Update: EBay Bucks is effectively defunct at the current time.
Let me tell you a story that every hard asset investor should love, a story of discounted precious metals and buying bullion at spot.
EBay recently sent me a marketing email alerting me to a 10% eBay Bucks promotion they were running over the next couple of days.
What is eBay Bucks? It is a rewards program that rebates a percentage of any eligible eBay purchase. EBay Bucks accrue all quarter long and are then paid out as a voucher that can be used for any additional eBay purchases after the end of the quarter.
So for example, rewards accumulated in July, August and September would be paid out in early October. These vouchers are only good for 30 days after they are issued, so you need to be fairly quick about using them. Any unused amount will expire after 30 days.
Under normal circumstances eBay Bucks accrue at a 1% rate, meaning that for every $100 in purchases, you will receive $1 in eBay Bucks. But every so often the e-commerce platform announces promotional periods where rewards accrue at 8%, 10% or even (very rarely) 15%. These supercharged rewards can be very lucrative if you are shopping for precious metals, antiques or other tangible assets.
After receiving my 10% eBay Bucks notice, I immediately went on the prowl looking for cheap gold or silver bullion to add to my cart.
In my case, I decided to buy a roll of pre-1965, U.S. silver quarters that was listed for $111.75. Let’s walk through the economics of my acquisition together.
The spot price of silver at the time of my purchase was $14.36 a troy ounce. Each $10 face value roll of junk silver quarters contains about 7.15 troy ounces of pure silver. Therefore, each roll had a melt value of $102.67.
This means I was paying $15.63 a troy ounce – an 8.84% premium over spot. This was an alright, but not great price. However, this was before we factor in the eBay Bucks bonus. These rewards were worth $11.18, which effectively reduced my purchase price to just $100.57 per roll, a -2.05% discount to the going spot rate.
But wait! I’m not finished yet.
I also own a rewards credit card that pays me back 1% on all purchases. Double stacking credit card rewards with eBay Bucks is a surefire way to reduce your cost basis and stretch your investing dollar. There are many rewards cards out there that offer 1% to 2% rebates, a topic I explore in greater depth in an article titled “Using Credit Card Reward Points to Buy Hard Assets“.
The 1% refund from my credit card lowered the cost of my silver quarters to only $99.45 per roll. That means that I picked up over 7 troy ounces of bullion for only $13.91 an ounce, -3.14% below spot!
|
|
Cost |
|
Cost |
Per |
|
Per |
Troy |
|
Roll |
Ounce |
Original Cost |
$ 111.75 |
$ 15.63 |
eBay Bucks |
$ (11.18) |
$ (1.56) |
Credit Card Points |
$ (1.12) |
$ (0.16) |
Final Cost |
$ 99.45 |
$ 13.91 |
And the best part is that you can scale this strategy too. The seller had 10 rolls of silver quarters for sale. It would have been easy enough to buy multiple rolls – and they all would have been below spot.
In fact, the deal was so good that I eventually opted to buy 2 rolls of the junk silver quarters. I simply couldn’t resist constitutional silver at less than $14 an ounce!
But eBay Bucks do have some minor drawbacks you should be aware of.
For instance, all items listed in the “Bullion” category under “Coins & Paper Money” are specifically excluded. You usually can’t receive rewards on these purchases. EBay excludes these listings because their profit margins in this category are simply too low to allow for any discounts.
But there is a great work-around for this unfortunate situation. Any gold or silver item that isn’t listed in the “Bullion” category is generally considered fair game. While this does limit your buying choices somewhat, it still allows you to pick up bullion at or near spot in many instances.
There are two specific types of bullion coins that can most often be found outside eBay’s “Bullion” category: pre-1965 U.S. 90% junk silver and pre-1933 semi-numismatic U.S. gold coins. These kinds of coins often trade at only modest premiums to spot to begin with, making them perfect candidates for an eBay Bucks discount strategy.
I find the semi-numismatic pre-1933 U.S. gold coins to be a particularly intriguing choice for the precious metal stacker. If you are at all familiar with gold, you know that fractional (less than 1 troy ounce) gold bullion coins typically sell for hefty premiums. For example, it isn’t unusual for major dealers to sell fractional-sized American Gold Eagles for 6% to 16% over spot.
Yet I found a well-respected dealer, Liberty Coin, selling random date, $10 Liberty Head gold coins in XF (Extra Fine) condition for only $695 (with free shipping). Factor in 10% eBay Bucks and 1% cash back on a credit card and you are looking at a net cost of just over $618. With gold trading for $1,283, this means the $10 Liberty Head gold coin (which contains 0.48375 troy ounces of pure gold) is selling just under spot.
Not only do you avoid paying any substantial premium, but you also get a more than 110 year old U.S. gold coin in reasonably good condition with numismatic potential!
For those who are more even adventurous, some other possible bullion coins would be pre-1967 Canadian 80% silver coins and European fractional gold coins, like British sovereigns and French 20 franc pieces. I personally have seen deals on Swiss 20 franc gold coins that put them at -4% to -5% below spot when combined with eBay Bucks, although you might have to wait patiently for a bargain that good.
Of course, it is sometimes possible to find reasonably-priced modern bullion coins like American Eagles or Canadian Maple Leafs that are listed in non-bullion categories, making them eligible for eBay Bucks. Although fairly rare, I wholeheartedly recommend these deals if you can find them.
Another potential drawback with eBay Bucks is that they are limited to $100 per transaction. So if eBay is running a 10% rewards promotion, you will only earn the full amount on a purchase up to $1,000. If the item in question is more expensive than that – say $1,500 – you will still only accrue $100 worth of eBay Bucks.
EBay also limits program participants to $500 in total eBay Bucks per quarter. This would cap you at $5,000 in aggregate purchases per quarter, assuming you only took advantage of enhanced, 10% rebate rates. I don’t think a ceiling this high should be a problem for most people. But if you’re a big spender, it is good to keep in mind that eBay’s largess does have its limits.
The eBay Bucks program is only open to U.S. and Canadian residents. Sorry, but if you hail from Great Britain, Continental Europe or the Land Down Under, you are out of luck.
A final consideration is that eBay Bucks are technically an unsecured obligation of the e-commerce giant. Although it seems quite improbable, if eBay were to declare bankruptcy between the time when you made an eligible purchase and the end of the quarter when vouchers are normally issued, you would get nothing. This is not something I believe will happen, but I’ve noted it here for the sake of completeness anyway.
Despite these minor drawbacks, eBay Bucks are a great way for the precious metal investor to buy bullion at spot. I use the program myself and can highly recommend it. If you liked this unconventional approach to hard asset investing, you might enjoy a related article I wrote about building your tangible assets using eBay flash sales.
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