Sep 11
2
Many people approach penny auctions with the purpose of reselling the items that they win. This opportunity for arbitrage can be extremely lucrative, if you know what you are doing and have a solid penny auction strategy. If you win items like gold bullion, the arbitrage value can be very high as this is at a high price right now, but other items require a good deal of caution. Items like electronics can have negative expected value after you take into account the price per bid that you must pay.
If you win a gold bar worth $200 in the real world marketplace, you will want to make sure that you spend far less than $200 on obtaining it. While gold is probably going to increase over the long term, if you are looking for arbitrage opportunities, you will want to resell it immediately. If you spend $250 on the bids to win it for $10.00, you have lost money over the short term—defeating the purpose of arbitrage.
As you can see, quick profits can be difficult to come by in penny auctions simply because of the fact that the valuable items are so hotly contested. If you have a winning penny auction strategy, however, you stand a good chance of making a lot of money by reselling items. Just make sure that you are going to be a winner long term before you attempt moving to the arbitrage stage. Wait at least a few auctions prior to stepping up your game to the next level.