Browsing Category

Articles

Antiques Are the Anti-Bubble Asset Class

Antiques Are the Anti-Bubble Asset Class

One theme that keeps smacking me in the face again and again over the past few years is just how pervasive our current Everything Bubble is.  It has worked its tentacles into almost every conventional asset class in the market today.  They are all overvalued to some degree, with the worst offenders – the WeWorks, Ubers and Netflixs of the world – totally reliant upon a perpetual stream of fresh investment dollars from zero-interest rate crazed mouse-jockeys in order to continue operating.

So I was intrigued when I read an article on the popular financial commentary site Zero Hedge that introduced me to the concept of anti-bubble assets.  According to this theory, every financial bubble throughout history has also produced an anti-bubble – a boring, cheap asset class that is neglected in the rush for everyone to be part of the historic investing “new paradigm”.

I’ll quote Kevin Duffy, co-founder of the Bearing Asset Management hedge fund and originator of the anti-bubble thesis:

“One of the things we know from past bubbles is that you often get anti-bubbles. This was clearly the case in the year 2000 when you had the new economy bubble on one side, and the old economy anti-bubble on the other side. When tech stocks peaked in March of 2000, a lot of the value stocks bottomed at the same time.”

I can absolutely attest to the validity of this idea, because I experienced it firsthand.  In late 1999/early 2000, I was fresh out of college and new to the financial industry.  When I looked at the markets, it didn’t make any sense to me that Webvan (a money-losing online grocery delivery service) was trading at a market cap of over $1 billion while the staid tobacco firm of Philip Morris was trading at a lowly P/E of 5 and a fat dividend yield of over 8%!

I drooled over the concept of purchasing Philip Morris for the juicy dividend yield, but alas, it was not to be.  Being straight out of college, I did not have two dimes to rub together and nobody was going to loan money to a penniless 22-year old so he could speculate in the stock market.  As you can probably guess, Philip Morris went on to make its shareholders as rich as Nazis while Webvan went bankrupt in 2001.

But this ordeal underscored to me just how hopelessly irrational markets can become in extreme bubble environments.  And our current bubble is no exception.

Today’s Everything Bubble makes the late 1990s dotcom bubble refugees look like chump change in comparison.  Right now Tesla has an improbably large $151 billion market cap.  Netflix sports an eye-watering total valuation of $188 billion.  And Uber, even after being mercilessly punished by the stock market for being a piece of hot garbage, still retains an astounding $60 billion market cap.  Webvan – the biggest failed IPO of the dotcom era – has nothing on our current crop of bubble darlings.

So now that we know where the bubble is, the real question is where is the anti-bubble?  What asset class or classes will allow us to safely double or triple our money over the next 5 to 10 years?

And while there can ultimately be no assurances about future investment returns (as the famous 1930s economist John Maynard Keynes once observed, the market can remain irrational longer than you can remain liquid), buying anti-bubble assets certainly stacks the proverbial deck in our favor.

According to Kevin Duffy, precious metals, short-selling stocks, retailers (Ed. note: in light of the Covid-19 pandemic, going long retailers seems like a busted thesis) and active investing are the mirror images of today’s Everything Bubble.  These are the asset classes/ideas that simply don’t get the time of day from otherwise intelligent, rational investors.

Although I’m not going to take issue with Mr. Duffy’s largely accurate assessment of our broken markets, I would like to extend the definition of anti-bubble assets slightly.  I believe that in addition to gold and silver bullion, antiques, gemstones and fine art have also been wholesale abandoned in the rush to find the next Lyft, Beyond Meat or SpaceX.

Antiques, art and other hard assets are definitely perceived as boring has-beens at this point in the economic cycle.  But I like boring.  The perception that an asset is boring is what allows us to buy it for an obscenely low price.  Boring is what produces outsized investment returns over the course of a decade or two.

And this leads us to my next point.

When bubbles burst, you want to be sure to have some money laying around to take advantage of the bargains that are sure to materialize.  But I’m not convinced it is either feasible or wise to hold a 100% cash position.  This is where having some antiques and hard assets in your portfolio can be invaluable.

You see, antiques, gemstones and art, while not money, all share important similarities to money.  Money must possess five attributes in order to function properly as a medium of exchange.  It must be acceptable in transactions, durable, portable, scarce and easily divisible.

This list got me thinking about an article I wrote a few years ago titled The Five Aspects That Influence Art’s Desirability.  In that article I defined 5 attributes that antiques and fine art had to possess in order to be considered investment grade.  Those characteristics are quality (of materials and construction), portability, durability, scarcity and stylistic zeitgeist (how closely a piece matches the style of its era).

As you can easily see, investment grade antiques share 3 out of 5 of the properties associated with money: durability, portability and scarcity.  Right now nobody cares even a little bit about that fact, but the day is coming when they will.  The Everything Bubble will burst one day.  And when it does, bubble assets will plummet in value.

But people who have the foresight to invest in money-like, anti-bubble assets such as antiques, gemstones, fine art and bullion will do quite nicely.  Conversely, people who don’t buy today’s boring assets will eventually wish they had.

 

Read more thought-provoking Antique Sage investing articles here.

-or-

Read in-depth Antique Sage investment guides here.

Welcome to the Greater Depression

Welcome to the Greater Depression
Photo credit: Carol VanHook

I haven’t written much over the past couple of months.  That’s because I’ve been watching in rapt awe as the financial markets first dropped like a rock and then quickly recouped most of those losses in a ludicrously improbable rally.  The unfolding economic deluge, coupled with absolutely bizarre market dynamics have been fascinating to follow, if not somewhat disconcerting.

I had been expecting a financial crisis of some description for quite some time.  I just didn’t expect it to be triggered by a pandemic.  Much like the Spanish Inquisition, no one expects a pandemic.

So I’ve decided to put pen to paper here and record some of my observations on our current economic predicament.

But first things first.  We are absolutely screwed, financially speaking.  The long-feared Greater Depression has arrived.

On that cheery note, it is obvious to me that the entire Treasury yield curve is headed to zero sooner or later.  This has already happened for everything out to about 3-years until maturity, all of which currently trade for yields below 30 basis points (bps) – equal to 0.3%.  It is only a matter of time before whatever yield remaining in the long end of the Treasury curve gets slowly squeezed out – like a tube of toothpaste.

This might seem fantastical considering that the U.S. 30-year Treasury was trading for well over 2% as recently as the beginning of this year.  But we need look no further than Japan, which seems to perpetually be about 10 years ahead of the rest of the world (economically speaking).  Their entire yield curve is negative out to 10-years until maturity, with the Japanese 30-year bond trading at less than 50 bps.

An outcome like Japan’s was long thought to be impossible in the United States, but since the Covid-19 pandemic struck, a convergence with their experience seems to merely be a matter of time.

 

U.S. Treasury Yield Curve - May 2020

 

And this very neatly brings us around to my second thesis.  We have officially entered the Greater Depression.  The collapse in demand and output we are currently experiencing in the economy is without precedent unless one references the Great Depression of the 1930s.  Cumulative unemployment claims over the past 6 weeks from mid March to late April 2020 have totaled a staggering 30.3 million claims.

This puts the unemployment rate in some states (8 to be exact) at more than 15%!  If that doesn’t qualify as a depression level event, then I don’t know what is.  Yes, some of these unemployed people will head back to work when the stay-at-home orders are finally lifted, but far fewer than many hope.

With the country facing its long-telegraphed Greater Depression, you might think that the stock market would finally get a clue.  You would be wrong.  The S&P 500 is currently (as of early May) just 16% off its all time highs, hovering around the level of June 2019.  So let’s get this straight.  Financial Armageddon arrives and the stock market reacts by giving up its last 1 year of gains (in the context of a 10 year bull market), but not a penny more.

This makes no sense whatsoever.

It makes even less sense when you consider that wide swaths of corporate America are quickly going bankrupt.  The entertainment, vacation and leisure sectors, including cruise lines, casinos, hotels and resorts are on the fast track to going broke.

Brick and mortar retail companies are in the same predicament.  Lord & Taylor, J. Crew, Neiman Marcus and J.C. Penney are among the national chain stores that have declared bankruptcy (or soon will) due to coronavirus-induced economic disruptions.  And that last great department store stalwart, Macy’s, probably only has 2 or 3 years left before it joins them.

Now, don’t misunderstand me.  I’m not saying that all physical retailers or entertainment-oriented firms are going to disappear, just that there will end up being far fewer of these companies in existence after our Greater Depression concludes than there are right now.

The transportation sector is facing similar headwinds.  Many airline companies are headed to bankruptcy for obvious reasons.  And world trade has taken quite a hit as well, which is causing tremendous pain for trans-oceanic cargo shipping firms.

These trends are highly unlikely to reverse, too.  The world is de-globalizing, a process that will take many years, but appears to be virtually unstoppable at this point.

If this news wasn’t bad enough, the entire energy sector is currently on life support.  The price of WTI (West Texas Intermediate) crude oil plummeted below $20 a barrel in late April 2020 – commensurate with price levels last seen in 1979 and 1986!  Natural gas prices aren’t doing much better, bumping along late 1990s lows.  Oh, and those values aren’t inflation adjusted – just pure nominal goodness.

So yeah, a lot of oil & gas contract drillers, energy service firms and oil & gas exploration and production companies are going to go to corporate heaven pretty soon – along with all the bonds and stocks they’ve issued.  In fact, it is a safe bet that many companies – perhaps most companies – involved in drilling for oil and gas in the shale fields of the United States will be forced into bankruptcy.

The deflationary impulse from these events will be absolutely massive – an outcome not even remotely discounted in the securities markets at the current time.  The price of energy feeds into almost everything else that the global economy produces.  With oil and gas plumbing multi-decade lows, the prices of many goods will have a tendency to decline.

Now many people are quite worried about inflation right now.  This worry is misplaced, at least in the near term.  Yes, I am aware that the Federal Reserve has just printed $2.5 trillion over the past couple of months (with the promise of more where that came from).  But this is like throwing money into a black hole where the global economy once stood.  Those freshly printed dollars simply disappear forever into the maw of nearly unlimited liquidity demand.

The total value of securities that will ultimately become valueless due to our Greater Depression is certainly greater than $10 trillion, and probably more than $20 trillion.  The Fed’s new $2.5 trillion infusion doesn’t go very far in this context.  And their next $2.5 trillion won’t do the trick either.  They would have to print tens of trillions of dollars to effectively stoke inflation.  And while that might be a distinct possibility towards the end of the 2020s, I don’t see it as being a realistic outcome over the next few years.

But make no mistake – bad times are coming for the dollar, albeit several years (or longer) from now.

The U.S. dollar, along with every other fiat currency in the world, is slowly losing its ability to transmit value over time.  The importance of this development cannot be overstated.  The governments and central banks of the world have fully embraced debasement (generally in the form of MMT) as a painless solution to their economic problems.  But money printing is like an addictive drug.  At first it seems like an unmitigated good, with no negative repercussions whatsoever.  It is only later, when it is already far too late, that the printing press demons make themselves known.

Right now you can still find U.S. dollar denominated CDs paying around 1.4% or 1.5%.  But that won’t be the case forever.  As the March 2020 liquidity crisis recedes into the rear-view mirror, banks will pay depositors progressively lower and lower interest rates.  The natural floor is the Fed Funds rate, which is currently hovering between 0% and 0.25%

And even though the Fed has sworn up and down that they will not pursue negative interest rates, there is still a good chance that they will panic and cut below zero at some point in the future.

So what is an investor to do?

I believe the answer is tangible assets: precious metals, antiques, gemstones and fine art.

Due to the Greater Depression, there are tremendous bargains available in the world of antiques.  For example, I recently purchased a magnificent set of 12 French .950 fine silver teaspoons from the 1860s or 1870s on eBay for only $13.75 a spoon.  To put this value in context, I remember frequenting an antiques store in the late 1990s where a fine set of one dozen sterling teaspoons by Frank M. Whiting (a well-respected name among antique silver collectors) sold for $12 each.  And I thought that was quite a deal at the time.

In other words, even though more than 20 years have elapsed, nominal prices have barely budged!

Another example of undervalued tangibles can be found in the coin market.  I recently bought a couple mixed rolls of 90% silver U.S. State quarters/America the Beautiful quarters for almost no premium over circulated junk silver.  Each $10 face value roll consisted of 40 coins in outstanding proof condition.  Under normal circumstances, proof coins intended for collectors should always trade at a premium versus similar non-proof issues.

But due to the fallout from our Greater Depression, these wonderful coins are being treated as bullion pieces (for now anyway).

Sure, there will be a bit over 100 million specimens struck between the two series when the America the Beautiful series finishes up in a couple years.  This isn’t a particularly small mintage.  But guess what?  Those hundred million coins are enough for…wait for it…about 4/5ths of a single coin for each U.S. household.

And they are downright rare when compared to the Washington quarter mintages typically found in junk silver rolls and bags.  For instance, in their last year of regular production, there were over 1.2 billion silver Washington quarters struck in 1964.  Even if you assume a brutal attrition rate of 90%, there are still more 1964-dated Washington quarters in existence than there will ever be of silver proof State quarters and America the Beautiful quarters in the two series combined!

In the future, coin collectors looking back at this period of American history won’t care about any of the nasty copper-nickel clad coinage struck for circulation.  Instead, they will gravitate towards precious metal bullion coins and select commemorative pieces (like the America the Beautiful quarter series) struck in silver or gold.  And because the silver proof mintages for the State quarter/America the Beautiful quarter series are spread over a hundred different designs spanning 20 years, collectors will have fertile ground to build an interesting, attractive and attainable collection.

So why not pick up a roll of these undervalued silver coins for only $160 to $180 each (subject to fluctuating bullion prices) while you still can?  It sure beats earning nothing in a savings account or spinning the roulette wheel in the crazed stock market.  The Greater Depression might mean that conventional assets are a losing proposition, but it doesn’t mean that tangible asset investing is dead.

 

Read more thought-provoking Antique Sage editorial articles here.

-or-

Read in-depth Antique Sage investment guides here.

Practicing the Art of Financial Self-Defense

Practicing the Art of Financial Self-Defense

If you live long enough, you get the honor of witnessing some pretty stupid things.  And nowhere is this statement truer than in the arena of investing.

In the late 1920s, know-nothing shoeshine boys were giving their customers hot stock tips.  Everyone knew that the stock market was a sure thing – an easy path to riches.  Only a few years later the Dow Jones Industrial Average crashed by 89% during the Great Depression.

An entire generation of investors was wiped out.

In the mid 1960s, Nifty Fifty companies like Xerox, 3M and Polaroid were widely considered “one decision stocks” – with the only correct decision being to buy (and hold forever).  The DJIA peaked at nearly 1,000 in 1966 during the height of the mania…and then proceeded to move sideways for the next 17 years.

The index only irrevocably surmounted the stubborn 1,000 barrier in late 1982.  Some of the Nifty Fifty names even went on to declare bankruptcy eventually!  So much for buying and holding forever.

In the mid 2000s, people caught house-flipping fever.  Many thought they had discovered the perfect wealth building plan: buy multiple houses simultaneously with no money down and then sell them to some other sucker at inflated prices.  During this time, Ben Bernanke of the Federal Reserve loudly declared that “we’ve never had a decline in house prices on a nationwide basis [since the Great Depression]”, implying that a widespread housing bust simply couldn’t happen.

Over the next decade, nearly 8 million homes were foreclosed on in the U.S., destroying the hopes and dreams of millions.  Ben Bernanke failed upward during this debacle, becoming the Chairman of the Federal Reserve.

In 2017, tech junkies, fraternity bros and anarchists everywhere were enthralled with the idea of crypto-currency in the bizarre belief that all the old rules surrounding money had changed.  But as far as I can tell, a crypto-currency is a digital guarantee that you own nothing…nothing tangible anyway.  Bitcoin, the undisputed king of the crypto-currencies, peaked in December 2017 at nearly $20,000 a unit.

It now trades for just over $7,500 – down over 61% – with the supply of greater fools running increasingly thin.  There will be more losses here for sure.

 

Bitcoin Price Chart

 

In 2020, we are grappling with the largest bubble in history – the dreaded Everything Bubble.  The coronavirus just popped this bubble, but the stock market still hasn’t gotten the message.  When it finally does, look out below.

All of these incidents are historical examples of just how emotionally unhinged investors can be.  It is also an object lesson in why you should practice financial self-defense.  Participating in a bubble can feel wonderful on the upside, but the dream of riches always gives way to the nightmare of reality at some point.

This is why I heavily rely on historical precedent when constructing my personal investment portfolio.  And right now the most undervalued, overlooked asset class by far is portable tangible assets – things like antiques, bullion, fine art and gemstones.

But the concept of financial self-defense also dictates that a portfolio must be well-balanced.  One simply can’t load up on a single asset class to the absolute exclusion of all others.

So in my opinion, the best financial self-defense tactic is to tier or layer your assets.  In this context, tiering your assets means to diversify across different asset types with different cashflow, liquidity and safety characteristics.  This strategy should give you the financial flexibility to buy undervalued assets, while riding out whatever economic disasters may come.

The first asset class vital to the art of financial self-defense is cash.  This can take the form of a checking account, savings account, savings bonds or even physical cash.  Cash is the most liquid of the asset classes and allows an investor maximum financial discretion.  In other words, whoever has a fat pile of cash when a crisis hits will be able to buy investments cheaply when others are forced to panic sell.

Cash is a very underrated asset at the moment.  The stock market has done so well since the last recession that a lot of investors believe that “cash is trash”.  A corollary to this is the misguided notion that you must always be fully invested, usually in an equity index fund.  But this anti-cash stance couldn’t be more unwise.  The ideal time to build a strong cash position (if you don’t already have one) is before a crisis strikes.  The second best time is right now, regardless of the macro situation.

A word of warning though – don’t rely on credit as a substitute for cash.  In a liquidity crisis, common types of consumer credit, such as bank overdrafts, credit cards and payday loans, may very well no longer be available.  As the old saying goes, “A banker will offer you an umbrella when it is sunny, only to take it back at the first sign of rain.”

The second tier of assets in a properly diversified, financial self-defense portfolio is conventional investments.  These include stocks, bonds, mutual funds and ETFs – paper assets that are commonly encountered in IRAs, 401-Ks and brokerage accounts.

Conventional paper assets are generally very convenient to buy and sell.  However, liquidity in this asset class can disappear shockingly quickly in a financial crisis.  But because – pre-coronavirus – it had been more than a decade since our last financial crisis, many people foolishly forgot this fatal flaw of the paper asset markets.

Due to the all-pervading Everything Bubble, I have difficulty recommending anything other than token allocations to most stock and bond sectors at this time.

The third integral part of any financial self-defense plan is real estate ownership.  This is most commonly recognized as owning your own home.  But it can also include owning residential rental properties or raw land.

Unfortunately, due to the Everything Bubble real estate suffers from the same overvaluation problem as stocks and bonds.

That leaves us with the final (and in my opinion best) layer of our financial self-defense cake: portable tangible wealth.  As noted above, this asset class consists of antiques, bullion, fine art and gemstones.  These are items that have been broadly recognized throughout history to possess substantial value, a large portion of which is often intrinsic.

For centuries the middle class and wealthy relied heavily on portable tangible wealth as a discreet and effective store of wealth that could be passed down from generation to generation.  For example, in 18th century Georgian England a house full of art and antiques was considered both a cultural and financial prerequisite for admission into the upper class.

These assets also served as a vital backstop against poverty when all else failed.  Many a European noble family resorted to selling the family silver or jewelry when financial bets went wrong.  Now this outcome might not have been ideal, but it did put food on the table at a time when there was no social safety net.

However, these historical lessons have largely been forgotten today.  Instead, we live in a world where many people put their savings in the stock market, which we are told by the financial media will provide 10% returns from now until forever (hint: it won’t).  Others stay 100% in cash, earning a paltry 1% or 2% a year while inflation eats it all up.

Most households are woefully under-allocated to alternative assets such as antiques and bullion.   Even a small addition to the average person’s portfolio would go a long way to blunting the risks associated with more traditional asset classes.  Financial self-defense counsels us to hold a broad basket of assets, with an emphasis on what is currently undervalued.  So you can feel reassured that when you buy a fine Edwardian diamond pin or a set of sterling silver flatware, history is on your side.

 

Read more thought-provoking Antique Sage investing articles here.

-or-

Read in-depth Antique Sage investment guides here.

When Premiums on Antiques Collapse

When Premiums on Antiques Collapse

If you are a frequent visitor to the Antique Sage website, you know that I talk a lot about premiums in relation to the vintage jewelry, sterling silverware and rare coin markets.  Premiums are simply the price charged on an item above and beyond its intrinsic value, usually expressed as a percentage.  Only pieces composed of precious materials (gold, silver, gemstones, etc.) have intrinsic value, but these are exactly the kinds of antiques that I’m interested in.

In one sense, a premium is the imputed artistic value of an antique item – the price people are willing to pay to acquire a historically or aesthetically interesting piece in excess of its raw material value.  As such, premiums can vary widely across both time and geographic distant.  When a certain item is “hot” in the antiques marketplace, premiums will be high.  Likewise, when an object is out of favor and few people want it, premiums will be correspondingly low.

This is pretty straightforward stuff, right?

Well, there has been an interesting trend developing in the antiques space over the past year or so.  I’ve noticed that the premiums on a broad range of intrinsically-valuable antiques have compressed considerably over that time.  In fact, it wouldn’t be a stretch to say that in some instances antique premiums have outright collapsed.

The poster child for this phenomenon is semi-numismatic gold coins.  These are coins struck before the 1930s Great Depression, when most national monetary systems were still on the classical gold standard.  Because these coins were intended for circulation, they were struck in large quantities.  Therefore, they are fairly common today (although scarcity varies by denomination, date, mint and condition) and have relatively modest premiums over their melt value.

Now, when I say that premiums for semi-numismatic gold coins are modest, I mean that even the cheapest examples (from a premium perspective) traditionally traded for 15%, 20% or 25% over melt.  There is persistent collector/investor demand for these treasures that means they pretty much never trade right at the value of their gold content, but always a bit over.

At least, that used to be the case.  Now I’m finding it increasingly easy to find pre-1933 semi-numismatic U.S. gold coins (which consistently sport higher premiums than similar foreign gold coins) retailing for 5% to 10% over melt.

This used to be unheard of.

For the better part of a century, old U.S. gold coins drew robust bids because of strong collector interest in their historical importance.  For example, in the late 1990s/early 2000s a circulated $2.5 quarter eagle gold coin might have gone for a premium of 300% or 400%.  A common-date U.S. $20 double eagle may have sold for 40% or 50% over spot.  These coins just didn’t trade close to their bullion value, unless they were heavily worn or damaged in some way.  Collectors would snap them up if their premiums dipped even a little bit.

But no longer.

A couple months ago I discovered a lightly-circulated U.S. $10 Liberty Head gold coin listed on eBay by a major bullion dealer for just 4% over melt.  And that’s not the only deal I’ve found lately either.  It is commonplace to find old British gold sovereigns selling for 3% to 5% over spot on eBay (Editor’s note: this article was written before the precious metals shortage of March 2020, so you might not be able to find the same sorts of deals today).  I even stumbled across a 1931 Austrian gold 25 Schilling coin during Black Friday (2019) selling for 2% under spot on Etsy.

This is crazy stuff.  After all, bullion dealers don’t receive the full proceeds from their sales.  They have to pay the online listing platform (eBay, Etsy, etc.) and the credit card processor their respective cuts.  They also generally have to pick up the tab for free shipping.

By the time all these fees get paid, the bullion dealer can’t be clearing more than the melt value of these coins in many instances.

But the madness doesn’t end with semi-numismatic gold coins.

Antique sterling silverware has also seen a dramatic fall in premiums.  In many instances it is possible to buy full or partial sets of vintage sterling flatware by venerable U.S. manufacturers like Gorham, Reed & Barton and Towle for very little above melt value.  Even pieces that would normally be considered high-end can sell for improbably low premiums.

For example, I recently purchased an elegant set of 1920s French teaspoons in 1st standard (.950 fine) silver on eBay (pictured in the hero image at the top of this article).  The workmanship on these demitasse spoons was absolutely exquisite.  Their classic thread, fiddle and shell pattern had been double-struck (patterned on both the front and back) in very heavy-gauge silver – a good indicator of quality.

But the real surprise was that they were created by the French silversmith and jeweler Robert Linzeler, whose mark was active in Paris between 1897 and 1926.  Robert Linzeler did top-notch work – so much so that he became a regular supplier to the French luxury firm of Cartier.  In fact, after Linzeler de-registered his maker’s mark in 1926, it is probable that he continued working chiefly as a Cartier contractor.  When Linzeler finally retired in the late 1930s, Cartier valued his firm so highly that they ended up purchasing it.

Now normally one would expect a treasure of this magnitude to sell for a very strong premium – perhaps something on the order of 200% to 400% over melt.  The value of the contained silver would typically be considered secondary to the artistic value and superlative workmanship of the teaspoons.  But in today’s tremendously undervalued antiques market I managed to pick up this gorgeous prize for a piddling 73% premium – a mere $67 above scrap value.

I paid more for the spoons’ value as silver bullion than I did for their superior craftsmanship!  This situation would have simply been inconceivable as little as a decade ago.

So what’s going on?

I suspect that many antique/bullion/collectible dealers are running into cashflow problems.  When this happens, one of the quickest and easiest ways for a business to raise more funds is to discount inventory in the hopes of drawing in bargain hunters.  Although it is too soon to tell, if my hunch proves correct we could eventually be looking at a full-blown liquidity crisis – probably sometime in 2020 to 2021 timeframe.  Under those circumstances, people with too much leverage and too few dollars will be forced to panic liquidate good antiques at great prices.

FYI, I originally wrote this article before the March 2020 market crash, so this turned out to be a pretty good prediction.

You can take advantage of this trend toward lower premiums by buying when everyone else is selling.  I would also encourage you to stack credit card rewards with eBay Bucks to maximize your purchasing power.  I have been following my own advice in this regard, and have been buying aggressively.  I am confident that my investments will appreciate briskly in due time.

 

Read more thought-provoking Antique Sage trend articles here.

-or-

Read in-depth Antique Sage investment guides here.