How a Little Known Technique Can Produce Consistent, Sometimes Massive, Auction Profits

Buy low sell high is a mantra that is often associated with investing in financial instruments such as stocks, bonds and currency. In the global economy another opportunity that often presents itself in the financial markets is arbitrage.


Arbitrage is defined as:


- a transaction in which an investor buys commodities, funds, mortgages, futures contracts, mortgage-backed securities or other securities in one market and simultaneously sells them in a different market in order to profit from differences in price between the two markets.
-or-
- A method of taking advantage of the fact that there may be different prices in different markets for identical goods such as gold, foreign exchange or commodities. Simultaneously, one buys in the lower price market and sells in the higher one.


Interestingly enough, with enough research you can and will find arbitrage opportunities that exist on auction sites such as eBay. Did you know that the internet pharmacy craze sweeping the globe was born out of an arbitrage opportunity?


In fact, a small town pharmacist turned virtually an overnight millionaire after stumbling upon an arbitrage opportunity found with Nicorette Chewing Gum. Nicorette Chewing Gum is a stop smoking aid that supposedly helps people kick the habit by chewing nicotine laced gum. It all started with a test. He found that a pack of Nicorette Chewing Gum was selling for approximately $5-$7 less in Canada than in the United States. At the time, the Canadian/US exchange rate was also extremely favorable to Americans. Buying $1 worth of Canadian goods only cost Americans 65 cents. In the case of Nicorette Gum this amounted to a double- whammy of a deal for Americans. Combine this with a huge demand in the United States...this small town Canadian tested his way into a huge money making business.


What started out to be a low risk test...buy a pack of Nicorette Gum...post it on eBay...see if it sells. Ended up being a 150-200 packs a day seller. The profits were roughly $3-$5 per pack...doing the quick math this was a $200,000 a year business! This is just one example of how you can benefit from arbitrage.


How do you spot these opportunities...RESEARCH! Look for high demand items and price them out in different countries. Find out if you can source them cheaper in your home country to sell in another country. In some cases the exchange rate differential is so great that you could pay retail in your home country and still make a profit by selling into another country.
In the current US/Canadian exchange rate climate I know that cars are a big opportunity. For example, in Canada a 2010 Corvette Coupe sells for $67,050 that exact same car in the United States sells for $48,930. Almost a 20 GRAND difference! Now this opportunity maybe a bit cumbersome for most...but the point is there are many more out there!