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What is the Secondary Gold Market?

The secondary gold market describes the exchange of gold on a second-hand basis. It involves buying or selling gold products from or to a party other than the original vendor when the product first exchanged hands in pristine condition.

What’s the value of secondary market gold?

The value of secondary market gold products holds strong because – regardless of their age and condition – they will always contain the same amount of fine gold. Their value is directly tied to the live price of gold and the primary gold market as a whole.

Contrary to popular belief, secondary market gold doesn’t always mean reduced quality. If a gold bullion product has been well cared for – packaged, stored and transported carefully – it is likely to be in very good condition.

That said, generally speaking, the more signs of wear and tear a gold bullion product shows, the cheaper it will be.

What are the key benefits of trading in the secondary gold market?

The secondary gold market provides more opportunities and further flexibility to investors, particularly those looking to buy cheap gold bullion.

The benefits of buying in the secondary gold market include:

  • Opportunity to find old and rare gold coins
  • Possibility of buying cheap gold bullion (due to wear and tear on the packaging)
  • Regardless of condition, the fine gold content is still the same

Who buys gold on the secondary market?

Many people buy in the secondary gold market for various reasons.

Those looking to buy cheap gold bars or coins may turn to the secondary gold market to find products with lower premiums added to the spot price of gold. First-time investors who are looking for a cheaper way to enter the market might be interested, but the secondary market is equally attractive to more experienced investors seeking to hold large amounts of the precious metal.

Some collectors may also use the secondary gold market to find old or rare coins. These types of coins just aren’t available in perfect condition because they’ve been around for so long and may have changed hands many times already.

Despite this, they’re still a very alluring option for collectors who enjoy seeking out each coin within a particular set or year.

What are the disadvantages of buying and selling in the secondary gold market?

Whilst the big international mints issue fine new collectable coins each year, the older and rarer coins will tend to only be available on the secondary market.

But for those collectors who look for perfection and prefer coins that are in their original condition, the secondary gold market might not always be the best option.

The other potential downside of the secondary market is the fact that it leaves buyers open to scams. Sadly, as with most valuable items, you’ll come across dishonest traders who sell imitation products that don’t carry the same value as the real deal would.

We’ve heard from many customers who have had bad experiences on eBay after buying what they thought was a genuine second-hand gold coin only to be disappointed. Our advice when looking for bullion or coins on the secondary market is to only buy from reputable sellers with a great number of positive reviews and open feedback so you can be assured that they deserve their reputation.

Where can you buy genuine secondary market gold?

As we mentioned, some investors and collectors turn to live auction sites (such as eBay) or second-hand sites (such as Gumtree) when they’re searching for secondary market gold.

Whilst there are reputable dealers selling on these sites, you do need to be careful and should always be wary of scams or illegitimate offers.

Some mints, such as PAMP, have introduced special packaging that allows people to identify whether or not the gold bullion products are genuine, even after they’ve been sold into the secondary market.

We recommend using a trusted and well-rated gold bullion distributor with a strong track record and a secure and verified payment system as a safer alternative. This should reduce the risk of falling prey to scams and ensure your investment in second-hand gold is worthwhile. 

Article Last Updated: Monday, August 7, 2017