gold coins have become a very attractive investment opportunity for many collectors. Any coin shop or bullion shop will have a selection of gold, but most of their coins will be priced at a substantial premium over the precious metal melt value. For the absolute lowest prices on gold and silver coins, a collector's best bet is eBay.
To the uninitiated, eBay can be a scary place. Counterfeit coins are a very large and real risk, especially when it comes to high value gold. An inexperienced shopper can easily end up buying a worthless counterfeit coin produced in China or Eastern Europe. It pays to be cautious when shopping for any type of coins on eBay, and doubly so when you're looking for world or U.S. gold coins. In this article, we're going to share some helpful tips on how to avoid getting burned when buying gold coins on eBay.
Don't buy raw coins unless you know what you're doing
The three coins in the picture on the left are all counterfeits. Our first rule may sound harsh, but it's true - if you can't recognize common counterfeit design flaws (AKA "diagnostics") on the type of coin that you're shopping for, you have no business buying raw coins. By "raw" coins, I mean coins not graded and slabbed by a third-party coin grading service like PCGS or NGC. Raw coins have no guarantee of authenticity and beyond the seller's say-so, and the grading is left up to the buyer's judgment. Buying a coin that has been slabbed by PCGS or NGC (the two top-tier grading services) gives you a guarantee that the coin is genuine and provides you with an expert assessment of the coin's grade. You should easily be able to find graded coins for all of the popular U.S. gold series - for ancient and foreign gold coins, your options may be slightly more limited. Slabbed coins tend to be slightly more expensive, but the peace of mind that third-party authentication provides is more than worth the added cost. **One note - make sure to check the slab certification number on the NGC or PCGS website to confirm it is a valid slab. Counterfeiters have recently taken to creating slabs along with the coins.
Now, there are some exceptions. You are generally safe in buying raw classic and modern gold coins from the eBay mega-dealers like APMEX, silvertowne. Those dealers do an enormous amount of business in American Gold Eagles and other gold bullion coins, where the time/cost of sending in a coin to get graded and authenticated is not the worth the time or effort. These dealers have two advantages for customers: a) they are large and established businesses (as opposed to small, fly-by-night dealers), with a vested interest in maintaining their longterm reputation; and b) they thoroughly inspect all the inventory they buy to identify counterfeits, prior to selling the coins to their customers. And that leads us to the next important rule:
Buy from reputable sellers
It's important to remember that eBay is not a single entity, but it is instead comprised of thousands of individual sellers, each with their own set of morals and ethics. Check feedback score before bidding on a coin. As a baseline, aim for sellers with feedback scores in the thousands and with lots of coin listings - these are the types of established coin dealers who have more of a reputation to uphold. Target sellers with positive feedback percentages as close to 100% as possible - anything lower than 99.5% for a high-volume seller is a bad sign. If you're on the edge about a seller, read through the negative feedback to understand the complaints that other customers have had. While the seller feedback score does have its limitations, in general it is a good indicator of a sellers' trustworthiness. Better to pay slightly more for the coin from a seller with 10,000 feedback than the cheaper coin from a seller with 10 feedback. If you can, try to buy from sellers with a PNG logo in the search result for their coin. Those are dealers that belong to the Professional Numismatists Guild, which enforces a strict code of ethics on its dealer members.
A few more tips for those who still want to buy raw gold coins...
When you see a raw gold coin going for less than spot with only a couple of hours left to go until the auction ends, our rule about avoiding raw coins might go out the window. But if we can't dissuade you from buying unslabbed coins on eBay, here at least are a few more words of advice to steer you in the right direction. Avoid raw Indian head quarter eagles, Indian head half eagles, and gold dollars - these are the three most heavily counterfeited series of classic gold coins. If you are not already a collector of these series, you will not be able to identify the key diagnostics to identify counterfeits. (Also, a large percentage of raw gold dollars on eBay are problem coins - either polished, cleaned, or removed from jewelry). All of the other series of U.S. gold are counterfeited as well, but not to the extent of those three. Weigh the coin after you buy it. If it's not within 0.1g of the mint standard (check the Red Book), open an item dispute and return the coin immediately. Even heavily circulated coins should still fall within 0.1g of the minted weight - the metal mass loss from circulation is less than you might expect.
To end this article on a happier note, after all the doom-and-gloom, here's a pic of a beautiful Saint-Gaudens double eagle!