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The Coin Article I Wish I Could Write

The Coin Article I Wish I Could Write

The year was 2000 and everyone was obsessed with technology stock…everyone except for me that is.  I was frantically researching another class of investments: ancient Greek gold coins.  You see, the ancient Greeks were renowned for minting remarkably beautiful coinage with images of rulers, deities, animals and mythical creatures.  Regardless of their subject, these coins were invariably struck in exceedingly fine style and with a three-dimensionality that was not mastered again in Europe until the late Renaissance.  And none of these ancient works of numismatic art are more desirable than those struck in gold.  They are the traditional apogee of fine coin collecting – the very same gems that were ravenously acquired by European nobility during the 17th and 18th centuries as they embraced all things Classical.

But in the year 2000 no one cared about ancient coins because they weren’t technology stocks.  Consequently, these miniature works of Classical art could be purchased dirt cheap at the time.  A mere $500 to $1000 per coin was sufficient to purchase a wide range of stunning examples in excellent condition.  I desperately wanted to own some.  There was only one problem.  I had just graduated college and although I had landed a white collar job in the financial services sector all my money was going towards rent and student loan payments with precious little left over for coins – regardless of how beautiful they might be.  But then my research took an interesting turn.

I had started thinking to myself, “What makes ancient Greek gold coins so desirable?”  In my opinion, it was a combination of their subject matter (the human form, animals, mythological creatures, etc.), their fabric (small and thick globular flans, hand-struck in gorgeous high relief) and their exceedingly fine, three-dimensional style.  I began feverishly researching the complete 2600-year history of global coinage until I stumbled upon a revelation: medieval gold coins from the native Hindu dynasties of South India.

These South Asian masterpieces are not ancient Greek coins, but they share almost all of the same characteristics.  Struck in captivatingly high relief, these coins feature gods and goddesses, rulers, animals and the occasional mythological creature.  The only difference is these coins draw on Hindu rather than Classical Western mythology for their subject matter.  The Indian pieces – every bit as alluring as their ancient Greek counterparts – are rendered in a distinctly curvaceous and seductive South Asian style.  Unlike Christianity in the West, medieval Hindu culture had no moralistic hang-ups surrounding the portrayal of the human form, whether man or anthropomorphic deity, and it showed.  Medieval southern India was a little bit of the ancient world that time forgot, complete with war elephants, grand stone temples and powerful empires and its coinage gloriously reflected this fact.

Almost unbelievably, these undiscovered jewels were only a tenth of the price of similar ancient Greek examples.  In the year 2000, $50 could buy you a gold 1/2 pagoda (1.7 to 1.8 grams) while $100 would get you a full gold pagoda (3.4 to 3.6 grams).  Even I, as a semi-starving former college student, could afford prices like that!

So why did I title this article “The Coin Article I Wish I Could Write”?  Because, unfortunately, the market supply of these wonderful little medieval South Indian gold coins has largely dried up.  eBay typically only has a handful of examples for sale at any point in time and they are usually overpriced, poor quality specimens.  Although prices are certainly higher than they were in 2000, Medieval South Indian gold coins are still beautiful little coins that provide an amazing opportunity for connoisseurship when you can find them in good condition for reasonable prices.  But good luck finding them.  My sincere hope is that one day more supply makes its way to the market so that others can come to appreciate these hidden gems.

What Happens When the Broader Investment Community Discovers Art and Antiques?

What Happens When the Broader Investment Community Discovers Art and Antiques

Here is a thought experiment.  What happens to the art and antiques market when they are finally discovered by the broader investment community?  As an example, let’s assume you can currently accumulate Venetian ducats (a high-denomination trade coin struck in gold by medieval Venice) for anywhere from $500 to $600 per coin.  Then one fine day a single pioneering hedge fund starts buying up the coins.

The immediate consequence is that Venetian ducats will disappear from the market almost immediately.  Unless the acquiring hedge fund is both incredibly discreet and sensitive to the realities of the fine art market – a possibility I find most unlikely – my best guess is that the Venetian ducat market will have been picked clean within a couple weeks.  At first, no new supply will appear.  Then, very slowly, a trickle of new pieces will come to market.  Only the pricing won’t be $500 to $600 for each coin.  Instead new sellers will test the market with pricing of perhaps $1,000 to $1,200 each.  The acquisitive hedge fund won’t think anything of paying twice the price for these medieval numismatic works of art.  After all, they were sorely underpriced at their original valuation of $500 or $600 a coin!

So our theoretical hedge fund will keep buying and, predictably, the new sources of supply available at the higher prices will gradually become exhausted over the period of maybe a month.  Then a new tier of supply will trickle into the market, except this time asking $1,500 to $1,800 per coin.  Our nameless hedge fund may hesitate at this point, allowing this new supply to sit largely unpurchased at its new higher price for a time.  But by now the original hedge fund’s ruthless competitors will have shrewdly divined its exotic asset accumulation plans and quickly follow suit.  Therefore, our latest tier of supply will disappear almost instantaneously and prices will rise stunningly fast – first to $2,000, then to $2,400 and finally to $2,800 per coin – all in a matter of weeks.  Finally, as buyers become satiated, prices will drift down over the next few months from their recent highs to stabilize at maybe $2,500 a coin.

And there is our hypothetical situation if traditional asset managers get even peripherally involved in the art market.  Venetian ducat prices skyrocket from $600 to $2,500 a coin – an increase by at least a factor of four – within about 6 short months.  Under this scenario there would be precious little possibility of accumulating new pieces during the market turmoil.  You will most likely either be in at the low starting prices, or on the outside looking in once the fireworks start.

I also assume that it is only a handful of niche hedge funds throwing only a few million dollars at this particular segment of the market.  If large pension funds, endowments, exchange traded funds or mutual funds became buyers, then all my predictions go out the window as they have tens of millions or even hundreds of millions to potentially allocate!  It is also important to keep in mind that if a part of the hedge fund community decides to accumulate Venetian gold ducats as an investment, they would undoubtedly be purchasing other fine art and antiques too.  Thus we would probably see sudden scarcity and rapidly rising prices across several market areas simultaneously.

The Enduring Allure of Ethnographic Art

The Enduring Allure of Ethnographic Art

Ethnographic art, also known as tribal art, is the material culture of native or indigenous societies.  Most people would recognize this style of art as “primitive”, although that term is discouraged in the collecting community because of its pejorative connotations.  While ethnographic art does not conform to the classical traditions of Western culture, it has a unique beauty all its own.

Modern design language, regardless of whether employed in a painting, building or smartphone, is almost universally sleek, precise and minimalist.  But these ostensibly positive attributes can also make contemporary art seem remote and sterile.  In contrast, ethnographic art is renowned for its highly abstract, organic forms.  It possesses an untamed, raw energy that appeals to us on a deeply primal level.  In fact, sometimes we might not even know why we are attracted to these masterpieces of aboriginal culture.  We are simply drawn in by their primordial glamour and untamed magnetism.

Ethnographic art originates from a variety of geographic locations.  Oceania, Australia, Africa and the Americas are the traditional sources of a large amount of tribal art.  However, although little recognized, India, Southeast Asia and the Middle East have also produced their fair share of naïve artworks.  Most of the world, at one time or another, has produced coveted tribal treasures.

Ethnographic art is an incredibly expansive and varied branch of antiques.  It can range from a Pre-Columbian Central American jade figurine to an 18th century African Akan brass goldweight to a Pacific Island wooden ritual mask.  Complex geometric designs and patterns comfortably reside side-by-side with flowing, stylized depictions of curious plants, exotic animals and local deities.  Tribal art’s massive diversity of materials, form, design and execution gives even the most discerning collector a niche to passionately pursue.

Sometimes people mistakenly assume that tribal art is an evolutionary dead end, a more archaic artistic style that is inevitably replaced by more refined art as time and culture progresses.  This is not the case.  In fact, ethnographic art has had a major influence on modern art.  For example, the famous 20th century painters Max Ernst and Pablo Picasso both drew heavily on the art of non-Western cultures for inspiration.  This cultural affinity filtered into their works, forever changing the contemporary art world’s perspective on tribal civilizations.

But the first, and perhaps most important, acolyte of incorporating indigenous culture into modern art was the French painter Paul Gauguin.  He was so obsessed with the idea of tribal life that he moved to the then French colony of Tahiti…twice!  His work from this period oozes with ethnographic symbols, themes and style.  Today his Tahitian work is widely recognized as one of the most dynamic phases of his entire artistic career.  By the time he died in 1903, Paul Gaugin had embedded tribal art firmly into the Western public conscience as something wild, exotic and seductive.

Ethnographic art is worlds away from art in the Western tradition that most of us are familiar with.  And that’s a great thing.  It allows us to pursue a very different kind of art that both excites and intrigues.  Unlike with many pieces of postmodern art, a deep knowledge of dialectic materialism or gender deconstruction isn’t required to appreciate the intimacy and energy inherent in ethnographic art.  Some of us like our art to be academic or photorealistic; for everyone else, ethnographic art beckons.

The Halcyon “Shotgun Days” of Antique Investing

The Halcyon "Shotgun Days" of Antique Investing

Investing in antiques is not – to put it politely – considered mainstream at the current time.  Contrary to first impressions however, this state of affairs is actually a good thing.  It allows savvy investors to acquire investment-grade antiques for low – sometimes ridiculously low – prices.  And yet, despite how opportunity laden the field of antique investing might be today, it is nothing compared to the halcyon era of the mid to late 1990s.

The golden age of antique investing was 15 to 20 years ago.  At the time, gold traded at less than a quarter of its current value – around $300 a troy ounce – while silver spent most of its time hovering near $5 a troy ounce.  No one cared about precious metals – or any other tangible investment for that matter – and this complete disinterest translated into phenomenal deals in antique stores.  During this period it was possible to walk into an antique store with only one or two hundred dollars in your pocket and walk out with multiple investment-grade antiques!  These were what I term the “shotgun days” of fine antique investing.  Investment-grade antiques were so ignored and underpriced during this time that a good antique store would have fine, investment-grade antiques strewn everywhere.  If you walked into such a shop and fired an imaginary shotgun randomly, you would always hit something worth buying.

It almost didn’t matter what you bought – sterling silver hollowware, Edwardian jewelry, old gold pocket watches – everything was an investment gem that, at a bare minimum, tripled or quadrupled in value over the next decade or two.  A discerning eye was always useful to help find the true diamonds in the rough.  But even “messing up” and buying a subpar antique didn’t mean you lost money.  It only meant you didn’t make as much as you could have otherwise.

One coin dealer in business at the time confided to me that “When gold was trading at $275 an ounce I couldn’t give gold bullion coins away.  No one wanted them.”  Fine antiques were treated no better than gold bullion; both were shunned in a similar manner.  Antique stores would have mountains of beautiful antique American sterling silver flatware for sale for $10 apiece, if not less!  A highly desirable vintage mechanical chronograph wristwatch might sit abandoned in a dusty pile of junk with a $35 price tag on it.  It was as easy as paying the dealer a pittance and taking your newfound treasure home.  The dealers didn’t care.  They just wanted to move the inventory and pocket their $5, $10 or $20 profit per item.  And so it went.

I instinctively understood just how great the bargains were, but, as a broke college student, a hundred dollars was far more than I usually had in my checking account at any given time.  This was torture for me as I was unable to buy much.  Instead I window shopped and feverishly plotted.  If I had only had two or three thousand dollars I could have assembled an investment portfolio of fine antiques to equal any pharaoh’s hoard.  As frustrating as that experience was for me, it forced me to really ponder the fundamental rules of investing in antiques.  Today you can profit from my hard-won past experience.  Believe me when I say that investment-grade antiques are still incredibly inexpensive, even after tripling or quadrupling in price.