Trends

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.

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Photo Credit: Grannies Kitchen

One of the questions I’m asked again and again by antique enthusiasts is why I believe that antique silver is a good buy.  Some people think it is too formal for today’s households.  Other people simply view it as an anachronism in a world dominated by smart phones and social media.  And to a limited extent, I sympathize with these opinions.

Antique silver will certainly never be used the way it was during the late 19th century, when prim and proper upper-crust Victorians used frilly silver utensils – sugar tongs, fish servers, citrus spoons, etc. – for every conceivable purpose.  But that doesn’t mean that I believe silver flatware is dead in the modern world, either.  Instead, I think there will be a powerful trend toward the adoption of sterling silverware for a very important practical attribute – antibiotic resistance.

Ever since they were first developed in the late 1930s, antibiotics have been a wonder-drug without equal.  They have allowed mankind to nearly eradicate bacterial infections that were deadly in prior eras, including killers such as tuberculosis, cholera, diphtheria and typhoid fever.  Many of us have never even heard of these dread diseases and, as a result, we largely take their continued medical insignificance for granted.

This is a grave mistake.

You see, we are rapidly entering a post-antibiotic world.  It was a good run, having lasted about 80 years, but many of the antibiotics that served us so well for so many decades are now losing their effectiveness.

Antibiotics kill bacteria in two primary ways: by preventing them from building cell walls or disrupting their DNA or RNA replication.  But bacteria have a way to fight back against this pharmacological onslaught: evolution.  Although nearly all of a bacterial colony may be destroyed by a given antibiotic, there will always be a few naturally resistant germs.  These resistant bacteria are then able to replicate unimpeded.  Eventually, after a long enough period of time, the world comes to be dominated by these drug-resistant super-bugs.

This is the new, frightening world we are now on the cusp of entering – the post-antibiotic age.

Medical science has gone to great lengths to delay this day of reckoning.  In most developed countries antibiotics are only available via a doctor’s prescription.  This tightly controlled distribution system is meant to ensure they aren’t taken casually, thus leading to drug-resistant strains.  But this tactic only serves to slow the evolution of antibiotic resistant infections – a strategy that has largely run its course by this time.

Medical researchers have also worked hard to develop new strains of antibiotics that bacteria aren’t immune to.  Even so, the golden age of antibiotic discovery was in the 1950s and 1960s, when fully 50% of the antibiotic drugs in use today were introduced.  Not coincidentally, the mid-20th century saw U.S. life expectancy increase by nearly 10 years.

But as we’ve recently begun to enter the post-antibiotic era, the  medical pickings have become increasingly slim.  New antibiotics are still being developed at tremendous monetary cost, but they often have dangerous side effects or limited applicability.  And it can easily take a decade or longer to bring a new antibiotic drug to market.

As a result, antibiotic resistant bacterial infections are on the rise worldwide.  The Centers for Disease Control (CDC) estimate that 2 million people in the United States contract an antibiotic resistant infection every year.  Over 23,000 of those people end up dying.  These numbers might seem manageable today, but they will undoubtedly rise in the future – possibly dramatically.

This is a situation custom-built for the resurgence of antique silver.

You see, silver is one of nature’s great antimicrobial agents.  It is effective in killing not only drug-resistant bacteria, but many viruses as well.  Better yet, there is little indication that germs develop widespread resistance to silver-based medicines like they do with conventional antibiotics.

Mankind has a long history of using the bactericidal qualities of silver to ward off disease.  The crews of sailing ships used to put silver coins in their stowed barrels of fresh water before embarking on long voyages.  This helped keep the water from growing unwelcome microbes.  Similarly, early North American pioneers placed silver coins into jugs of milk in order to keep them fresh longer.

The phrase “born with a silver spoon in one’s mouth” means that a person has been born into a wealthy family.  But the origins of the saying are quite literal.  In medieval times, only the aristocracy could afford silver utensils.  The peasants and common folk had to make do with wooden bowls and spoons.  However, only real silverware gave newborns (and anyone else who used it) protection against the common infectious diseases of the age.

Silver was a common fixture in the medical profession as recently as the 1940s.  Hospitals used to regularly give newborn babies silver nitrate eye drops.  This was done to prevent blindness from sexually transmitted diseases like chlamydia and gonorrhea, which can be passed from mother to baby during childbirth.  Alas, this cheap and effective method of disease-control was abandoned with the rise of antibiotics.

But as we fully enter the post-antibiotic era, the advantages of solid silver flatware will become increasingly obvious.  The more you use silver in your everyday life, the more protection you gain against infectious diseases.  Eating with real silver place settings is a start.  Adding other solid silver items, such as cups, bowls and pitchers offers additional benefits.  Big spenders can splurge on luxurious silver coffee or tea sets in the pursuit of a healthier, germ-free lifestyle.

But where does one find sterling silver utensils in a post-antibiotic world?  Our economy no longer produces non-stainless steel silverware in large quantities.  And what little real silverware is still being made today is only offered at premium prices.  So if you want to inoculate yourself against the rise of the super-bugs, you’ve got one realistic alternative: buying antique solid silver flatware and hollowware.

And that’s why I think owning antique silver is a trend for the 2020s and beyond.  Yes, I concede that it may take a decade or two for average people to figure out that science isn’t going to bail them out with some improbable miracle drug.  But they will figure it out; their health (and that of their family) depends on it!

In my opinion, those who have the financial means will buy antique silverware by the bucket load.  Those without the means will settle for old silver-plated utensils (which I consider a poor substitute for the real thing).  The poorest of the poor will be relegated to using cheap, but plentiful stainless steel.

I don’t know about you, but I’m buying antique sterling silver before the rush, while prices are still ridiculously low.  The post-antibiotic world has finally arrived, and it is just a matter of time until everyone else figures it out.

Read more thought-provoking Antique Sage trend articles here.

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