How the International Gold Standard Ended in the 1930s

How the 1930s Global Gold Standard Ended
Photo Credit: LBMA
This Art Deco inspired French 100 franc gold coin was struck in 1936 – the year the international gold standard finally went bust.

I’ve been fascinated by the 1930s collapse of the international gold standard for some time.  Over the course of the 20th century we somehow went from circulating gold coinage being considered normal and “right” by mainstream economists, to a wacky world of perpetually depreciating fiat currencies where even the mention of the word gold gets you labeled a monetary crackpot.

Although a lot of ink has been spilled about how the United States abandoned the gold standard in 1933, there is precious little commentary on how the gold standard fell apart in other countries.  Franklin Delano Roosevelt’s decision to devalue the dollar undoubtedly played a big part in the end of the international gold standard, but it wasn’t the only important event.

I hope to fill in the historical gaps with this article.

Our story begins at the dawn of the 20th century, before the outbreak of World War I.  At this time, almost every nation – or at least every nation that mattered commercially – had adopted what was known as the classical gold standard.  Under the classical gold standard a nation’s monetary unit was defined as a specific weight of fine gold.  For example, the British pound was defined as being 7.3218 grams of pure gold.  Each French franc was fixed at 0.2904 grams of gold.  And the German mark was pegged at 0.3584 grams of gold.

The classical gold standard stipulated that the national central bank had to hold gold coin or bullion in sufficient quantities to back outstanding bank deposits and circulating paper currency.  But no country maintained a 100% coverage ratio.  Instead, most central banks were bound by law to maintain lower coverage ratios that generally ranged between 30% and 60%.  This was done on the (sometimes false) premise that not everyone would want to exchange their paper money for gold simultaneously.

Another tenet of the classical gold standard was that the national currency had to be freely convertible into gold at the stated rate upon demand.  Anyone – citizen or non-citizen – could present a banknote at a bank window and walk out with a gold coin of the appropriate value.  In addition, there could be no capital controls – laws impeding or forbidding the import or export of gold coin or bullion between nations.

For many decades this system worked remarkably well.  Between 1871 and 1914 Europe experienced a commercial and cultural golden age, driven in no small part by the economic stability that the classical gold standard provided.

Then disaster struck in 1914: World War I.

The expenses associated with this global conflict were immense.  It was easily an order of magnitude more expensive than any previous conflict in human history.  Every belligerent nation was forced to suspend gold convertibility once it became clear the war would not end quickly.  The warring countries also ran up massive sovereign debts in an effort to finance wartime expenditures.

But the classical gold standard was such a powerful idea that most countries involved in World War I sought to reestablish convertibility as soon as practicably possible in the aftermath of the conflict.  It is just that in most circumstances these new gold pegs had to be established significantly below pre-war parity.  In other words, the countries spent so much on the conflict that they were forced to devalue their currencies – sometimes by a considerable amount.

 

U.S. 1882 $100 Gold Certificate

Photo Credit: papercut4u
Here is a rare U.S. 1882 $100 Gold Certificate.  Notice the prominent statement on it that reads “gold coin repayable to the bearer on demand”.

 

Great Britain was a notable exception to this rule.  Before the Great War, London had been the undisputed center of global finance.  The British attributed this – at least in part – to the stability of the pound sterling under the classical gold standard.  Every pound had been exchangeable for 0.2354 troy ounces of pure gold since Sir Isaac Newton set the exchange rate back in 1717.  The only interruption in convertibility occurred during the Napoleonic wars of the early 19th century.

The non-convertibility of the pound during World War I was merely seen as another such inconvenience by the British monetary authorities of the time.  Much like in the aftermath of the Napoleonic wars, they strove to reestablish the pound’s pre-war parity to gold and then regain their position at the center of the financial universe.  Winston Churchill – in his capacity as the Chancellor of the Exchequer – did indeed re-peg the pound to its pre-war gold parity in 1925, but London never did manage to regain its throne as the preeminent global capital market.

Instead, a bizarre three-way system formed with New York, Paris and London sharing monetary hegemony in the inter-war period.  The U.S. dollar, British pound and French franc all became internationally important gold-backed currencies in the new post World War I financial landscape.

Although the international gold standard had been largely restored by the latter half of the 1920s, it was not the classical gold standard of the pre-war years.  Most nations chose to “economize” on the use of gold by adopting what was called the “gold exchange standard”.  In this scenario, a nation held its reserves in the form of both gold and foreign currencies exchangeable for gold.  In most cases, this meant U.S. dollars or British pounds.  The French franc was only re-pegged to gold in June 1928 at about 1/5th of its pre-1914 parity.

Another development was that gold coins were struck less frequently by gold standard nations in the inter-war period.  In most places, gold coins no longer circulated in day-to-day commerce as they had before 1914.  These trends towards sovereign mints striking fewer gold coins and those coins circulating less frequently only accelerated once the Great Depression began.

In tandem with this, some countries embraced a modified “gold bullion standard” in which the smallest allowable gold/currency swap typically involved 400 troy ounce London Good Delivery bars.  Great Britain was the leading example of a gold bullion standard in the inter-war years.  In order to exchange your pounds for gold post-1925, you needed to present around £1,700 at the Bank of England.  This represented several years’ salary for a skilled white-collar worker of the time – a small fortune.

In contrast, the classical gold standard used by the U.K. before World War I was much friendlier to the average man on the street.  Before 1914, a mere £1 note was convertible into a gold sovereign coin.

Even though the international gold standard appeared healthy in the late 1920s, in reality intractable problems lay just beneath its glittering façade.  World War I had been characterized by gigantic sovereign debt issuance and accompanying inflation.  Most belligerent nations (with the notable exceptions of Great Britain and the U.S.) chose to devalue their currencies before re-pegging to gold again in the 1920s.  Despite these near universal devaluations, there was still too little gold in the global monetary system to support the mountain of credit and currency that had accumulated.

 

Old U.S. Gold Certificates for Sale on eBay

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After a sharp, but brief, post-war recession that ricocheted through the global economy from 1919 to 1922, the Roaring 1920s began.  This decade-long non-stop party was fueled by alcohol, gambling and debt – with debt being the worst of the three vices by far.  Banks happily gave out loans for the purchase of real estate, stocks and even consumer goods like cars, vacuum cleaners and refrigerators.  If you could fog a mirror, you could get a loan.  And although the Roaring 20s is primarily associated with the U.S., the accompanying credit explosion happened in other developed markets like Western Europe and Japan, too.

The newly established U.S. Federal Reserve made a bad situation worse by recklessly encouraging credit expansion in the face of obvious securities market bubbles.  In July 1927, the then head of the Federal Reserve Bank of New York, Benjamin Strong, gave the already-inflated U.S. stock market a “coup de whiskey” by cutting the Fed’s discount rate.  The artificially low discount rate then spurred additional speculative borrowing in an economy already saturated with debt.

In many ways, this maneuver was no different than the modern-day insanity of the Fed pegging short-term interest rates at 0% in an attempt to get the last sucker to buy an overvalued house in Southern California.

But the reason that Strong pursued this unwise policy is the really astonishing part; he did it as a personal favor to the Bank of England, which wanted lower U.S. interest rates in order to make investing in London at higher rates more favorable!  In other words, the British pound was overextended and the Bank of England had insufficient gold reserves (due to their aggressive 1925 peg to pre-war parity).  By lowering U.S. interest rates, the Fed could drive money (in the form of gold or dollars, either one would work) into the U.K. where they would pad out the pound’s gold coverage ratio.

Benjamin Strong apparently never seriously considered that his actions would lead to even greater speculation in the U.S. stock market, thus ultimately leading to the Crash of 1929 and the Great Depression!

But things were falling apart in the global economy even before the infamous 1929 stock market implosion.  After frenetic price increases during World War I and into the early 1920s, many commodity prices gradually fell for the rest of the decade.  This was due to rampant over-investment and consequent over-production.  Commodities as diverse as sugar, oil, copper, rubber and beef either fell or stagnated in price during the mid-to-late 1920s.

Emerging market countries that relied primarily on commodity exports to power their economies felt the pinch first.

Argentina, a major agricultural producer, abandoned the gold standard in December 1929.  Venezuela, a leading oil exporter, devalued its currency in September 1930.  Commodity export powerhouse Canada didn’t formally break its peg to gold until 1933, but it did put severe restrictions on gold exports starting in 1928.

Although the U.S. stock market crash of October 1929 is widely viewed as the beginning of the Great Depression, the world didn’t experience its worst effects until 1931.  It was only after the major Austrian bank Creditanstalt unexpectedly failed in May 1931 that the economic crisis really intensified.

 

U.S. Double Eagle Gold Coins

Photo Credit: Portable Antiquities Scheme
$20 double eagle gold coins (pictured above) were a primary form of bank reserves in the United States when the country was still on the gold standard.

 

The collapse of this Austrian bank put pressure on German banks, which also began to fail en masse.  In July 1931 Germany nationalized its largest banks, suspended the gold convertibility of the Reichsmark, imposed capital controls and ceased payments on its World War I reparations.  It then capped off this financial disaster by defaulting on its sovereign debt.

The reverberations of this economic catastrophe were felt around the world, but Great Britain was perhaps the hardest hit.

Up until the summer of 1931, most countries made a determined effort to maintain the international gold standard.  It was widely believed by mainstream economists of the time that the gold standard was the monetary cornerstone of global prosperity and had to be retained at all costs.

The Bank of England, in particular, secured multiple rounds of gold loans from the Federal Reserve, the Banque de France and private banking consortiums in an effort to maintain its faltering gold coverage ratio in the wake of the German implosion.  But the pressure on the British pound was unrelenting.  Nervous businessmen, shrewd currency speculators and wary citizens all exchanged pounds for gold (or good-as-gold U.S. dollars and French francs) as quickly as they could.

As summer turned to early fall, the monetary pressures on the British pound became unbearable.  The Bank of England’s gold coverage ratio fell below the critical 25% threshold.  The government was in crisis as it attempted to impose draconian budget cuts in the midst of rising unemployment and widespread economic distress.

The end came suddenly.

On September 16, 1931, – an otherwise nondescript Wednesday – £5 million in gold and foreign exchange reserves exited the U.K.  On Thursday that amount rose to £10 million.  On Friday it was £18 million.  On Saturday – a day when the banks closed early – more than £10 million fled the country looking for safer shores.  On Sunday, September 20th, the Bank of England recommended that the British government break the pound’s peg to gold, which Parliament officially did the very next day.

Great Britain’s devaluation sent shockwaves through the international gold standard community.  The British Empire, with London at its heart, was one of the world’s most important financial centers.  Sterling had maintained a more or less constant link to gold for more than two centuries.  The pound no longer being backed by gold was nearly unthinkable.

 

1920s & 1930s Foreign (Non-U.S.) Gold Coins for Sale on eBay

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And yet once it happened, the dam burst.

In the weeks after the British devaluation, country after country followed suit.  India, a British colony at the time, de-pegged from gold at the same time as Britain.  Australia, a former British colony, devalued its pound simultaneously.  So did Ireland.  The Nordic countries – Sweden, Denmark, Norway and Finland – all abandoned the gold standard between September and October 1931.  Nations as diverse as Portugal, Columbia and Hungary also suspended the convertibility of their banknotes into gold in the fall of 1931.  Even Japan discarded the gold standard in December 1931.

Despite the exodus of so many countries from the international gold standard in late 1931, some nations stayed the course.  The United States and France – two of the three great money centers of the time – continued to adhere to the gold standard despite the worsening economic outlook.

But the situation for gold as money was looking increasingly bleak.

All the countries that had debased their currencies along with the U.K. in 1931 now found that their exports were suddenly more competitive in the global markets.  Conversely, nations that continued to embrace gold found their own exports to be artificially expensive.

This financial asymmetry put ever increasing, unrelenting economic pressure on any nation that chose to stick to the international gold standard.

Outside of Europe’s financial center of gravity, only a handful of non-European countries maintained their peg to gold after 1931.  The United States was the most important of these countries.  But South Africa, a major gold producer thanks to its vast Witwatersrand deposits, also stubbornly kept its gold-backed pound intact.

For a little more than a year, the international gold standard struggled on.  But the Great Depression only deepened.

South Africa finally abandoned the gold standard in December 1932.  The United States was not far behind.

I won’t linger on the drama surrounding the United State’s departure from the gold standard in March of 1933.  That has been well-documented elsewhere.  However, I will give a short excerpt from an article I previously wrote about pre-1933 U.S. gold coins:

 

“Prior to the Great Depression of the 1930s, the United States was on the gold standard.  Under this arrangement, dollars were exchangeable for gold at a fixed rate – $20.67 for every troy ounce of gold.  But the financial dislocations created by the Great Depression put incredible strain on this convertibility scheme.  As bank after bank collapsed, average people began withdrawing their money from the financial system fearing that their bank would be next.

Compounding the problem was the fact that there was no insurance for bank deposits; the FDIC did not exist at this point in time.  As a result, the wise move was to remove your funds from any questionable bank rather than risk losing your hard-earned money when it failed.

The financial crisis came to a head in January-February 1933 when two Michigan banks – the First National Bank of Detroit and the Guardian National Bank of Commerce – effectively became insolvent.  The Governor of Michigan was forced to declare a bank holiday in order to avoid a general banking collapse.  This action frightened people in neighboring states who believed their governors may be forced to follow suit.

The crisis quickly spiraled out of control.

One day after his inauguration on March 4, 1933, newly elected president Franklin Delano Roosevelt declared a national bank holiday.  One month later on April 5, 1933, FDR issued his infamous Executive Order #6102 which suspended domestic gold convertibility of the dollar.  In addition, citizens were required by law to surrender their gold coins, bullion and gold certificates to the government.”

 

Interestingly, Canada only formally suspended the convertibility of its paper money into gold on April 10, 1933 – a full month after the U.S. had left the gold standard!  Of course, Canada had already prohibited the export of gold overseas for years beforehand.  But it is still notable that Canadian citizens could exchange their banknotes domestically for a hodgepodge of gold bullion, British gold sovereigns, Canadian gold coins or U.S. gold coins (the type of gold was at the discretion of the bank) for longer than U.S. citizens could.

By the early summer of 1933, the situation for the remaining gold standard countries was getting desperate.

 

1920s & 1930s U.S. Gold Coins for Sale on eBay

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Hoping to reach an international agreement to end the Great Depression, the world’s major economic powers held a conference in London from June 12th to July 27th, 1933.  The lifting of tariffs, debt forgiveness and the stabilization of exchange rates were on the agenda, but no agreement was forthcoming.

As the London Economic Conference wound down, a core group of European nations publicly announced that they intended to remain committed to the international gold standard.  These so called “Gold Bloc” nations were the Netherlands, Switzerland, France, Italy, Poland and Belgium, along with the micro-states of Luxembourg and Danzig.

It is interesting to note that two of the Gold Bloc countries – Switzerland and the Netherlands – were using the same gold parity that they had before World War I.  In other words, these countries (which had been neutral during the Great War) did not devalue their currencies after 1914.  They were the last nations on earth to maintain their gold pegs unchanged since the 19th century.  Incidentally, the Swiss Franc and Dutch Guilder were also the world’s strongest currencies during the 20th century.

By the autumn of 1933, the Gold Bloc members – all located in Europe – were nearly the only countries in the world still on the gold standard.  The last of the monetary traditionalists had circled the wagons, hoping their solidarity would be enough to fend off the rising economic storm.

 

Number of Countries on the Gold Standard from 1920 to 1936

 

But it was not to be.

As the Great Depression progressed and country after country left the gold standard, the pressure on those who remained wedded to gold only increased.  Reserves of all types – primarily gold, but also foreign currency and bonds – steadily flowed out of those nations still pegged to gold.

Even France, which had fixed the franc to gold at an artificially low rate in 1928, began to have problems.  This was notable because during the early part of the Great Depression, gold had flowed into the Banque de France due to the undervalued franc.

But during the latter part of the Great Depression, this situation completely reversed.  The once undervalued franc, still pegged to gold, now became overvalued compared to the dollar and the pound.  As a result, gold and other foreign reserves began to flow out of Paris in quantity.

Despite all official pronouncements and new policies, the plight of the Gold Bloc steadily worsened.

By 1935 the Gold Bloc shrank as Belgium, Luxembourg and the Free City of Danzig all devalued their currencies in May of that year.  Now only five lonely countries remained in the Gold Bloc: Switzerland, the Netherlands, France, Italy and Poland.

The beginning of the end for the international gold standard was, curiously enough, geopolitical in nature.  In March 1936, Hitler marched his Nazi armies into the demilitarized Rhineland in clear violation of the Treaty of Versailles.  No one opposed him.  No country in Europe felt it had the military might to do so.

This was a wakeup call to all of Europe.  Peace would not last.  The World War I peace dividend had been squandered during the 1920s and early 1930s.  It was now imperative for all European nations to rebuild their militaries as quickly as possible.

And building armies is not cheap.

The financial markets instantly realized what this meant.  The budgetary fiscal discipline that the Gold Bloc countries had shown up to this point was instantly destroyed.  Everyone knew they would be forced into massive deficit spending in order to reequip their armies against possible German aggression.

Poland was the first to go, breaking its peg with gold in April 1936.  The remaining countries of Switzerland, the Netherlands, France and Italy – the core of the core – all stayed linked to gold during the summer of 1936, desperately looking for a way out of their monetary dilemma.

But there was no solution.

After suffering massive gold outflows all summer, France finally capitulated.  On September 26, 1936 – a Saturday – the convertibility of the French franc was suspended.  It took less than 48 hours for the Netherlands and Switzerland to follow suit.  Italy’s gold peg collapsed about a week later in early October 1936 (although it should be noted that Italy had already placed restrictions on the export of gold way back in 1934).

The Gold Bloc – and with it the international gold standard – had ceased to exist.

However, there was still one nation that purportedly stayed on the gold standard right up until World War II – tiny Albania, situated on Europe’s Adriatic coast.  I say purportedly because information about century-old monetary policies in obscure countries is nearly impossible to verify.  Nonetheless, Albania supposedly maintained a circulating gold currency (the Lek) right up until it was invaded by Mussolini’s Italy in April 1939.

When the international gold standard collapsed, most economists of the time naively believed the break with gold would be temporary.  There was a widespread assumption that once the Great Depression ended and prosperity returned, most nations would happily reestablish their currency’s link to gold.  In fact, nearly all countries that abandoned the gold standard in the mid 1930s still officially defined their currency in terms of gold according to law (just less gold than before devaluing, obviously).

But World War II destroyed any desire, or even ability, to return to the gold standard.  Europe had been the beating heart of gold convertible currencies, but World War II ripped that heart out.  While World War I may have begun the destruction of the international gold standard, World War II definitively killed it.  Our money has never been the same since.

 

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Longines – The Watch Brand That Time Forgot

Longines - The Watch Brand That Time Forgot

A few weeks before the 2021 holidays I stopped over at my parent’s house on a mission.  My 17 year old niece is a fiction fanatic and I wanted to gift her a trilogy of paperback fantasy novels that I had read as a teenager.  However, after college I had opted to leave the books at my parent’s house as space was in short supply in my new (and very cramped) urban apartment.

Now my parents are borderline hoarders.  I’ve never known them to willingly get rid of anything that might prove to be even remotely useful in the future.  As my mom likes to say, “I’ll need it the minute I throw it out!”

So I thought my chances of finding that paperback trilogy for my niece were pretty good.

Then reality intervened.

It turned out that my parents had converted my old room into a makeshift storage warehouse.  It was packed nearly to the ceiling with archive boxes full of…well…stuff.  Think of the ending of Indiana Jones and the Raiders of the Lost Ark, except on a much smaller scale.

I dived in, ultimately spending hours picking through the debris.  I found everything from wicker baskets to a book on how to program computer graphics from the 1980s.  But the fiction trilogy I was looking for eluded my search.  I suspect that it was thrown out at some point.

It seems that although my parents like to save stuff, it is “their” stuff (and not anyone else’s) that is important in the grand scheme of the universe.

I had struck out.

However, just as I was about to call off the search I noticed something glinting in the dark corner of a partially opened archive box.  I reached down with anticipation and slowly pulled out a beautiful vintage Longines wristwatch housed in a solid 14 karat yellow gold case, circa 1950.

This was a surprising development for me, but not too surprising.  You see, I have a knack for finding valuable things – so much so that I have occasionally been called a “truffle pig”.  I’m the sort of guy who randomly pulls an old sterling silver spoon or gold thimble out of a junk drawer, provided any are there to be found of course.

I gave the newly found watch to my parents declaring, “It’s a Longines cased in 14 karat gold.  That’s a good old watch; hold onto it.”  After briefly examining the watch, my parents had an epiphany about it origins.  This Longines had a family story behind it – one that I’ll recount a little further on in this article.

But what a beauty this vintage Longines was!

Its solid 14 karat yellow gold case featured prominently flared lugs – a hallmark of 1940s to early 1950s Retro era design.  The completely original (albeit somewhat stained) dial sported applied gold Roman numeral markers along with a period appropriate Longines logo.  The sub-seconds – located at 6 o’clock – was absolutely typical for the time.  Popping off the back of the case, I found the movement was a manual-wind, 17-jewel Longines caliber 9LT.  The movement’s serial number (7958924) indicated that it was produced in the year 1950.

An updated version of the 1940s era caliber 9L, the 9LT is a really interesting watch movement.  Both calibers were workhorses of the Longines wristwatch lineup, yet hardly get a second look from most vintage watch enthusiasts today.  In fact, it is difficult to find out any information about these movements at all!

But what I did discover was compelling.

Like most vintage Longines movements, the 9L/9LT family was produced exclusively in-house with no components sourced externally.  These high grade movements were used in a wide range of Longines wristwatches, including those with stainless steel, gold-filled and solid karat gold cases.

I will quote an anonymous online vintage watch enthusiast on the charms of the 9L/9LT movement:

“I don’t have experience with the exact movement, but look at it.  It has solid gold chatons surrounding the ruby jewels.  [Editor’s Note: The chatons are undoubtedly only gold-plated, but still reflect a high quality finish.]  Burnished teeth on the gears.  All the plates are chamfered.  It’s Geneva Seal quality.  Far nicer than a Rolex or Omega of the period.”

In my opinion, the Longines caliber 9L/9LT is the equal of the classic IWC caliber 89 or the superb Hamilton 982M of the same period (the “M” stands for either “medallion” or “masterpiece”, depending on who you ask).  In contrast, Rolex movements of the era were generally considered sub-par in comparison.

 

Longines Caliber 9LT

A vintage Longines caliber 9LT

Photo Credit: Waha Watches

 

The family history behind my Longines watch find was no less interesting than its technical specifications.  According to my father, this Longines wristwatch originally belonged to his father (my paternal grandfather).  It was gifted to my grandfather when he “retired” from Koppers – a Pittsburgh, Pennsylvania-based chemical company where he worked as a chemist.  I put the word “retired” in quotation marks because my grandfather only left his job at Koppers when he was diagnosed with terminal lung cancer in the mid 1950s.

My grandfather died shortly after leaving Koppers and bequeathed his prized Longines watch to my father.  My father subsequently wore it during his high school years in the late 1950s/early 1960s until he carelessly broke the crystal once or twice.  He never wore it again after that.

So our family’s elegant Longines watch became a sleeping beauty, tucked away in a stuffy archive box for 60 odd years until its recent rediscovery.

Likewise, the Longines watch brand is an incredible bargain hiding in the dark corners of the world of vintage timepieces, waiting to be found and loved again.

Like nearly all good watchmakers, Longines’ origins lay nestled deep in the 19th century Swiss alpine countryside.  It was in the year 1832 that Auguste Agassiz and his partners founded the company in the town of Saint-Imier.  At first the firm assembled parts from other manufacturers into finished pocket watches.  But in 1867, Longines built a dedicated factory and started producing its own in-house movements.  It would continue making its own movements until the late 1970s.

After experiencing tremendous commercial growth during the last few decades of the 19th century, Longines moved to safeguard its brand from unscrupulous competitors.  The company filed its celebrated logo, a winged hourglass, as intellectual property with the Swiss authorities in 1889.  This copyright protection was extended in 1893 when the Longines name and hourglass logo were registered with the United International Bureaux for the Protection of Intellectual Property.  As a result, Longines has one of the oldest business logos in continuous use in the world today.

The firm’s golden age began in the 1920s and ran through the 1960s.  It was during this period that many iconic Longines wristwatches were introduced.  These include the military aviator Weems chronograph (1927), the pilot-focused Lindbergh Hour Angle (1931) and the classic minimalist Flagship (1957).  These models are very popular with vintage watch aficionados today and usually command strong prices.

Longines was also renowned for the superlative styling of its Art Deco/Retro era dress watches.  Knotted, flared or stepped lugs complemented other venerable hallmarks of the age, including hourglass cases, pie-pan dials and applied Breguet Arabic numerals.  These luxury watches were often housed in solid white or yellow karat gold cases, sometimes studded with diamonds.

 

1950 Longines Dress Watch

My grandfather’s 1950 Longines Retro era watch featuring a 17-jewel 9LT movement.

 

The Longines brand only began to decline in the public consciousness during the 1970s.  This was the time of the Quartz Crisis in the Swiss watch industry, when cheap and super-accurate quartz watches largely displaced traditional mechanical movement watches.  Many traditional Swiss watchmakers (and all the major American watchmakers) either went bankrupt or were sold during this time.  Although Longines held out longer than most, it was eventually forced to merge with the Swatch Group in 1983.

This event was both a blessing and a curse.

On the one hand it allowed Longines to live on when it probably would have gone bankrupt and liquidated otherwise.  But it also meant that Longines was no longer an independent company.  Swatch eventually determined that Longines would no longer develop or produce its own movements, but would instead use ETA movements.  Although ETA makes robust calibers that are used by many different Swiss watchmakers, they do not have the same cachet and recognition that in-house movements do.

Another side effect of the Swatch acquisition is that Longines now found itself fighting with other Swatch brands for market share.  In order to prevent its brands from cannibalizing each other, Swatch assigned each in-house brand its own “tier” within the organization.

For example, the Swatch brand is the lowest tier.  These are quartz fashion watches with bold styling, bright colors and copious use of plastic.  The price point of Swatch watches is typically between $50 and $100.  The next tier up is Tissot, another Swatch Group brand.  Then comes Hamilton, a once great American watch company that fell on hard times in the 1970s and was sold to Swatch.

Longines is next in line.  It is positioned as a mid-tier brand within the Swatch Group – not super expensive, but not cheap either.  This is a tremendous change from its heady days as an independent company when Longines was considered a luxury brand par excellence.  But today both Omega and Blancpain sit above Longines in the Swatch Group hierarchy.

The storied history and outstanding quality of vintage Longines watches provide the collector of older timepieces with a unique opportunity.  Because of its modern-day circumstances as a “mid-tier” watch brand, high quality vintage Longines wristwatches are surprisingly affordable.  This is especially the case when their prices are compared to other peer or near-peer vintage watch manufacturers.  In effect, antique Longines watches are great bargains relative to vintage Piagets, IWCs and Vacheron Constantins, among others.

For example, it is possible to pick up a freshly serviced 1960s era Longines Conquest or Flagship automatic cased in stainless steel for under $1,000 today.  Meanwhile, a rather run-of-the-mill vintage Rolex Oyster Perpetual in stainless steel will generally run you anywhere from $3,000 to $5,000.  As you can see, vintage Longines watches represent a compelling value proposition.

 

Vintage Longines Automatic Watches for Sale on eBay

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Of course, if you care about the resale value of a vintage watch you are looking to buy, then brand matters.  A strong brand equates to more demand and higher prices – just look at Rolex!  But one of the great mistakes that watch enthusiasts make is to assume that brand is static – that today’s leading brand must also be tomorrow’s dominant brand.  The fact is that none of us knows which watch companies and brands will be highly esteemed 40 or 50 years from now.

This leaves the watch investor with a fundamental dilemma.

Do we purchase a vintage watch based solely on the quality of its movement, attention to detail and overall workmanship or do we buy based primarily on brand image?  Given that we don’t know which brands will be in vogue decades hence, I tend to lean toward the former strategy rather than the latter.  I find it satisfying to know that the vintage watch I hold is a miniature work of art – a marvel of technical engineering shrunk into a movement the size of a couple coins stacked on top of each other.

Although I do think quality ultimately wins this debate, one must always keep an eye on the brand in order to have a balanced perspective.

Happily, the vintage watch aficionado sacrifices very little when buying a fine old Longines.

The company’s vintage movements were all designed and manufactured in-house.  The fit and finish of its pre-1975 watches are universally excellent.  Every style of Longines can be found – from formal dress watches to sporty tool watches.  The history of the firm, setting aside its unfortunate post Quartz Crisis fall from grace, is impeccable.

Longines dress watches from the 1930s to the 1960s in solid karat gold cases offer exceptional value for money at the moment.  These watches can be readily found in a dizzying array of case styles with either sub/center seconds or without them – the choice is yours.  A wide range of stylistic choices are available in the $500 to $1,200 range.  Solid karat gold Longines dress watches are criminally undervalued right now – a situation that can’t persist forever as supply inexorably dwindles due to the demographic trends inherent to the estate industry.

Another solid investment choice is World War II era Longines Weems pilot watches.  These are still available in reasonable states of preservation in the vintage watch marketplace for less than $5,000.  Although the Weems design was widely licensed and produced by many different manufacturers of the era, the Longines version still offers excellent value for the money.  This is remarkable considering that the Weems is the progenitor of today’s ubiquitous sports watch styling.  In fact, I believe there is more than a passing resemblance between the Weems and that most hallowed of sport watches: the Rolex Submariner.

 

1953 Rolex Sub vs 1940 Longines Weems

The stylistic similarities between this first year of issue 1953 Rolex Submariner (ref. 6204) and this 1940 Longines Weems are striking. Most of the differences are superficial in nature, such as the Rolex’s use of black enamel on the bezel or markers in place of numerals on the dial. Many of these altered visual cues can be purely attributed to translating an aviator watch into a dive watch.

Photo Credit: Bob’s Watches & The Spring Bar

 

My final investment pick is Longines automatics from the 1950s and 1960s.  Notable automatic models of the period include the Conquest, Flagship, Admiral and high frequency Ultra-Chron.  Pre-1970 Longines automatics offer classic Mid-Century styling combined with standout movements (such as the illustrious Longines caliber 30L and 430 families).  As an added bonus, some models offer date functionality.  $800 to $2,000 will get you the pick of the litter in your choice of either a stainless steel or solid karat gold case.

Please note that not all of the Longines models listed above exclusively used automatic movements, so some discretion is necessary when shopping.

I would steer clear of any vintage watch (including vintage Longines) with a gold-filled or gold-plated case.  The plating always wears through eventually, leaving an impaired watch that is difficult to sell for good money on the secondary market.  Exceptions can be made for rare or otherwise exceptional watches (like an original Weems), but those are few and far between.

As always though, buy what you like.  Just keep in mind that depending on your tastes, some vintage watch purchases may not be investments in the strictest sense of the term.

I will leave you with this excerpt from the website of a respected British vintage watch dealer that concisely sums up the Longines value proposition:

“For how long vintage Longines watches will remain such good value is anybody’s guess.  They have risen steadily in worth over the last twenty years, but for no explainable reason have still retained their undervalued position in relation to the other major brands.  A decade ago, the most informed London dealers were saying that pre-1960 Longines material just had to soar in price in the internet age, but it hasn’t happened.  At the moment, experienced early Longines collectors live in a sort of smug parallel universe, where the most astonishing levels of quality can be obtained for a few hundred, or, in the very best cases, just a few thousand pounds and we have a feeling that’s exactly how they want things to stay.  If the market ever wakes up to just how exceptional these vintage Longines watches are, we’ll all see auction results that are triple, or more, what these pieces command today.  For the moment, for the thinking man who wants the ultimate in sharp aesthetic design and technical refinement without paying the high premiums associated with antique Rolex items, Longines is the perfect choice and cannot be recommended more wholeheartedly.”

I couldn’t have said it better myself.

 

Vintage Solid Karat Gold Longines Watches for Sale on eBay

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

 

Post Script:

Much to my surprise and delight, my parents presented me with my grandfather’s Longines as a Christmas gift a few weeks after I found it.  A family heirloom had made its way into my hands.

Best.  Gift.  Ever.

I intend to have it serviced, cleaned and returned to working order.  I feel it is important to preserve and cherish these keepsakes from our past.  If we do not save them, then one day they will be gone – and our memories with them.

 

Read more thought-provoking Antique Sage editorial articles here.

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Antique Brooches & Pins – A Dazzling Past

Antique Brooches & Pins - A Dazzling Past
This sumptuous calibre cut green tourmaline and yellow gold Edwardian bar pin was made in the United States circa 1915.  Antique brooches and pins represent one of the best values in vintage jewelry today, giving far more bang-for-your-buck than similar quality rings, pendants or bracelets.

I recently visited a local antique store in search of a piece of nice vintage furniture to spruce up my house.  Much to my chagrin, I discovered that everyone in my part of fly-over country apparently took the advice I had laid out in an article I wrote in late 2019 titled “Is 2020 Finally the Year to Buy Antique Furniture?”

In retrospect, the answer was clearly yes.  2020 was the year to buy antique furniture.

Who knew?

By the time I got around to browsing the aisles of this particular antique shop, any decent piece of old furniture was long gone.

But there was something else I saw there that caught my eye.  In a display case filled with vintage costume jewelry and mediocre low karat gold Victorian pieces there was a hidden gem.  Nestled in the corner amongst the dreck was a gorgeous yellow gold Edwardian bar pin set with a row of bright green stones.  The very first thing I noticed upon handling the piece was how heavy it was given its small size.  Even though it only measured 40 mm (1.6 inches) in length, the antique pin weighed in at a hefty 4.16 grams.  When a piece of vintage jewelry has great heft for its size it is almost always a sure sign of quality.

Upon closer inspection I determined that the brooch was solid 14 karat gold set with 10 immaculate, square-cut green tourmalines.  The tourmalines totaled a substantial 1.9 carats and were all calibre cut – a style where square or rectangular stones are precisely faceted to sit shoulder-to-shoulder with no gaps in-between.  Calibre cutting first became popular in French jewelry around the year 1900 before rapidly spreading across the globe.  But calibre cutting was very labor and material intensive; yields on calibre cut gems from the original rough were invariably low.  As a result, calibre cut stones are usually only found in better pieces of antique jewelry (and are almost never found in modern jewelry).

The overall effect was stunning.

The rich yellow-gold hue of the millegrain setting beautifully highlighted the luscious deep-green calibre cut tourmalines.  And the goldwork itself was flawless – solidly hand-worked without a trace of porosity or messy solder.  You would be amazed at how many pieces of supposedly fine jewelry have nasty, sloppy goldwork – things like bulky prongs or rough finishes in hidden areas.

We can use this tidbit of knowledge to our advantage, though.  You can learn the true quality level of a piece of jewelry by turning it over and looking at its back under magnification.  Any deficiency in a piece’s goldwork will be instantly visible.

But this gold and tourmaline Edwardian pin was a true jewel all around – even when viewed from behind.

By my estimate, the brooch was made in America around 1915.  Its simple, but boldly linear design foreshadowed the rise of the Art Deco movement in the early 1920s.  The brooch would have been a fairly high end piece for its time, with a retail price of at least $10 when new – equivalent to a hefty U.S. gold eagle coin containing about half a troy ounce of pure gold (the U.S. was still on a gold standard in the 1910s).

This is ideally what antique jewelry is all about.  Here was a chunk of finely wrought precious metal dripping with luxurious gemstones – a feast for the eyes.

The tag on the piece asked $325.  This was a good start.  If the asking price is too high, negotiating a reasonable final price becomes all but impossible.  I asked the woman behind the counter if the price was negotiable (pro-tip: the prices in antique stores are almost always negotiable).  Because the store was a co-op (several dealers sharing a single physical location), the clerk had to call the item’s dealer to inquire.  The final price proffered by the dealer was $275 – a $50 discount.

I wavered.  I had been hoping the dealer would come down to $250.  I said I would think about it and walked out of the store.

After several weeks of deep thought, I stopped back at the antique shop and asked if the discounted $275 price still stood.  A short phone call to the dealer confirmed that it did and I walked out of the store the happy owner of an exquisite piece of fine antique jewelry.  In the end I decided that a $25 difference in price – the cost for two people to eat at a fast food restaurant these days – was ultimately immaterial.

But my story raises an interesting question.  Why are antique brooches so cheap?

In a vintage jewelry market where it has become progressively more difficult to find any high quality pieces for less than $700 or $800, why could I walk out of an antique shop with a superlative Edwardian pin for under $300 – less than the cost of a monthly car payment?

 

Cartier Art Deco Diamond Brooch

This Cartier Art Deco diamond, pearl and rock crystal brooch is a stunning example of the “white look” that was popular in the 1920s.

Photo Credit: Tim Evanson (Creative Commons 2.0 License)

 

Brooches and pins have had a tough time of it lately.  The market for antique brooches has been soft for more than two decades.  As a result, prices for these wonderful pieces of history have been depressed.

As simple as it may seem, the primary reason vintage and antique brooches are so inexpensive is that they are currently out of fashion.

A brooch is a piece of jewelry meant to be worn on a blouse, jacket or dress.  But since the early 1990s we have trended towards less and less formal women’s clothing.  Brooches look best on lapels, collars, straps and other relatively formal fashion trim.  The formless, undulating sweaters and T-shirts of the modern age simply don’t accommodate pins or brooches well!

This means that a glut of vintage and antique brooches has flooded the market while demand has remained subdued.  Consequently, prices for old pins are often much, much lower than equivalent pieces of antique jewelry in other forms – like rings or pendants.

Of course, I don’t expect this state of affairs to persist forever.  Clothing styles make long round-trips from more formal to less formal attire and then back again.  Granted, these fashion trends can take decades to fully unfold, so this isn’t a situation I expect to positively resolve within the next few months!

Another thing that antique brooches have going for them is that there are a limited number of general jewelry types in existence.  For example, we have rings, earrings, necklaces and pendants, bracelets and anklets and, finally, brooches and pins.  Every other type of jewelry gets tossed in a minor catch-all category (i.e. tiaras, hat pins, nose studs, etc.)

In the final analysis there are just 5 broad classes of jewelry.  This fact alone practically guarantees that brooches and pins will come back into style at some point in the future.

Indeed, the brooch has been with us continuously since ancient times.  The Celts, Greeks and Romans used cloak pins called fibula that were made out of bronze from a very early period – before 1000 BC.  These fibulae were the very first brooches.

Although purely utilitarian to start, the fibula soon evolved into a full-fledged jewelry piece that was indispensable to any high-class ancient woman.  Instead of bronze, more expensive examples were wrought from silver or gold.  By late antiquity, enamel and gemstones were often liberally applied to fibulae as well, completing their journey from utilitarian fashion accessory to pure luxury good.

During the early medieval period the safety pin like form of the ancient fibula gradually changed into the annular brooch – a bejeweled circle with a pin behind it so it could be fastened onto a cloak or shirt.  Once the annular brooch developed, every other shape of brooch imaginably wasn’t far behind – squares, cruciforms, discs and, of course, the familiar bar pin.

So the brooch has been with us for a long, long time.  It isn’t going anywhere, regardless of how hopelessly unfashionable it might seem today.

But the real reason I like antique brooches as an investment is because they are incredibly undervalued.  Dollar for dollar they are one of the least expensive forms of vintage jewelry (along with other fashion refugees like cufflinks).  So a hypothetical $1,000 spent on antique brooches will go further than if the same amount was spent on vintage earrings or bracelets, for example.

 

Edwardian & Art Deco Antique Brooches & Pins for Sale on eBay

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

 

Perhaps my favorite way to exploit this mispricing is to look for antique brooches that contain natural (non-synthetic) colored gemstones.  It has become clear that the modern world is facing a looming colored gemstone shortage.  Yet imminent disaster has been avoided over the past couple of decades by an improbable series of events.

First, there have been a handful of major colored gem field discoveries since the 1990s.  The resulting mine output hasn’t been massive on an absolute scale, but it has been sufficient to keep the global markets supplied at the margins.

Second, the Great Financial Crisis of 2008-2009 and the austerity policies adopted by most developed countries in its aftermath suppressed demand for jewelry and, by extension, colored gemstones during the 2010s.  However, these anti-middle class austerity policies are being abandoned due to a combination of COVID response (with its direct cash payments to citizens) and popular political support for higher wages for the average worker.

But before we can fully explore the economics of investing in antique brooches, I think it is important that we understand colored gems a bit better.

The colored gemstone market is both highly fragmented and relatively small.  It is estimated that more than $170 billion worth of gold is mined every year, compared to just $16 billion for rough diamonds and a piddling $3 billion for all rough colored gemstones combined (excluding jade).

Almost all colored gem mining is artisanal in scale.  Artisanal mining refers to small groups of individual miners that primarily use hand tools (or hand-held power tools) to extract gems.  Colored gemstone miners rarely enjoy the benefits of the massive mechanization seen in the diamond industry.  And it would hardly matter if they had access to all that expensive equipment anyway – most colored stone deposits are too small for large scale mining to make economic sense.

Due to God’s wonderfully dry sense of humor, almost all major colored gem deposits are located in geographically remote and politically unstable regions.  The biomes surrounding these mines are typically scorched deserts, burning savannas or primeval jungles.

Poor countries like Afghanistan, Madagascar, Sri Lanka, Myanmar and Tanzania are some of the places renowned for their rich deposits of colored stones.  But these are destinations few tourists would willingly visit.  As you can imagine, gem mining is an extremely challenging industry with deadly landslides, cave-ins and flash floods being commonplace.  And that is before one takes into consideration the tangential dangers inherent in bribing corrupt government officials, dodging armed rebel groups and side-stepping bloodthirsty bandits.

Another problem is that gemstone deposits do not last forever.  Many famous mines have now been completely, or nearly completely, exhausted over the centuries.  For instance, the last jewels of the renowned Golconda diamond mines of India reached the world about 300 years ago.  The legendary Kashmiri blue sapphire mines in the snow-capped Himalayas fell silent a century ago.  The fantastical Mt. Mica tourmaline workings located in the backwoods of Maine, U.S.A. have all but ceased production.  And the once prolific Thai ruby mines that provided almost the entire world’s supply of the noble red gem from the 1960s to the 1990s are effectively played out today.

In other words, now is a great time to buy colored gems as an investment.  And antique jewelry – especially antique brooches – represents a near ideal vehicle to exploit that trend.

 

Retro & Mid-Century Vintage Brooches & Pins for Sale on eBay

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

 

So here are a few pointers when looking to buy antique brooches and pins.

First, look for examples that are well endowed with diamonds, colored gemstones or a combination of the two.  Although I am not a huge fan of white diamonds as stand-alone investments, they are still quite desirable in period jewelry – especially when they are old cuts.  Another benefit of buying antique brooches set with colored stones is that you are likely to get either completely untreated or lightly treated specimens – a great boon in a world where modern gem treatments are becoming ever more invasive and difficult to detect.

I do have a word of caution, though.

Synthetic colored gems were commonly mounted in jewelry starting at the end of the Victorian period/beginning of the Edwardian period, circa 1900.  Because they were the latest technological innovation, these synthetics (usually calibre cut Verneuil flame-fusion rubies or sapphires) were often mounted in very fine, expensive jewelry.  It isn’t unusual to see synthetic gems sitting side-by-side with natural diamonds in high karat gold or platinum settings.  In fact, antique jewelry mounted with synthetics is collectible in its own right, although it will never be as valuable as similar jewelry set with fully natural stones.

In the end, it is up to you whether or not to accept vintage brooches and pins set with synthetic colored stones.

When hunting for gem-laden antique brooches, I feel it is also important to avoid examples mounted with stones that are too small.  One of the age-old tricks of the jeweler who is trying to keep costs down is to mount a piece with a myriad of very small stones.

I consider gems of 5 points (0.05 carats) or smaller to fall into this category.  These tiny gems cost very little, so a dazzling effect could be created for very little money.  Very small gemstones are not completely valueless, but they add very little to the intrinsic value of a piece.

As investors, we want to see larger gems mounted in our jewelry if at all possible.

Our ideal antique brooch would have a central colored stone weighing in at over 1 carat, surrounded by other smaller gems greater than 5 points each in size.  But I have found this condition to be almost impossible to meet at a reasonable price point these days.

Therefore, I have become more opportunistic when hunting for antique brooches.  I’m willing to entertain specimens that have no large central stone at all, but are instead set with many smaller stones that are greater than 10 points each.  The yellow gold and green tourmaline Edwardian brooch I describe at the beginning of this article is just such a piece.

I’ve also become more flexible about the colored gemstones I’m willing to buy in antique jewelry.

I like almost all colored gems from an investment perspective.  The big three – rubies, sapphires and emeralds – are all classics.  But it is very difficult to find antique jewelry set with larger sized specimens for a fair price.  Synthetics are also a potential pitfall here.

Stepping down a tier, we come to aquamarine, beryl, spinel, tourmaline, topaz, opal and jade.  These are all solid choices that are generally more readily available than the big three.  These are the gem-laden antique brooches that I favor most at the moment.  They provide the best combination of large gemstones, reasonable availability and low price.

Pearl brooches are another interesting choice, but you want to stick to natural pearls if at all possible.  These are generally found in Victorian, Art Nouveau and Edwardian era pins – all created before circa 1915.  This is due to the fact that cultured pearls first became commercially available in the mid-1910s (for baroque shapes) and around 1920 (for fully round shapes).  Pearls set in jewelry from before this time will be natural.

Half pearls (also called split pearls) and tiny seed pearls are the least valuable types.  They are often found in Victorian brooches as accent stones.  Baroque pearls, which range from off-round to fantastically shaped, are greater in rarity and value.  But fully round pearls, especially fully round pearls that are matched for size and color, are the most valuable of all pearls.

Sometimes you will come across antique brooches mounted with ultra-rare gems like color-change alexandrite, green demantoid garnet or canary yellow diamonds.  These are all highly desirable, but imitations abound.  So I advise caution here.

Vintage or antique brooches set with (non-fancy) red garnets, zircons, peridot, citrine, amethyst and other quartzes round out our colored gemstone possibilities.  These types of stones were generally mounted in less valuable jewelry, although there are certainly exceptions to this rule.  I personally avoid jewelry set with these types of stones unless they are truly exceptional, one-of-a-kind works.  As a side note, garnets and peridot are up and coming in today’s gem market due to the fact that they are never treated.

 

Victorian Antique Brooches & Pins for Sale on eBay

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

 

Of course, gems aren’t the only thing to consider when investing in antique jewelry.  You also want to look for antique brooches and pins that are good examples of their stylistic period.  You want your 1920s Art Deco pins looking sleek and angular and your 1940s Retro brooches looking big and bold.  Likewise, your 1880s Victorian brooches should be ornate and majestic while your 1900s Art Nouveau pins should exude whimsy and naturalism.

Choosing vintage jewelry with fine period style is so important that I’m often willing to loosen my gemstone requirements if I happen to find an otherwise perfect piece.

I won’t talk at length about the different styles of antique brooches or pins you may encounter when searching antique stores or online listings.  Instead I will list them in chronological order, followed by a brief description.  If you want more information, this excellent article at The Loupe covers vintage jewelry styles in greater detail:

 

  • Victorian (1830 to 1900) – Victorian jewelry was ornate, heavy and formal, reflecting the tremendous cultural influence of the grand British matriarch herself. Bright-cut engraved or granulated yellow gold was often combined with rubies, sapphires and diamonds to great effect.  But lower value stones such as amethyst, citrine and garnets were just as popular.
  • Art Nouveau (1890 to 1910) – At the close of the 19th century, jewelers became obsessed with the beauty of the natural world. Female forms with long, flowing hair, birds, flowers and vines were all prominent motifs of this style.  Yellow gold and enamel were favored mediums, often set with diamonds, peridot or opals.
  • Arts & Crafts (1890 to 1910) – In a rejection of the increasingly industrial nature of jewelry fabrication, Arts & Crafts jewelry was all artisan handmade. The forms incorporated into this style of jewelry could vary considerably; medieval revival, simple geometric shapes and naturalistic motifs were all experimented with at one point or another.  It was common for sterling silver, enamel and lower value gems to be used with an emphasis on the rustic, handmade nature of the finished piece.
  • Edwardian (1900 to 1915) – Also known in France as La Bell Époque (The Good Times), Edwardian style combined the best elements of Art Nouveau and Victorian jewelry to create colorful, dainty and somewhat fanciful pieces that still resonate with us today. Edwardian jewelry often featured expensive materials like diamonds, natural pearls, sapphires and other high value gems mounted in platinum or karat gold settings.
  • Art Deco (1920 to 1940) – With its precise, rectilinear forms, Art Deco took the world by storm in the 1920s. Sleek platinum or white gold settings dripped with calibre cut emeralds, sapphires, rubies and diamonds.  The dazzling “white look” was in (yellow gold was rarely seen), sometimes accented by colored stones, jet black onyx or carved Chinese jade plaques.  High value materials were de rigueur.
  • Retro (1935 to 1950) – A desire to escape the dreary, harsh world of the Great Depression sparked the advent of Retro jewelry. Retro design was characterized by its big, bold, often asymmetrical look.  Scrollwork, ribbons and pave settings were common, often rendered in multi-colored (green, pink, white or yellow) gold.  Due to the interruption of gem supplies from Southeast Asia during World War II, citrines, aquamarine, amethysts and other less expensive gems were used just as often as precious rubies, sapphires and diamonds.
  • Mid-Century (1950 to 1970) – Mid-Century jewelry reflected the revived traditionalism and newfound prosperity of the post-World War II era. Playful animal motifs, stylized floral sprays and simple geometric designs were all commonly employed in Mid-Century jewelry.  Diamonds, sapphires, emeralds, and rubies were favorite gems during this era.  But slightly less expensive stones like aquamarine, pearls, coral and jade were also popular.
  • Modernist (1960 to 1980) – The 1960s brought a renaissance in artist-driven jewelry design. Avant-garde jewelers experimented with abstract designs dominated by organic or hyper-angular forms, extreme textures and unusual gemstone combinations. Almost anything goes with Modernist jewelry; it isn’t unusual to see high value gems like diamonds or rubies sit side-by-side with low-value amber or moonstone.

 

As with any antique jewelry, I would only recommend picking up pins and brooches that are crafted in 14 karat gold or higher purity or platinum.  Palladium – a sister metal to platinum – is also acceptable.  However, palladium was only used in vintage jewelry for a short time during the 1940s as a platinum substitute when World War II caused the latter metal to be declared strategically important.

On a related note, good quality metalwork is too often overlooked in vintage jewelry.  You want clean, competent goldwork (or platinum-work).  Excess solder, porous castings, roughly finished surfaces and bulbous prongs are all to be avoided.  They are not only unattractive, but also indicative of poor workmanship.

Antique brooches are one of the greatest bargains in the world of vintage jewelry today.  Good examples combine the best elements of high intrinsic value, impeccable style and reasonable price in a way that no other type of vintage jewelry can rival at the moment.  Savvy investors interested in tangible assets would be wise to consider buying antique brooches and pins now, while they are still cheap.

 

Read more thought-provoking Antique Sage gems & jewelry articles here.

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Read in-depth Antique Sage vintage jewelry investment guides here.


Welcome to the World of Gonzo Investing

Welcome to the World of Gonzo Investing
Gonzo investing means buying alternative assets like this 124.9 gram off-white, Siberian nephrite jade river cobble.

We live in a weird, weird investment world.

And as famous gonzo journalist Hunter S. Thompson once wrote, “When the going gets weird, the weird turn pro.”

For those of you unfamiliar with it, gonzo journalism is an iconoclast form of reporting where the reporter eschews objectivity and throws himself headlong into a news story, often becoming a part of its narrative.  Now I have no strong opinions about gonzo journalism.  But I do think we can apply its radical outlines to investing.

That’s right.  I’m advocating for gonzo investing.

Welcome to the funhouse of mirrors that is our 21st century capital markets.  If the Federal Reserve insists on debasing the currency in order to prop up our Potemkin stock market, then why can’t you and I invest in the most esoteric, unappreciated assets we can find?  Enter gonzo investing.

But what exactly is gonzo investing?

I would define it as purchasing alternative assets that are currently ignored or outright hated by the financial establishment.  The premise behind gonzo investing is that you want to be where “they” aren’t.  You want to zig when “they” zag.  You want to be so far ahead of the curve that you’re falling toward the horizon, not running to catch up in a rigged financial game you can never win.

And right now “they” (Wall Street dealmakers and the big banks) love SPACs, private equity funds, passive ETFs, Bitcoin, FAANG stocks and anything with a lot of beta (a measure of sensitivity to broad market movements).

Therefore, according to the rules of gonzo investing we should pursue assets that have been left behind – things like precious metals, antiques, gemstones, fine art and other tangible assets.

As an aside, I’m going to leave it up to the reader whether to include crypto-currencies in their own personal gonzo investing universe.  But I will say this: Bitcoin can’t be a gonzo investment.  It is the subject of intense Wall Street interest and admiration.  It has futures contracts trading on it, for God’s sake!

Bitcoin is crypto-currency 1.0 – the least technologically advanced of all the cryptos (with the exception of its clones).  Even Litecoin (a near copy) is significantly more capable than Bitcoin!  Bitcoin’s first-mover advantage is the only reason it has captured the demented imagination of Wall Street…for now.

What I’m saying is that if you intend to indulge in gonzo investing with cryptos, please stick to altcoins.

Anyway, I went “pro” (read: weird) with my own gonzo investing about a week ago by purchasing a water-worn Siberian nephrite jade cobble from a vendor on Etsy.  Jade is a wonder material – a substance that is somehow both eminently tangible and mysteriously ethereal all at once.  Venerated for thousands of years by the Chinese, Maori and ancient Meso-American peoples, jade has been sacred to every culture that had the good fortune to develop in geographical proximity to high quality deposits of the stuff.

The gem quality nephrite jade cobble I bought is a phenomenal specimen.  The soft, waxy luster of the 125 gram off-white river cobble is breathtakingly seductive.  The piece is such a fine example of a river jade that it is probably worth more as a mineralogical specimen than it could ever be as jewelry.

A pure white, known as mutton fat, is the most desirable and expensive type of nephrite jade in the world.  True mutton fat jade can sell for more than $50,000 a kilo.  The stone I acquired is off-white in color – most decidedly not mutton fat – but then again I only paid around $900 a kilo for it.  So I have no complaints.

But let’s face it: using Etsy as a substitute for a brokerage account is a strange experience.  This is definitely gonzo investing at its finest.

Gone are the days when you could mindlessly dump your money into an S&P 500 Index fund or corporate debt ETF and expect non-negative future returns.  Savings accounts pay next to no interest.  Real estate is a minefield due to COVID-related rent moratoriums and the related collapse in demand for corporate office space.

What are we left with?

Bizarre, strange stuff, that’s what.

The investment landscape is so distorted that we need to be willing to invest in things we might never have considered under more financially stable circumstances.

As a result, gonzo investing is the new black.  Not because we want it to be, but because the central bankers of the world have left us no choice in the matter.

When I was browsing on Etsy recently, I came across this gonzo worthy investment: a lot of eleven vintage fountain/ballpoint pens selling for a grand total of just $125.  Highlights of the group include a circa 1960s to 1980s Parker fountain and ballpoint pen set, a higher-end vintage Waterman pen (according to the seller; the pictures aren’t clear enough for me to tell which one it is), and a 1930s or 1940s Sheaffer fountain pen with its original desktop stand and solid 14 karat gold nib.

 

Etsy Vintage Pen Lot

A lot of 11 vintage fountain/ballpoint pens listed for sale on Etsy.

Photo Credit: OtherPeoplesStuf

 

There is more than enough in this lot to keep a vintage pen aficionado happy for quite some time.  I also have a sneaking suspicion that several of the pens may have solid karat gold nibs (beyond the one I verified).  This means you could potentially recover most of the purchase price in intrinsic gold value!  Of course, any vintage fountain pen collector worth his salt would instantly offer you 2 or 3 times melt value for any old gold nibs if you were inclined to sell.

Regardless, most of these pens would be worth much more restored to their former glory than they would be parted-out (provided they are in any kind of reasonable condition).

Now some people may hold the opinion that vintage fountain pens aren’t much of an investment, but consider this.  They represent the romance of a time gone by that we all yearn for.  More and more people are becoming interested in reclaiming the small joys of the analog past in a world increasingly dominated by sterile digital interactions.

The supply of vintage fountain pens is also strictly limited.  They sure aren’t making any more!

Although originally produced in sizable quantities, attrition has steadily eroded the population until only a small remnant survives today.  And as we all know, limited supply and high demand equals rising prices.  Buying vintage fountain pens is definitely gonzo investing at its weirdest – and I mean that in the best possible way.

Another slightly unhinged gonzo investment that I made earlier this year was the purchase of a 2021 Saint-Gaudens “$100 Union” silver fantasy coin in proof-like condition by Daniel Carr.  Although dazzling in its own right, the piece bears a striking resemblance to the famous Saint-Gaudens gold double eagle $20 gold coin that was struck by the U.S. Mint from 1907 to 1933 – a series widely regarded as one of the most beautiful U.S. coins ever struck.  This is because Carr’s unique winged Liberty design was derived from an early sketch concept of American artist Augustus Saint-Gaudens’ namesake double eagle gold coin.

 

Dan Carr Silver Union vs Saint-Gaudens Double Eagle

Daniel Carr’s $100 “Union” silver fantasy coin side-by-side with its inspiration: the Saint-Gaudens $20 gold double eagle.

Photo Credits: Wikimedia Commons and The Moonlight Mint

 

As a fantasy issue, the silver $100 Union’s face value is strictly symbolic; it is in no way legal tender.  But if anyone ever offers to trade you one of these magnificent pieces of exonumia for a crisp C-note, take them up on it!  The massive coin weighs in at an astounding 100 grams of .999 fine silver and has a diameter of 50 mm (much larger than either a U.S. silver dollar or a gold double eagle).  To add to its allure the $100 Union is struck in gloriously ultra high relief; in effect it dances on the border between coin and sculpture.

I ordered this fantasy masterpiece directly from Daniel Carr’s Moonlight Mint website at a cost of $240 (plus $10 shipping).  That translates into a price of almost $80 an ounce – fully 3x the spot price of silver bullion at the time of purchase.  Although it seems like an outrageously high premium to pay over melt value, there is a lot to like about these coins.

Daniel Carr struck the silver $100 Union fantasy piece for a limited three year run: 2019, 2020 and 2021.  Each of those years had a mintage of only around 100 pieces.  If you had purchased all three at Mr. Carr’s original issue price it would have cost you $625 in total (plus shipping).  Due to the fact that only about 100 sets could ever be completed, it is easy for me to envision a time 25 or 30 years in the future when a complete set of these unique coins sells for 10 or 20 times the original issue price.

This is gonzo investing par excellence.

Unfortunately, Carr’s silver $100 Union silver fantasy coins are sold out in his shop and therefore only available in the secondary market through venues like eBay.  If you are interested in reading more about Daniel Carr and his Moonlight Mint fantasy coins, I wrote an in-depth investment guide on the topic recently.

 

Daniel Carr Fantasy Coins & Overstrikes for Sale on eBay

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

 

Long-time readers of my site may have noticed my budding obsession with jade.  In true gonzo investment style, I have been building myself a rough jade portfolio over the last couple of years.  I will happily admit that this is a very unusual investment position to be taking.

But there is sound logic behind it.

Our financial system is swirling around the toilet bowl of history at present.  We don’t know when the flushing will truly commence, but it is coming.  This will not only permanently restructure our monetary and corporate systems, but also our global supply chains.  In other words, the world will become much less connected by trade than it currently is.

Deglobalization is coming.

Much of the nephrite jade I’ve been accumulating originates from Siberia.  Most of these deposits are found to either the northeast of Lake Baikal in the Stanovoy Range or to the southwest of the lake in the Sayan Mountains.  This is incredibly remote backcountry.

Nephrite gradually weathers out of its host rock in the mountains over the course of countless millennia.  These newly freed jade nodules then wash into mountain streams and rivers where they are subjected to relentless wear and polishing from constantly flowing water.  Lesser materials are pounded into clay and sand – indeed almost all foreign matter associated with the jade is stripped away.  What is left are tough, compact water-worn cobbles of the highest quality Siberian nephrite.

Then some intrepid Russian jade prospector has to hike deep into the wilderness looking for that one in a million jade pebble sitting in an ice cold mountain stream.  He can do this for perhaps three months during the summer before the onset of colder fall weather puts a stop to his efforts.  Assuming he isn’t rich enough to rent a helicopter (and he probably isn’t), he must haul all those kilos of jade cobbles back to civilization using nothing but his legs.  This part of Siberia has few roads and little infrastructure of any kind.

Finally, if you pay him a pittance (usually just a few hundred dollars, give or take), he will happily ship a beautiful, satiny jade pebble straight to your door.

This is what I’m after – all of the treasure with none of the fuss.  Welcome to the world of gonzo investing.

However, it isn’t hard to see how this mutually beneficial arrangement will all come to a screeching halt one day in the not so distant future.  First, there is a well-established pattern in jade mining where secondary deposits (usually alluvial – river – in nature) are mercilessly exploited until no more can be found.  This has already occurred in Wyoming, British Columbia, western China and Burma.  Siberia and Guatemala are currently in the process of being mined out.

 

Siberian Nephrite Jade River Cobbles for Sale on Etsy

(These are affiliate links for which I may be compensated)

 

Of course, once the secondary deposits are gone, prospectors can still mine the primary (hard rock) deposits.  But this is a very expensive proposition.  It requires massive amounts of mechanized equipment and well trained crews.  In addition, the jade extracted will often be of lower quality because the less-desirable material won’t have been eroded away by nature yet.

The next problem is one of international trade.  COVID has shown us that our Gold Rubergesque, just-in-time global supply chain was a ticking time bomb.  Although it will be a painful and slow process, I’m certain that supply lines will inevitably become more regional in the future (probably continent-wide versus our current worldwide).  So one day the parcels full of wonderful treasures straight out of the Siberian wilds will probably cease to arrive at my local post office.

But until that day comes, I will continue to be a gonzo investor.  And you should be one too.

 

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