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Gold Versus Bitcoin as a Store of Energy

Gold Versus Bitcoin as a Store of Energy

Gold mining consumes a massive amount of energy.  So does Bitcoin mining, for that matter.  But rather than being a drawback, I see the high energy consumption of these alternative currencies as an overlooked benefit.

After all, a currency that can’t be arbitrarily created at the whim of 12 corrupt central bankers sitting in an oak-paneled conference room somewhere in the bowels of Washington D.C. is a bonus in my book.  If we had been using either a gold-backed currency or Bitcoin when the 2008 financial crisis struck, it would have been impossible for the Federal Reserve to unilaterally bail out Goldman Sachs, Citigroup and all the other too big to fail banks against the will of the American people.

The fact that real energy and resources have to be expended to acquire new supplies of either gold or Bitcoin is one of the very compelling features that both of these currencies share in common.  In fact, I would argue that is a vital attribute for any successful currency – it must represent a store of energy.

If we compare gold versus Bitcoin from a store of energy perspective, does one have a higher energy density than the other?  And if so, by how much?

Let’s examine the energy density of gold first.

Because it is impossible to get good information on aggregate energy usage in the gold mining industry, I’m going to use a single major gold producer, Goldcorp, as a proxy for industry-wide energy consumption.  Goldcorp, a Canadian-based miner, is one of the world’s largest gold producers, with a 2017 production total of 2.57 million troy ounces.

According to its February 2018 corporate presentation, Goldcorp attributes 14% of its production costs to either fuel (generally diesel or fuel oil) or power (mostly electricity).  But Goldcorp also has other energy intensive costs that fall outside of this narrow definition of energy.

For example, tires (2%), explosives (3%), site costs (5%), maintenance parts (9%) and consumables (15%) are all energy sinks.

The massive tires used on mining vehicles are composed almost entirely of oil derivatives.  A tire for the massive Caterpillar 797B dump truck weighs 11,860 pounds (5,380 kilos) and contains almost 2,000 pounds (907 kilos) of steel, which is itself a very energy intensive metal to mine and refine.  It is estimated that each one of these mammoth tires consumes 100 barrels of oil to fabricate.

Explosives are another energy cost in disguise.  Although it is generally accounted for as a material on a mining company’s ledger, explosives are actually highly concentrated chemical energy.

Two of the most commonly used explosives in mining today are ANFO and TNT.  ANFO is composed of 94% ammonium nitrate and 6% fuel oil (another hidden energy expenditure).  Ammonium nitrate, in turn, is created by reacting gaseous ammonia with nitric acid.  However, ammonia is not found free in nature and must instead be synthesized via the Haber process.

The Haber process is extremely energy intensive because it requires high pressures (between 150 and 250 atmospheres) and temperatures (750 to 930 °F or 400 to 500 °C) in order to work.  In fact, it is estimated that ammonia synthesis via the Haber process devours more than 1% of total global energy output.

TNT, or trinitrotoluene, is hardly less energy intensive.  The base chemical used to create TNT is toluene, a light hydrocarbon fractionate.  Although it occurs naturally in crude oil in limited quantities, most toluene is a byproduct of gasoline production via either hydrocarbon cracking or catalytic reforming.

Gold mining site costs are another secret energy cost center.  While these can vary widely from mine to mine, they include exploration drilling, mine ventilation, waste water disposal, waste rock removal and site reclamation.   These activities consume large quantities of energy, only a portion of which are accounted for in raw electricity and fuel costs.

All of the equipment and replacement parts used to keep a gold mine running smoothly also cost a great deal in energy terms.  Parts and machinery must be fabricated in a factory and then transported to the mine site, which is often geographically remote.  Even common raw materials used in gold mining, like lime and sodium-cyanide, require tremendous amounts of energy to synthesize or extract.

And, of course, we can’t ignore the fuel costs attributable to commuting mine workers and contractors, which only show up as an indirect, payroll cost.

Overall, it wouldn’t be an exaggeration to guess that anywhere from 1/4 to 1/3 of the cost of gold extraction is directly attributable to energy, either in the form of electricity or fossil fuels.

According to an estimate by industry consultant CPM Group in its 2018 Gold Yearbook, the All-In-Sustaining-Cost (AISC) to mine an ounce of gold averaged $949 across the entire gold mining industry in Q3 of 2017.

This means that there is between $237 and $316 worth of energy embedded in every ounce of gold pulled from the ground.  With WTI crude currently trading at $51 a barrel and using the midpoint of the above energy consumption estimate, there is the equivalent of just over 5.4 barrels of oil used in the extraction of each ounce of gold.  That is equivalent to 31.6 gigajoules (GJs) of energy per ounce!

We can calculate gold’s electrical energy equivalence at around 8,800 KHW per troy ounce.  This represents about 10 months’ worth of electrical usage for the average American household.

So gold represents an excellent store of energy, being incredibly energy dense.  But how does the energy consumption of crypto-currencies compare?  Is Bitcoin far behind?

For Bitcoin’s energy usage estimates, I’m going to rely heavily on the work of Alex de Vries, who is widely regarded as the world’s leading authority on Bitcoin energy consumption, as well as being a prominent blockchain expert.

According to Mr. Vries latest estimates, Bitcoin’s blockchain calculations consume about 67 terawatt-hours (TWH) annually, which is about the same amount of electricity that the South American country of Chile uses in a year.  As of 2018, the average time between each successfully mined Bitcoin block is about 9 and 1/3 minutes.  And each of these new blocks rewards miners with 12.5 new Bitcoins.

So we can extrapolate that somewhere around 704,000 new Bitcoins are created every year via mining.

This means that each freshly mined Bitcoin represents just over 95,000 KWH of electrical energy.  This is equivalent to about 110 months of electrical usage for the average American household.

Although not directly comparable because Bitcoin is mined using electricity and not oil, each unit of the premier crypto-currency is equivalent to over 58 barrels of oil.  This represents 342 GJ of energy per Bitcoin.

But what about the energy density of gold versus Bitcoin on a dollar for dollar basis?

With Bitcoin currently trading at $3,500, each dollar’s worth of Bitcoin stores about 27.1 KWH of energy.  With gold going for around $1,240 a troy ounce, every dollar of the precious metal symbolizes around 7.1 KWH.

An energy assessment of gold versus Bitcoin from an oil perspective gives us similar values.  Each dollar of Bitcoin equals 0.0167 barrels of oil, while every dollar of gold is 0.0033 barrels of oil.

So Bitcoin has a clear advantage in energy density versus gold, with a ratio of 3.8 to 1 in Bitcoin’s favor.

Of course, it is wise to keep in mind that this energy density ratio is somewhat arbitrary.  It will fluctuate markedly with changes in the relative market value of gold versus Bitcoin.  In fact, as the price of Bitcoin has dropped over the past several months, the preeminent crypto-currency has become more “energy rich” on a per dollar basis relative to gold.

Another factor to keep in mind is that both Bitcoin and gold are only energy storage vehicles in a very abstract way.  It is not possible to pull electricity or oil back out of either of these alternative currencies once it has been consumed in their production.

Instead, both gold and Bitcoin provide their users with very different sets of energy-derived benefits.  Gold is a physical commodity that possesses excellent corrosion resistance, malleability and ductility, as well as superb electrical and thermal conductivity.  Some people bizarrely conclude that this means the yellow metal has no intrinsic value.  I strongly disagree, as I argued in a recent article I wrote on the intrinsic value of gold and gemstones.

On the other hand, Bitcoin provides its users with a fully digital currency secured by an incorruptible, publicly-verifiable blockchain.

Personally, I feel that gold has the edge here, although you might reasonably reach a different conclusion.  Bitcoin’s blockchain technology is certainly innovative and definitely has value, but this value is completely self-referential.

For example, do we really need to know how much someone’s Starbucks latte cost 5 years ago?  As it is currently structured, Bitcoin will retain this (and other equally superfluous) transactional data in perpetuity.

I believe that earth’s scarce energy resources could be better utilized.  For instance, the electrical energy consumed in crypto-currency calculations could instead be used to tackle computationally-intensive math problems that would broadly benefit humanity.  For those who are interested, this is a topic I addressed in greater detail in an article titled “Blockchain 3.0 and the Problem with Bitcoin“.

 

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Profiting from the Global Dollar Shortage of 2019

Profiting from the Global Dollar Shortage of 2019

We are on the verge of a dollar shortage – a monstrous, massive global dollar shortage.  The kind of dollar shortage that goes down in history as a singular, unprecedented event.  And it represents a great opportunity to make money in the tangible asset space.

It has been apparent for some time now that financial conditions are tightening.  The Federal Reserve has been raising short term interest rates relentlessly since December 2016.  They have also been engaging in quantitative tightening – the slow, but persistent shrinking of the Fed balance sheet – since November 2017.

These developments are beginning to have an impact on global liquidity, especially against a backdrop of inflated bubble financial markets.  This means that the dollar is getting stronger versus just about every other currency out there:

The Brazilian Real declined from 3.3 to the dollar a year ago to 3.85 today, a -14% loss.

The Turkish Lira had a rough time, moving from 3.84 to the dollar to 5.38 at the end of 2018, a -29% drop.

The Iranian Rial’s black market rate plummeted from 41,000 in November 2017 to 117,000 in November 2018, a stomach churning -65% fall.

The Argentinean Peso hardly did any better, experiencing a -54% depreciation from 17 to the dollar at the beginning of the year to 37 at the end.

However, the worst of the lot was the Zimbabwean Zollar, a debt instrument issued by the African country’s central government that circulates like currency.  Each Zollar is supposed to be worth 1 US dollar.  But that didn’t stop the Zollar from collapsing from 1.4 to the dollar during the summer of 2018 to 10 to the dollar a mere six months later, an astounding -86% decline in purchasing power.

I won’t even bother mentioning Venezuela, which is currently experiencing a crippling hyperinflation.  Its currency is quite literally not worth the paper it is printed on.

The global dollar shortage isn’t just limited to basket case emerging market currencies though. Other financial markets are also starting to break down due to a lack of dollars.

The crypto-currency complex is a prime illustration.  The much hyped Bitcoin is down a breathtaking 72% for 2018, from $14,100 at the beginning of the year to less than $4,000 right now.

Lower-rated corporate debt is also feeling the heat of the dollar shortage.  Yield spreads on junk bonds are up over 100 basis points in just the last 2 to 3 months.

Even the poster children of our current Everything Bubble – the FANG stocks – have lost their sizzle due to the sudden dollar shortage.  The FANG stocks, consisting of Facebook, Amazon, Netflix and Google (now Alphabet), have dropped by a shocking -20% over the past 4 months.

As harrowing as this flood of bad news might seem, we are at the very beginning of the global dollar shortage.  It will get much, much worse before it gets better.

All of this means that you’d better have some safe, liquid assets in your portfolio – things like U.S. Savings Bonds, U.S. Treasury securities, or an FDIC insured bank account/money market account.

Of course, the Fed won’t stand idly by while the financial world burns down around them.  They will leap into action, pumping unbelievably large amounts of dollars into the world’s financial system in an attempt to stem the global dollar shortage.

Unfortunately, the Fed is almost guaranteed to overreact to the financial panic by printing far more dollars than it should.  In the last financial crisis, the Fed increased the size of its balance sheet from about $900 billion to $4.5 trillion.  And honestly, that barely got the job done, spawning the most tepid recovery in U.S. post-war history.

This time around I expect the Fed to balloon its balance sheet to nothing less than an astounding $20 trillion dollars.  The sums involved are so large as to almost be beyond comprehension.

But suffice it to say that all this money printing is ultimately bad for the value of the dollar.  Every new dollar that gets created dilutes the existing supply of dollars.

This is why I recommend that everybody store a portion of their wealth in portable tangible assets – things like precious metals, fine art, antiques and gemstones.

Now here is the tricky part.

In the midst of this unprecedented dollar shortage, the Fed will be rapidly debasing the dollar by handing out fistfuls of them to foreign central banks and too-big-to-fail financial institutions.  But in spite of this massive debasement, the dollar will still temporarily strengthen for a period of time.  This is precisely the moment when you must be trading your dollars for tangible assets.

This is actually a lot harder to do in reality than it sounds.  You will need to be selling your dollars when everyone else is desperate to hoard them.  People have an inherent herding instinct, especially in financial markets.  From an emotional perspective, a contrarian stance will be incredibly difficult during this time.

But if you can pull it off, some of history’s greatest tangible assets bargains will be yours for the taking.  Precious metals, investment grade antiques and gemstones are all screaming bargains right now.  And I suspect they may get a little bit cheaper yet during the depths of the crisis.

But Rome wasn’t built in a day and neither is a solid tangible asset portfolio.  Slabbed coins, antique silver and vintage watches all take time to properly evaluate and acquire.  Even commodity physical assets like gold and silver might be difficult to acquire at reasonable prices on short notice during an intense financial crisis.

So the smart investor will leg into a tangible asset position.  The few dollars you might save trying to time the exact bottom of the market are likely to cost you a lot of lost profits.

I already suspect that we are seeing the lowest prices (on a valuation basis) in recorded human history for some segments of the antique market.

How cheap are antiques right now?

Profiting from the Global Dollar Shortage of 2019 - Coin

Right now (December 2018) you can buy a random date, PCGS certified MS-63 U.S. Liberty Head gold eagle ($10 coin) for $700 on eBay.  The bullion value of this piece (with spot at $1,234) is $597.  You are only paying $103, or 17.3%, in premium over the coin’s melt value.

Not only that, but these desirable pre-1933 gold coins are eBay Bucks eligible.  During one of eBay’s frequent promotional periods, it would be possible to get 8% to 10% of the gross purchase price back as an eBay Bucks voucher.  This would bring the effective premium over melt down to just $33, or 5.5%.

Think about it for a moment.  You can buy a beautiful and historic 100 year old U.S. gold coin in Mint-State for only $33 more than its scrap value.  That is simply mind-blowing to me.  It is undoubtedly the lowest percentage premium these coins have carried since the late 1930s/early 1940s.

That isn’t the only tangible asset deal out there either.

Profiting from the Global Dollar Shortage of 2019 - Diamond

I recently stumbled upon a luscious 0.34 carat old mine cut diamond on Etsy for $375.  The old mine cut was used in the diamond trade from the 18th century until the end of the 19th century.  These vintage gems are a favorite of sophisticated gem connoisseurs because of their tremendous presence and charm.

As an added bonus, the seller recently marked the stone down by 10% to $337.50.  This comes out to only $10 a point, which is ridiculously cheap for a lightly-included, 19th century diamond of excellent color.  I remember seeing similar prices for antique cut diamonds back in the 2002/2003 recession, except that those stones weren’t as high quality.   $10 a point is less than 60% of the cost of a similar modern-cut stone, which is shocking when you consider that the old mine diamond is hand-cut and has 150 years of history behind it.

But the thing I love most about tangible investments is that they all possess optionality.  Optionality is any element of a financial instrument that you don’t pay much for right now, but might be worth a lot in the future.

Think of it as a lotto ticket.

The only difference is that when the drawing happens on Friday night and you don’t have the winning numbers, the average lotto ticket becomes instantly worthless.  But optionality on a tangible asset is like a perpetual lotto ticket.  There is a drawing every Friday night, and if you don’t win this Friday night, you can just hold onto the asset and wait for your winning number to come up on a future Friday night.

Right now tangible assets have substantial optionality.  And the looming global dollar shortage of 2019-2020 will be one of history’s best opportunities to accumulate these overlooked assets at deep discounts.  Don’t blow it.

 

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AU-58 Coins – A Stealth Numismatic Investment

AU-58 Coins - A Stealth Numismatic Investment
Photo Credit: Silver Torch66

AU-58 coins are one of the best-kept secrets in numismatics.  But coin investors and collectors alike have started to grasp the potential of these underrated gems.

In order to appreciate the unique appeal of AU-58 coins, we must first understand the Sheldon grading scale.  Invented by the numismatist William Herbert Sheldon in 1949, it was first intended for grading U.S. Large Cents.  The scale ranges from 1 to 70, with higher numbers representing better states of preservation.  For example, a Poor-1 coin is an almost worn-smooth slug and a Mint-State-70 coin is absolutely perfect.

The Sheldon grading scale was updated to apply broadly to all coins in the 1970s.  Today, it is the global standard used by the two largest and most respected third-party grading services – NGC (Numismatic Guaranty Corporation) and PCGS (Professional Coin Grading Service).

The Sheldon grading scale designates MS-60 through MS-70 as Mint-State.  This means that all coins in this range are technically uncirculated, with no wear whatsoever.  Instead of using wear as a grading criteria, Mint-State coins are sorted according to the quality of their strike, along with the presence of mint luster, marks or hairlines and any attractive/unattractive toning.

So an MS-70 coin should be perfect, with no visible marks, a strong strike and full mint luster.  In contrast, MS-60 coins have a combination of distracting imperfections, unsightly tarnish and a weak strike.  As a result, it is almost axiomatic that low-grade Mint-State coins, like MS-60 and MS-61 examples, are relatively unattractive specimens with little eye appeal.  In fact, they are often downright ugly!

However, coins below the MS-60 designation are primarily graded according to the amount of wear they have received.  So coins graded from AU-50 to AU-58 fall in the About Uncirculated category.  These coins have received anything from very light, even wear to only a hint of rub on their highest surfaces.  Original mint luster is the only other criteria for AU coins, with higher grades within the classification requiring more luster.

You can probably see where I’m going with this analysis.

If AU-58 coins acquire that grade purely because they have an almost imperceptible amount of rub on their highest points, then there is no reason that an AU coin with good eye appeal can’t look better than an MS-60 or MS-61 coin.

This is a numismatic revelation for coin investors.

 

PCGS & NGC Certified AU-58 Pre-1933 U.S. Gold Coins for Sale on eBay

(This is an affiliate link for which I may be compensated)

 

You see, eye appeal is one of the most important traits an investment-oriented coin can possess.  Relatively small increases in eye appeal can have a major impact on the desirability – and thus value – of a rare coin.  After all, coins are miniature works of art.  If one coin with a particular type, date and mintmark looks objectively better than another example, it only stands to reason that it would be more valuable.

Normally, we would expect coin prices to rise as we ascend the Sheldon grading scale.  After all, each successively higher grade should have more detail, luster and (indirectly) eye-appeal than the one below it.

And this is indeed the behavior we tend to observe in the rare coin market, particularly for Mint-State coins.  Once you ascend to coins graded MS-63 and higher, it isn’t unusual for each step-up in grade to be accompanied by a large – or even massive – price increase.  And this is in spite of the fact that it is difficult for the layman to distinguish the minute visual differences between these grades.  For instance, the average person can’t reliably distinguish between an MS-64 and MS-65 coin.

About Uncirculated coins, particularly AU-58 coins, are the only potentially systematic wrinkle in the rare coin market’s continuum of Higher Grade = More Eye Appeal = Higher Prices.

This brings us to the concept of the elusive “AU-64” coin.  What if there was a beautiful MS-64 coin that had somehow received the tiniest bit of wear or rub sometime in the distant past?  It could no longer be properly called Mint-State anymore, because it isn’t technically uncirculated.  The best grade it could hope to achieve on the Sheldon grading scale would be AU-58.  Oh, but what a glorious AU-58 coin it would be!

 

PCGS & NGC Certified AU-55 & AU-58 Carson City Morgan Silver Dollars for Sale on eBay

(This is an affiliate link for which I may be compensated)

 

It is easy to see how an AU-58 coin with the eye appeal of an MS-64 coin would sell at a significant premium over your run-of-the-mill MS-60 or MS-61 coin.  In fact, it would be easy to see how a superior AU-58 specimen could achieve MS-62 or even MS-63 price levels, provided it has stellar eye appeal.

Simply put, AU-58 coins are a numismatic loophole that every serious coin investor and collector should be exploiting.

And, in all honesty, a lot of knowledgeable coin enthusiasts have been taking advantage of the wonderful potential of good-looking NGC and PCGS AU-58 certified coins over the last 15 to 20 years.  For example, many desirable 19th century U.S. coin series command high premiums for AU-58 pieces with strong eye-appeal.  In fact, it can be difficult to find AU bargains in series like Capped Bust half dollars or Trade Dollars because of this trend.

But the U.S. rare coin market is the most forward-looking, sophisticated coin market on the planet.  So although the advantages of AU-58 coins may already have been recognized in 19th century U.S. coins, it still hasn’t been widely applied elsewhere.

This means there are still AU deals to be found in 20th century U.S. coins & world coins.  I especially like European gold coins in AU-58 condition.  They haven’t been picked over yet, giving the numismatic enthusiast a lot of great examples to choose from.

 

PCGS & NGC Certified AU-58 European Gold Coins for Sale on eBay

(This is an affiliate link for which I may be compensated)

 

I should also point out that some AU-55 coins can also share the phenomenal eye appeal of AU-58 specimens, just with a touch more wear.  So although I’ve been talking about AU-58 coins throughout this article, the same concept can also apply to AU-55 examples, just somewhat less frequently.

For instance, one of my recent Spotlight posts featured a stunning 1882 French 100 franc gold coin certified AU-55 by NGC.  This impressive gold coin, with a mintage of only 37,000 pieces, looks far better than your average MS-60 or MS-61 example.  But it is selling for a ridiculously low 38% premium over its bullion value!

Of course, I should also point out that not all AU-55 or AU-58 coins have great eye appeal.  Unlike with Mint-State coins, the AU grades primarily designate wear, not eye appeal.  So it is certainly possible to run into ugly or sub-par AU-58 coins.  A certain amount of patience and discretion is necessary to cherry pick a gem AU example.

Let me part with a word of caution.  There is an old numismatic saying: always buy the coin, not the holder (or the grade on the holder, for that matter).  This dictum has never been more important than when dealing with AU coins.  But although it requires discipline, AU-58 coins are one of the best ways I know of to score a deal in the world of rare coins.  And that little bit of knowledge is worth its weight in gold.

 

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5 Odd Investments for the Stock Market Skeptic under $100

5 Odd Investments for the Stock Market Skeptic under $100
Photo Credit: Joe Haupt

These 5 odd investments don’t rely on the stock, bond or real estate markets in order to make you money.  Better yet, each one of these tantalizingly unusual assets is available for less than $100!

 

1) Pre-1982 U.S. Copper Pennies

Few people know it, but U.S. pennies aren’t made from copper anymore.  In 1982, the U.S. Mint was forced to change the composition of the coin due to the rising price of copper.  Consequently, pre-1982 pennies were made from an alloy of 95% copper and 5% zinc, while post-1982 cents consist of a solid zinc core that has been copper-plated (97.5% zinc and 2.5% copper).  In 1982, both solid copper and copper-coated zinc pennies were struck.

This would all be rather academic, except that right now the price of scrap copper #2 is around $2.20 per pound (this varies according to location and scrap dealer).  But it only takes around 154 circulated pre-1982 copper pennies, with a face value of $1.54, to equal one pound.  So each pre-1982 penny is actually worth about 1.43 cents in copper scrap.

This presents the enterprising coin sorter with an arbitrage opportunity.  According to estimates, pre-1982 copper cents represent around 15% to 20% of the remaining pennies in circulation in 2018, although this can vary considerably depending on geographic region.  If you are willing to take the time to pick these copper pennies out of circulation, you can easily accumulate a significant stash of copper bullion at below market prices.  And you can get started for only $5 and a trip to your local bank, or even just the loose change that is laying around your house.

There are, however, a couple downsides.  First, the U.S. government made it illegal to melt down pennies (and nickels too) for scrap in 2006.  That isn’t too much of an issue because rolls or bags of pre-1982 copper pennies can be traded for more than their face value without being melted.

The other problem is that the U.S. penny is not long for this world.  Inflation has rendered the smallest of U.S. denominations practically worthless.  In addition, the U.S. Mint hasn’t made a profit on the penny since 2005.

When the penny is finally discontinued, one of our era’s best odd investments will disappear with the lowly coin.

 

2) Indian Mughal Rupee Silver Coins from the 16th and 17th Centuries

Rare coins are a perennial favorite among alternative asset investors.  Unfortunately, the very finest examples can often be prohibitively expensive.  You don’t need to look any further than ancient Greek gold coins to verify this, where prices start in the thousands of dollars and only go up from there.

But what if I told you that a centuries-old, hand-struck silver coinage of tremendous beauty from one of the greatest empires on earth could be yours for less than $100?  Allow me to introduce you to one of the finest odd investments you’ve never heard of: Indian Mughal silver rupees.

The Mughal Empire ruled the Indian subcontinent between the early 16th century and mid 18th century.  The Mughals were not only extremely powerful, but also incredibly wealthy.  In fact, the Indian Mughal emperors were considerably richer than Western European monarchs of the time, such as Queen Elizabeth I and King Louis XIV.

So it shouldn’t be surprising that the Mughals struck a magnificent silver coinage to match their exalted status.  Mughal rupees were high denomination coins, each containing about 11 grams of nearly pure silver.  This made them exceptionally heavy for their time – about 3 to 4 times the average weight of most contemporary European silver coins.

In addition to being impressively large, Mughal silver rupees also possess phenomenal eye appeal.  These Indian artistic masterpieces deftly weave geometric borders, elegant decorations and flowing Arabic calligraphy together in an unrivaled numismatic tour de force.

But perhaps the best thing about these odd investments is their low cost.  Prices range from around $40 or $50 for common types in Very Fine condition to $200 or $300 for scarce examples in pristine grades.  However, discerning investors can easily find superb examples of these centuries-old Indian silver coins for less than $100.

 

3) Vintage Fountain Pens

Before the widespread adoption of ballpoint pens in the 1960s, every gentleman and businessman used a fountain pen.  These little luxuries were often made from the most cutting edge materials of the time, including hard rubber, early plastics and stainless steel.  Some examples were even made from sterling silver, gold-filled and, occasionally, solid karat gold.

The nibs of high quality vintage fountain pens were invariably made from solid 14 or 18 karat gold, while more modest specimens made due with palladium-alloy or gold-plated steel nibs.

Vintage fountain pens perfectly embody the zeitgeist of the mid 20th century.  However, in spite of all their positive attributes, these odd investments were often overlooked until recently.  Before the early 2000s, it was possible to find desirable vintage fountain pens from the 1930s, 1940s and 1950s at flea markets, garage sales and second-hand shops for only $5 or $10 each.

But as it became apparent just how special these pens were, prices inexorably rose.  Even so, it is still possible to purchase desirable vintage fountain pens in good condition in the $50 to $100 range today.

Although a tremendous number of companies manufactured vintage fountain pens, if you’re shopping in the sub $100 price bracket you are most likely to encounter pens from U.S. mid-tier makers, such as Parker, Eversharp, Sheaffer and Wahl.

 

4) Artisan Hand-Poured Silver Bars

Most people think of silver bullion bars as, well…bullion and nothing more.  But over the last decade, a veritable renaissance has bloomed among small precious metal fabricators.  These companies, which are often family-owned businesses, have begun producing a variety of hand-poured silver bars that are actually miniature works of art.

Artisan produced, hand-poured silver bars are a far cry from the soulless, mass-produced struck silver bullion bars that dominate the precious metals market today.  Instead, small-batch, hand-poured silver bars have soft, rounded edges, alluring pour lines and charming blemishes that make them irresistibly odd investments.

In fact, vintage poured silver bars made in the 1980s or earlier already trade for strong premiums among tangible asset investors looking for something intriguingly different.  And I feel it is only a matter of time until artisan hand-poured silver bars start selling for elevated premiums over spot as well.

A single $100 bill can easily buy one of these hand-poured bullion masterpieces from a recognized fabricator like Vulture Peak Mines, Prospector’s Gold & Gems, Scottsdale Mint, Bison Bullion or SilverTowne.  Hand-poured bars generally range in size from 1 troy ounce to 20 troy ounces, although anything larger than 5 troy ounces will cost more than $100 (with spot silver at $15 per ounce).

 

5) Vintage British Sterling Silver Liquor Labels

The aristocracy of 18th and 19th century Britain loved few things more than a glass of fine wine.  Unfortunately, paper labels for wine and liquor bottles were not developed until the 1860s.  Therefore, wealthy British lords and ladies had to find a way to distinguish the otherwise anonymous bottles of spirits stockpiled in their private stashes.

They accomplished this by using solid sterling silver liquor labels, also known as wine or bottle tickets.  These small, decorative plaques were engraved with the name of the appropriate spirit and then hung around the neck of a bottle via an attached silver chain.  Every well-appointed British Georgian country estate or stately London townhouse had its share of these upscale sterling name tags.

Although rendered technically unnecessary by the late 19th century, sterling silver liquor labels have continued to be made until the present day because of their elegance and high-end appearance.

Vintage sterling liquor labels produced from the 1950s through the 1980s are particularly interesting.  These odd investments can be found inscribed with the names of a variety of different spirits, including port, sherry, whiskey, gin, brandy, bourbon, scotch and rum, just to name a few.  So there is sure to be one that appeals to you, regardless of the kind of alcohol you enjoy.

In addition, vintage sterling silver liquor labels from the Mad Men era are significantly less expensive than their Georgian progenitors.  While a late 18th century example might cost you $150 to $200, a fully-hallmarked 1960s or 1970s British sterling liquor label can be purchased for a modest $50 to $100.

 

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