Sales of gold up on eBay amid stock market turmoil
SAN FRANCISCO (AP) — For gold sellers on eBay, the recent stock market turmoil has been a boon for business.
Gold and silver sales on eBay had already been rising steadily over the past several years — so much so that eBay Inc. created a special area in May to make it easier for buyers to find sellers.
Now, activity on that part of the site, the Bullion Center, is intensifying as consumers unnerved by the economic uncertainty flock to gold in hopes it will be a stable investment.
"When people are coming down to the question, 'Do they want to have cash in the bank or gold in their hands?' the answer is they'd rather have gold or silver," said Jacob Chandler, CEO of Great Southern Coins, the largest seller of precious metals on eBay.
The stock market just ended one of its most volatile weeks in years, prompted in part by a downgrade in the nation's credit rating and fears of another recession. The Dow Jones industrial average fell nearly 6 percent on Monday, its worst one-day drop since December 2008. Then the index rose Tuesday, fell Wednesday and rose Thursday and Friday to end the week 2 percent lower than a week ago.
Through most of last week, the average selling price increased for gold bullion — bars or coins stamped with their weight and level of purity.
According to the most recent data available from eBay, sales of 1-ounce gold American Eagle coins and 1-ounce gold Pamp Suisse bars rose steadily from Aug. 5 to Wednesday, before dipping slightly on Thursday.
On Aug. 5, when Standard & Poor's lowered the nation's credit rating, American Eagle coins were selling for an average of $1,800 among eBay's featured sellers. The average price of the coins, produced by the U.S. Mint, rose more than 8 percent to $1,952 on Wednesday, before dropping to $1,915 on Thursday.
The Pamp Suisse brand of gold bars sold for an average of $1,787 on Aug. 5 and climbed nearly 8 percent to $1,927 by Wednesday. On Thursday, the bars dropped slightly to $1,890.
Even before last week's market turbulence, investors were cautious because economic signals in the U.S. and overseas pointed toward trouble.
The Dow index fell 6 percent in the week ending Aug. 6. That week, the number of gold buyers on eBay rose 11 percent compared with the year's weekly average. The number of gold sellers rose 14 percent. EBay would not provide the total number of buyers and sellers.
"With all the turmoil in the markets, this is seen as a way to diversify," said Anthony Delvecchio, eBay's vice president of business management and strategy for eBay's North America business.
EBay, which is based in San Jose, Calif., does not impose minimum purchase amounts for bullion. Sellers offer gold both through auctions and "Buy It Now" fixed-price sales.
The increased popularity of gold on eBay echoes what's happening in the broader gold market, where prices have spiked during the past two years.
Gold traded at about $900 per ounce in the summer of 2008, before the financial crisis unfolded that year. It passed $1,600 in late May and briefly rose above $1,800 for the first time on Wednesday before pulling back to $1,784. On Friday, gold fell to $1,740.60 per ounce, still nearly twice the summer 2008 prices.
Great Southern Coins has benefited from this uptick. Chandler said the company is selling more gold lately, and its silver sales remain strong, too. Chandler estimated his business has nearly quadrupled in the past 45 days, and he said it appeared to be up about five or six times during the past week, with most of this growth coming from sales on eBay.
Daniel Hirsch, a New York-based statistician who recently purchased more than a dozen gold coins on eBay from Great Southern Coins, said he started buying gold less than a year ago in an effort to expand his investment portfolio.
"It's kind of a safe haven and a hedge against low interest rates," he said.