Investing

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Due to my interest in the antique market, I end up spending a lot of time on eBay.  And there is something very interesting that I’ve noticed on the platform.  Antiques are cheap right now.  Really cheap.  Super cheap.  It is a superb time to accumulate high quality antiques, but how did this marvelous investment opportunity originate?

In my opinion, the antique market is currently experiencing the final low in a triple bottom sequence that dates back 20 years.  The first low coincided with the original, late 1990s Dot Com bubble.  At the time precious metals were trading for ridiculously low prices: $300 an ounce for gold and $5 an ounce for silver.  This meant that a lot of antiques containing precious metals were very inexpensive.  But very fine antiques or those created by famous makers still commanded healthy premiums.

The second low in the antiques market hit during the financial chaos of the 2008-2009 Great Recession.  This economic downturn was the most severe to hit the United States since the Great Depression of the 1930s.  Many good antiques dropped in price due to forced liquidations by people who were selling everything in order to raise much-needed cash.  Precious metals also took a brief dip during this downturn, making antique silver and vintage jewelry more affordable.  In addition, the collectibles market more or less imploded during this episode, never to recover.

We are now in the midst of the third, and in my opinion, final bottom of the last two decades.  The antiques market has been absolutely ravaged by the weak economy of the last decade.  The middle class has experienced a relentless decline in its purchasing power, which has greatly curtailed most discretionary spending.  This is one of the reasons that retailers as varied as Sears, Payless Shoes, Radio Shack and Barney’s New York have all gone bankrupt.  People are reserving their precious dollars for the bare necessities: mortgages, utility bills, food, etc.  Antiques are simply one casualty among many here.

The investment opportunity provided by this third dip is your best chance – and perhaps last chance – to buy high quality antiques at knock down prices.  Tremendously desirable fine antiques are selling for sums of money that put them well within the reach of regular people like you and me.  Items that would have previously only been affordable to the wealthiest echelons of society are out there waiting for bids – oftentimes any bids!

Want proof?  Here is a small selection of the deals I’ve come across on eBay in the last few months.

I found a fantastic lot of vintage U.S. Navy military insignia from World War II.  Every piece was made from sterling silver, with at least one of them being gold-filled over sterling.

Now I usually advise against purchasing gold-filled antiques, but gold-over-silver is a different animal.  It is the absolute finest form of gold-plating in existence (along with now long-defunct mercury-gilding).  Because so few vintage military insignia were crafted from solid karat gold, gold-filled over silver is often the best a collector can hope for.  As an added bonus, the set even included a couple of rare Ballou sterling silver clutches that were only briefly produced during 1942/1943.

Amazingly, this lot of 8 pieces was selling for a buy-it-now price of only $75 – less than $10 per pin – hardly more than garage sale pricing!  This feat is even more impressive when one realizes that these tangible pieces of World War II history are becoming increasingly scarce with the death of the Greatest Generation.

Incidentally, this lot of vintage military insignia was a great example of the benefits of super-sizing your antique purchases.  Instead of buying a single vintage pin for $15 or $20, it makes a lot more sense to do volume buying in order to get the best price on a per-item basis.

Alas, for all you militaria buffs out there, this fine collection of World War II sterling Navy insignia (pictured at the top of this article) sold just a couple days after I stumbled across it.  I can’t say that I’m surprised, given how low the price was.  The antiques market can be an unforgiving place for procrastinators.

But that wasn’t the only intriguing antique investment opportunity I stumbled across.  I also unearthed a beautiful Edwardian British sterling silver snuffbox engraved with a stunningly ornate monogram.  It had a thick layer of rich gilding on the interior, which was standard practice to ensure the silver didn’t corrode from contact with the tobacco snuff it carried.  According to its hallmarks, this piece was made in Birmingham, England in 1900 – right at the height of the grandeur of the British Empire.

Under normal circumstances, a monogram is considered a negative by many antique silver enthusiasts.  But in this case, the elaborate monogram complemented the silver snuff box’s streamlined design, considerably enhancing its desirability.  It wouldn’t be a stretch to say that the monogram (along with the applied decorative thumb-catch) made the box.

Although this piece would have been an absolute gem for any tobacciana aficionado, it might leave non-tobacco enthusiasts cold.  But it shouldn’t.  After all, one doesn’t need to indulge in smoking, cigars or snuff to appreciate the tremendous artistic beauty of this 120 year old silver box.  In addition, this snuff box could easily have been repurposed to hold your pills, keepsakes, personal stash or any other small, precious item you might have on hand.

The price?  A stunningly cheap £105 – around $129 at then current GBP-USD exchange rates.  This is about equal to one month’s cell phone or cable bill for the average American family.  Unfortunately, this Edwardian treasure has sold too.

The final investment opportunity I want to highlight today is an 1886-S U.S. half eagle $5 gold coin certified MS-63 by NGC.  At today’s prices, pre-1933 U.S. gold coins are one of the greatest numismatic bargains of the last several decades.

And this particular example had it all.  It was third-party certified as being Mint State – among the highest grades assigned.  Now a lot of old gold coins get slabbed as MS-61s or MS-62s, however these lower Mint State condition coins aren’t usually the prettiest specimens.  But with few hairlines and frosty original mint luster, this 1886-S half eagle went above and beyond, truly earning its MS-63 designation.

Yet despite being in great condition, it wasn’t terribly expensive at only $535.  This is because 1886 half eagles struck at the San Francisco mint are considered “common-date” in the world of numismatics.  I use the term “common-date” in quotation marks here because a grand total of just 3,310 1886-S $5 gold pieces have been graded by NGC and PCGS in MS-63 or higher condition.

Let’s take a moment to compare this “common-date” gold coin, with 3,300 extant high grade examples, to something like Amazon stock.  Amazon is currently trading for over 3x as much per share as the 1886-S half eagle in question ($1,801 vs $535), even though there are 510 million shares of Amazon outstanding (as of June 30, 2019).  Oh, and the 130 year old Mint State half eagle also contains $360 worth of gold (with gold spot hovering around $1,485), which puts a hard floor underneath its price.  I seriously do not see how you lose with this proposition.

In fact, this investment opportunity was so much of a no-brainer that I bought the coin myself!  I waited for a 10% eBay Bucks promotion, which brought my effective purchase price down to only $482.  And while you may no longer be able to buy the exact same coin I did, there are many other MS-63 certified “common date” pre-1933 U.S. gold coins that can still be purchased for ridiculously low premiums over their melt value.

Today’s antiques market is truly a paradise for the intelligent hard asset investor.  But there is one catch.  If you want to benefit from this sterling investment opportunity, you must take action now.  It is far too easy to simply sit on the sidelines, believing that today’s great deals will always be available.  I can assure you that they will not.

If you have ever had any desire to buy antiques, now is the time to do so.  If you ever wanted to own a vintage 1950s Omega wristwatch, or a genuine 19th century Japanese samurai sword tsuba, now is your best chance.  Don’t make the mistake of waiting; this unique investment opportunity won’t stick around forever.

Read more thought-provoking Antique Sage editorial articles here.

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Compelling investment opportunities are often found in some very unusual places.  And right now one of those places is the world of old silver bullion bars.  While antique silver bars from many different manufacturers are desirable, many of the most coveted and beautiful are vintage Johnson Matthey (frequently abbreviate “JM”) and Engelhard silver bars.

Back in the 1960s, 1970s and 1980s, the Engelhard and Johnson Matthey companies produced the most recognized and accepted silver bullion bars on the planet.  These poured, extruded or struck vintage ingots exhibit gorgeous, old world-style craftsmanship.  Quality mattered.  As a result, they are quite popular with collectors today, often trading for substantial premiums over their bullion value.  In fact, it isn’t uncommon for rare vintage JM and Engelhard silver bars to sell for hundreds of dollars per troy ounce – a truly shocking valuation in a world of $14 to $20 an ounce silver!

Now this is where things get interesting.  You see, the vintage silver bar marketplace is giving savvy investors an extraordinary arbitrage opportunity at the moment.  Old silver ingots under 10 ounces in weight – including JM and Engelhard silver bars – currently trade at much heftier premiums than larger bars with sizes of 20 to 100 ounces.

The present rule of thumb is that for any given level of rarity, premiums decrease dramatically as size increases.  So for example, an iconic vintage 3 ounce Johnson Matthey maple leaf logo silver bar might trade at 3 to 6 times its bullion value, while an equally rare 100 ounce TD Bank-branded Johnson Matthey silver bar from the 1980s might struggle to sell for 1.4 times spot.

But there is no fundamental reason why this should be the case.  I can see the reasoning behind some decrease in premiums for larger vintage silver bars of similar rarity.  After all, Engelhard silver bars that weigh only a few troy ounces currently have less than $100 in bullion value, allowing a larger audience of avid collectors to theoretically bid up their numismatic premium.

In contrast, a 100 troy ounce vintage silver ingot requires $1,700 (with spot at $17 an ounce) as the base price of admission.  Any collector premium must be added on top of that already prodigious sum.  The amounts of money involved with larger silver bars can be intimidating, serving to reduce the potential collector pool.

But there are clear limits to this logic.  Right now rare smaller silver bars often trade with numismatic premiums 10 times higher (or more!) compared to scarce vintage 50 and 100 ounce ingots.  That can translate into maybe 20% of your total purchase price being intrinsic value in the former case versus over 70% in the latter case.  Assuming equal rarity, a greater level of intrinsic value is always better than a lesser level of intrinsic value.

I know a bargain when I see one. And right now large JM and Engelhard vintage silver bars are the bargain of a lifetime.

Look, I’m not the first person to spot this market anomaly.  The vintage silver ingot enthusiasts over at the All Engelhard website have published several commentary pieces over the years pointing out this strange situation.  Their conclusion is the same as mine; you want to buy larger vintage silver bars with both hands.  They are insanely undervalued right now.

Vintage Engelhard Silver Bars for Sale on eBay

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But the real problem is how to take advantage of this undervaluation.  Most of us don’t have the $5,000 or more lying around that we would need to really exploit this vintage silver bar arbitrage opportunity to its fullest.

Or do we?

Many of us have 401-ks, IRAs or other retirement accounts invested in conventional stocks, bonds or other paper assets.  I happen to have an IRA sitting around right now earning a pittance in long-term U.S. Treasury bonds.  And this account has enough money in it to buy some very fine, very rare JM or Engelhard silver bars – larger bars.

Now here’s the trick.

U.S. citizens can open what is called a precious metal IRA.  Also known as a gold IRA or a silver IRA, this retirement account is meant to allow you to invest in physical gold, silver, platinum or palladium bullion.  All silver bullion coins or bars that are purchased in a gold IRA must be at least .999 fine, and, in the case of silver bars, manufactured by a NYMEX or COMEX approved refiner.

When our political overlords enshrined these gold IRAs into law, they intended for people to load them up with straight bullion coins and ingots.  In fact, the IRS frowns upon the purchase of what it (disparagingly) terms “collectibles” in retirement accounts.  So vintage Engelhard silver bars are definitely not the hard asset that people are expected to put into their precious metal IRAs.

But that doesn’t mean you can’t do it anyway.  After all, the Federal Government made the rules surrounding precious metal IRAs.  And they happened to leave in a couple loopholes for the coin collector/antique enthusiast.  I say we exploit these technicalities that the Feds have graciously given us.

As mentioned above, in order for a bar to be eligible for a self-directed, silver IRA account, it must be .999 fine and produced by a NYMEX or COMEX approved refiner.  Happily, a number of vintage poured, struck and extruded silver bars from the 1960s, 1970s and 1980s meet these requirements.

Here is a list of the most commonly encountered IRA eligible vintage silver ingots (which includes JM and Engelhard silver bars, of course).  I’ve pulled this data directly from the CME Group, which is the parent company of both the NYMEX and COMEX commodity exchanges:

Engelhard – Along with Johnson Matthey, Engelhard is the premier name in vintage silver bullion bars.  It produced a range of poured, extruded and struck silver bars from the 1960s until it ceased production around 1987.

Engelhard silver bars are much rarer than the market currently recognizes.  It is estimated that Engelhard’s total ingot mintage across the company’s complete 28-year production run is equal to (or less than) 1 to 2 month’s average production of the U.S. Mint’s American Silver Eagle bullion coin.  As a result, the rarest Engelhard silver bars can trade at very high premiums over spot.  However, more affordable Engelhard ingots are available too.

Johnson Matthey – This diversified British chemical company was one of the world’s largest and most well respected makers of bullion bars from the 1960s until the mid 2010s.  Johnson Matthey sold its precious metals division to the Japanese corporation Asahi Holdings in 2015.

As a general rule, its larger bars are poured while its smaller bars are struck.  Please note that poured 1 kilo JM silver bars stamped with “SLC” (which stands for Salt Lake City) are not rare or old, having been produced rather recently in large quantities.

Vintage Johnson Matthey Silver Bars for Sale on eBay

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SilverTowne – A favorite of poured silver buffs everywhere, the Winchester, Indiana-based precious metal dealer SilverTowne has been making ingots since 1973.  These vintage silver bars are found in 5, 10, 50 and 100 troy ounce sizes – all in horizontal formats and most with serial numbers.  SilverTowne is still producing poured and struck silver bars today, but these newer bars aren’t serialized.

Sunshine Minting – Sunshine Minting is a respected silver refiner located in the famous Coeur d’Alene mining district in Idaho.  It produced struck silver bars in 10, 50 and 100 ounce sizes starting in the early 1980s, some of which are dated. Undated older bars can be difficult to tell apart from newer bars, so I would exercise caution here.  In addition to providing the planchets that the U.S. Mint uses to strike its American Silver Eagle coins, Sunshine Minting is still striking silver bars today.

The Perth Mint – This is a well-respected Australian refiner known worldwide for its Gold Kangaroo and Silver Kookaburra coins, among others.  Owned by the Government of Western Australia, The Perth Mint has a long history, having been established in 1899.

The Perth Mint produced many beautiful poured silver bars back in the late 1970s to early 1980s that are highly prized by collectors today.  Its logo is a stylized swan in a circle.  The swan on vintage pieces always faces left, versus facing right on newer silver ingots issued by the company.

Royal Canadian Mint – Canada’s official mint produces the popular Canadian gold, silver, platinum and palladium Maple Leaf bullion coins.  Although little known, the Royal Canadian Mint (abbreviated as RCM) also made silver bars in 1, 10 and 100 troy ounce sizes back in the 1970s and 1980s.  You can distinguish these older silver bars by their horizontal format, versus the vertical format of the newer bars.

PAMP SA – This acclaimed Swiss refiner is famous for its “Lady Fortuna” bullion bars struck in silver, gold, platinum, palladium and rhodium.  Many vintage PAMP bars are treasured by collectors and consequently trade for dizzyingly high premiums over melt value.  PAMP SA is still producing precious metal bars today, so not all PAMP bars are old.

Degussa – A German refiner celebrated for its poured silver bars, Degussa was purchased by the Belgian multi-national corporation Umicore in 2003.  Its logo is a half sun and crescent moon inside a diamond.  I don’t believe that any Degussa-branded bars were produced after 2003, but this claim is subject to further verification.

Bunker Hill – A defunct subsidiary of the U.S. multi-national Gulf Corporation, the Bunker Hill refinery operated in Kellogg, Idaho – an important lead, zinc and silver mining region. Bunker Hill produced mostly odd weight ingots with a lot of variation in size and shape. The company ceased production around 1981.  As a result, Bunker Hill vintage silver bars are rather difficult to find and expensive today.

Handy & Harman – Handy & Harman was a diversified U.S. industrial corporation that spent much of the 20th century deeply involved in the precious metals market.  They made a variety of larger poured and extruded vintage silver bars, typically with a conjoined, double-H as their hallmark.  The company ceased production of silver ingots some time ago, most likely in the 1980s.  Consequently, their bars are rarely encountered by collectors today.

U.S. Assay Office – This official government agency was tasked with the assaying and refining of precious metals.  The San Francisco, Philadelphia and New York City U.S. Assay Offices minted odd-weight silver bars from the 1930s through the 1960s.  Each one bears the seal of the United States, along with its year and city of manufacture.

These vintage silver bars are extremely rare and in incredibly high demand from collectors.  When one does arrive on the market, it usually sells for several thousand dollars, even if it’s only a 5 or 10 ounce bar.  Don’t mistake these ultra-rare ingots for the much more common early 1980s privately-minted bars that state “contains silver formerly stored at U.S. Assay Office”.

As a parting note, if you decide to pursue a strategy of stacking older silver bars in your precious metal IRA, it is imperative that you opt for segregated storage at your custodian.  This is more expensive than the more common non-segregated or commingled storage, but it will ensure that the vintage JM or Engelhard silver bars you add to your account today are the exact same ingots you pull out again at a later date.

Read more thought-provoking Antique Sage investing articles here.

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Read in-depth Antique Sage investment guides here.