3 Vintage Wristwatches That Are Better Than a Savings Account

3 Vintage Wristwatches That Are Better Than a Savings Account

There’s an old British financial saying: “safe as houses”.  It means that a financial endeavor is risk free, or nearly so.  Of course, anyone who lived through the 2008-2009 housing crisis in the U.S. might take issue with this wisdom.  Before that debacle, U.S. housing prices hadn’t declined on a nationwide basis since the Great Depression in the 1930s.

It sort of makes it tough to take the adage seriously.

But maybe we don’t need to abandon the maxim, so much as update it for the modern age.  After all, houses are tangible assets, and I strongly suspect that assets you can touch, hold and keep in your physical possession will do surprisingly well in the years to come.  But if houses, which have shown vulnerability in the face of widespread property bubbles, aren’t the tangible asset to own, then what is?

Here’s my working theory.  Maybe vintage watches are the place to stow a bit of your hard-earned money instead of a stodgy old savings account.

Many people might be surprised by this bit of unconventional investment wisdom.  After all, a savings account has traditionally been one of the safest places a person can keep his excess cash.  So why in the world would I think that vintage watches would be better?

Well, financial risk can come in many different dimensions.  For example, with a savings account there is the risk that your bank will go bust and be unable to pay back your deposit.  In these instances, a national bank insurance fund (like the FDIC in the U.S.) will usually pick up the slack, making good on deposits up until a predetermined monetary limit.

So no, I don’t expect many people to lose money in failing banks.  After the 2008-2009 financial crisis, regulators demanded that banks in the U.S. maintain far higher reserve levels than they had previously.  So even in another financial crisis, I find it unlikely that many U.S. banks would fail.

No promises if you live in Europe, though, where your banks are levered to the moon!  In this instance, you might well find yourself relying on the tender mercies of your financial regulators or politicians to ensure that you are made whole.

However, there is another major risk when you place your money in a savings account – inflation.  Inflation gradually erodes the purchasing power of any cash or deposits, including savings accounts.  Now under most circumstances, your bank will pay you interest to offset this inflationary loss, along with just a little bit more so that your account gains value in real (inflation-adjusted) terms.

Unfortunately, we don’t live in normal times.  Instead, we live in an era of financial repression, where bank regulators use depositors as a tool to recapitalize the national banking system.  This comes in the form of bank deposit rates on your savings account that are below the prevailing rate of inflation.

Every month your money stays on deposit in your savings account, you lose just a little bit of purchasing power.  This lost purchasing power is happily vacuumed up by your local bank so that it can keep on doing whatever it is that banks do (which seems to be crashing the global economy about once every ten years, as far as I can tell).

But vintage wristwatches give you a safe, tangible asset that you can hold in your hands (or wear on your wrist)!  The market for vintage watches has been going from strength to strength over the past decade, and I believe this trend is likely to continue.  The possibility of loss is very low, assuming you choose high quality watches and pay a fair price for them.

So the question then becomes: can carefully selected vintage wristwatches outperform the return you expect to get on your savings account?

Now, I will admit I am a bit of a pessimist when it comes to bank deposit rates.  In most developed nations, short-term interest rates (like the kind banks pay on deposits) are embarrassingly low right now.

For instance, the European Central Bank is keeping short-term rates pegged at 0.25%, the Bank of England is holding them at 0.75% and the Bank of Japan is satisfied with a miserly -0.1%.  Only the U.S. Federal Reserve has managed to decisively move off the zero bound with a current range of 2.25% to 2.50%.

These rates are unlikely to get too much higher before we enter another synchronized global recession.  Central banks will react to this development by driving short-term interest rates down to zero (or possibly below).  At that point, even a lowly 1.0% annual interest rate on your savings account will seem like a sweet, distant dream.

But let’s generously assume, for the sake of argument, that you can score an average 1.0% return on your savings account over the next 10 years.  This means that if you park $10,000 in your bank today, it would grow to $11,046 over the next decade.

I’m going to be blunt here.  The vintage watches I list below will almost certainly beat this return, and most likely handily.  I think these 3 categories of vintage watches could easily achieve an annual appreciation of 2.5% to 5.0% over the same timeframe.  This would transmute your $10,000 stash into anywhere between $12,801 and $16,289 over 10 years – an increase over our theoretical low-interest savings account of $1,395 to $4,883.

And who couldn’t use an extra $2,000 or $3,000?

So what are these magical, better than savings account watches?  I have a few unusual choices in mind.

 

1) Vintage Rolex Oysterquartz Watches

Everyone has heard of Rolex watches – even people who don’t know anything about vintage wristwatches.  Rolex makes beautiful, robust and thoroughly desirable luxury watches.

But did you know that there is a Rolex watch that nobody talks about?  Yes, it’s true!  Shockingly, there is a type of vintage Rolex that is completely overlooked in today’s secondary market.  I’m speaking about the Rolex Oysterquartz series, which was produced from 1977 until 2001.

Many collectors ignore these horological treasures because, as the name implies, they have quartz movements.  But an Oysterquartz is no ordinary quartz movement.  It is an in-house, high-end, super-accurate quartz movement that Rolex laboriously developed over many years of research and testing.  Better yet, it is estimated that only 25,000 of these unique quartz movements were ever created, making them far rarer than many other Rolex calibers.

Although I don’t believe that most vintage quartz wristwatches make good investments, Rolex Oysterquartz watches are a clear exception to this rule.

I think it is inevitable that the long neglected Oysterquartz will one day be recognized for the gem it is, driving prices up.  But until then, you can get Rolex Oysterquartz wristwatches in stainless steel or two-tone cases for just $3,000 to $5,000.  This is substantially less than what similar Rolexes with mechanical movements go for.

 

2) 14K & 18K Solid Gold Dress Watches from the 1960s and 1970s

I also like vintage, solid 14 and 18 karat gold dress watches from the 1960 and 1970s.  These classic timepieces were produced by the leading Swiss watch companies of the time, such as Audemars Piguet, Omega, IWC, Longines and Vacheron Constantin.

Vintage gold dress watches simply drip with aesthetic flair and Mad Men zeitgeist.  And, of course, they all sport finely finished, fully jeweled mechanical movements that are works of art in their own right.

Yet prices are still unbelievably low for these enchanting vintage watches, probably because gold dress watches are out of style right now.  Some of the rarer models from the most esteemed makers might run you $3,000 or $4,000.  Slightly more common, but still desirable specimens can be found as low as $2,000, or even a bit less!  That represents a remarkably good alternative for your extra cash compared to parking it in a low-interest savings account.

I recently featured a stunning 18K gold IWC men’s watch from the 1960s in one of my Spotlight posts.  It was unbelievably inexpensive at only $1,720, and sold quite quickly.  But there are many other bargains to be had in this segment of the vintage watch market.

 

3) Vintage Must de Cartier Tank Watches

Cartier is famous for their iconic, rectangular tank wristwatches.  But the prices for these covetable luxury timepieces can be mind-numbingly high.

Luckily, Cartier produced a line of elegant, entry-level luxury tank watches between 1977 and the mid 2000s under the Must de Cartier nameplate.  They were made from vermeil, which is solid sterling silver coated in a generous, 20 micron thick layer of gold.  In addition, the discerning watch enthusiast can choose between high quality manual wind or quartz movements.

Stylish Must de Cartier tank wristwatches perfectly straddle the fine line between avant-garde fashion watch and traditional luxury timepiece.

But the best thing about these perennially popular watches is their price.  Specimens in good-to-mint condition can generally be found in the $800 to $1,800 range, meaning that even a horological aficionado with a beer budget can afford to own a genuine Cartier Tank.

 

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18K Gold Retro Cufflinks with Rubies and Sapphires

18K Gold Retro Cufflinks with Rubies and Sapphires
Photo Credit: Bottom-Fisher Finds

18K Gold Retro Cufflinks with Rubies and Sapphires

Buy It Now Price: $684.95 (price as of 2019; item no longer available)

Pros:

-These 1950s Retro cufflinks are beautifully crafted from textured 18 karat yellow gold and set with natural, untreated rubies and sapphires.

-Each cufflink measures 0.69 inches (17 mm) long by 0.44 inches (11 mm) wide, while the pair tip the scales at a hefty 9.5 grams (0.3054 troy ounces).

-Retro jewelry was popular from the late 1930s into the 1950s.  It was characterized by bright, bold looks, multi-colored gold and a willingness to forgo diamonds in order to experiment with less expensive gemstones (like citrines, aquamarines and topazes).

-The rubies and sapphires set in these cufflinks are undoubtedly completely natural, untreated stones.  We know this because the cufflinks were made in the late 1940s or early 1950s, before corundum treatments became widespread in the 1970s.  Furthermore, the inclusions (flaws) visible in the stones are absolutely typical of natural ruby/sapphire gems.

-Important jewelry designers and fashion houses showed a renewed interest in naturalism starting in the late 1940s.  This was notable because naturalism had long been neglected in the jewelry world up until that point – more or less since the abandonment of the Art Nouveau and Edwardian styles around 1910.

-These Retro cufflinks display extremely fine workmanship, an attribute that is harder to find in fine jewelry than you might suspect.  In addition, they are also quite heavy, indicating that the jeweler who created them did not skimp on the gold.

-Natural, untreated rubies and sapphires are extremely rare today.  Most of these gems are heat-treated, flux-filled, beryllium diffused, dyed or otherwise modified to improve their appearance.  It is estimated that less than 1% of gem quality ruby production remains completely untreated before being set in jewelry!

-This pair of retro cufflinks exhibit classic 1950s design.  They combine naturalistic flower motifs and matte-finish yellow gold with eye-catching colored gemstones to form an aesthetically cohesive whole.

-I estimate the weight of the rubies and sapphires set in the front of these Retro cufflinks at 0.20 carats each and the rubies set in the back at 0.13 carats each.  As a result, the total estimated carat weight of gems contained in the piece is a substantial 1.06 carats.

-I believe the intrinsic value of these cufflinks is around $291 for the gold (with gold trading at $1,300 an ounce) and $106 for the gems (at about $100 per carat, conservatively).  This gives a total scrap value of roughly $400, which means that the seller’s asking price of $685 is less than double the intrinsic value – quite a bargain in my opinion.

-These solid 18 karat gold Retro cufflinks would make a great addition to any gentleman’s formal wardrobe, while simultaneously being a great tangible investment.

 

Cons:

-These cufflinks are not hallmarked.  Instead, the metal fineness has been verified by the seller via an acid test.  However, there is nothing in the photos that would lead me to believe that this jewelry is anything other than solid 18 karat gold.  They really are incredibly well-made.

-The natural rubies and sapphires set in these Retro cufflinks are of good, but not the very highest, quality.  You can tell by the numerous flaws which are readily apparent in the stones.  However, these rubies and sapphires are still valuable because they are completely untreated – a rarity in today’s gem market.

 

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Sidestepping the Coming Pension Crisis

Sidestepping the Coming Pension Crisis

An enormous pension crisis is coming our way.  And it is likely to cause a seismic shift in how we view saving and investing.

I generally consider that to be a positive development.  However, the way we get there is bound to be ugly.  At this moment the looming pension crisis is like a distant storm on the horizon.  Many people know that it will arrive at some point.  Some even believe that it will be bad.

But few truly understand the magnitude of the pension disaster to come.

A pension is just a fancy way of saying that a company, financial institution or government will cut you a monthly check for the rest of your life once you reach retirement age.  Almost all pension plans manage large pools of assets that are used to pay out these benefits.  Under normal circumstances, these assets (usually stocks and bonds) grow in value over time, allowing the pension plan to keep up with its obligations.  This is referred to as being “fully funded”.

So far, so good, right?  Unfortunately, we aren’t living in financially normal times.  You see, many of the assets contained in pension plans these days are rather questionable.

For example, I recently read an article by financial commentator Wolf Richter titled “This Deal Shows How the Junk-Credit Market is Still Irrationally Exuberant“.  It details the sad story of a company called Asurion, which is borrowing $3.75 billion in the capital markets.

The problem is that Asurion is already highly levered.  It is rated B1 by Moody’s, which is deep in junk territory.  Furthermore, Moody’s considers the company’s borrowing binge to be “credit negative” – code for the strong possibility that it will downgrade Asurion in the near future.

The bad news doesn’t end there, though.  Asurion will not use the proceeds from the new debt to expand its business or buy another company.  Instead, it will use the entire $3.75 billion to issue a special dividend to its partial owner, a private equity firm.

If this sounds bad, it is because it is.  Asurion is already neck deep in debt.  Taking on more debt will not improve its chances for long-term survival.

But this is where things get interesting.  Asurion isn’t 100% owned by the private equity company mentioned above.  Instead, the private equity firm has cut some other “investors” (read: bag-holders) in on owning Asurion.  One of those investors just happens to be the Canadian Pension Plan Investment Board, which manages the Canadian equivalent of Social Security in the United States.

Oh, and Asurion’s business is selling extended warranties on cell phones, consumer electronics and home appliances – a superfluous service if ever there was one!

So here is what is going to happen.  In the next recession, the inevitable will occur and Asurion will go bankrupt.  The unfortunate equity owners (like the Canadian Pension Plan – indirectly the Canadian people) will get a goose egg.  Any holders of Asurion debt (mutual funds, other pension plans, etc.) will take a massive haircut, getting pennies on the dollar.

Oh, and if there is a God in heaven, Asurion will hopefully be liquidated in its bankruptcy, if for no other reason than so we can’t go through this demented financial rollercoaster again at some future date.

Now Asurion’s grim situation isn’t a one-off.  The corporate world has been borrowing hand-over-fist for the better part of a decade now.  When the financial storm finally hits, it will be unbelievably intense.

And regular people expecting their pension payouts will be at the center of this default hurricane.  And this doesn’t just apply to the minority of the population that still gets a defined-benefit pension from their private employer.  It is also going to hit millions of pension holders who work (or used to work) for state and local governments.

Even social security beneficiaries (which include nearly every American citizen over the age of 65) will feel the pinch of the pension crisis.  According to the Social Security Administration’s 2018 report, the Social Security Trust Fund will be fully depleted in 2034.

But once the looming pension crisis smashes into the economy, you can expect this drop dead date to arrive far sooner than anyone expects.  This is because the cratering economy will bleed a lot of jobs, driving down payroll tax collections that would have been used to fill the Trust Fund.  At that point, absent a substantial increase in payroll tax rates, Social Security will only be able to pay out 75% of its scheduled benefits.

And that brings us to the real crux of this article – how you can avoid the coming pension crisis.

I would direct your attention to the photo at the top of this post.  It shows a 5 troy ounce vintage silver bullion bar that I recently purchased from Etsy.  This classic, loaf-shaped bar is undoubtedly an older ingot from the 1960s.  In fact, it is possible that the “64” stamped on the lower left-hand corner of the bar is actually the last two digits of its date of manufacture – 1964.

If this is the case, this vintage silver bar would have been equivalent to almost $6.50 in U.S. silver certificates (before they ceased being convertible in 1968).

But the greatest thing about this beautiful vintage silver bar was its price – a mere $110, including shipping!

I find it amazing that you can still pick up gorgeous and desirable hard assets like this for so little money, while the financial “professionals” chase treacherous junk bonds.  $110 is less than the price of one share of Facebook ($148), Alibaba ($152) or Boeing ($356) stock.  And it is less than the price of a single token of the Maker ($450), Ethereum ($119) or Bitcoin Cash ($130) crypto-currencies.  And unlike these dubious assets (or your monthly benefit check), hard assets won’t collapse in value in the coming pension crisis.

 

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2018 Mexican Silver Libertad Reverse Proof Set

2018 Mexican Silver Libertad Reverse Proof Set
Photo Credit: APMEX

2018 Mexican Silver Libertad Reverse Proof Set

Buy It Now Price: $208.32 (price as of 2019; item no longer available)

Pros:

-This superb 2018 Mexican Silver Libertad reverse proof set contains two one troy ounce coins: a standard proof version and its highly coveted, reverse proof twin.

-Each of the one troy ounce Mexican Silver Libertads in this set measure an impressive 40.0 mm (1.57 inches) in diameter.

-The coins’ obverse bear the 10 historical Mexican coat of arms.  The reverse shows the winged Greek personification of victory, Nike, against the backdrop of the famous Mexican volcanoes Popocatépetl and Iztaccihuatl.

-A proof coin is struck from specially prepared dies under ideal conditions.  This creates a nearly perfect coin that has a desirable cameo effect, consisting of frosted devices set against high-contrast, mirrored fields.

-The rendition of the goddess Nike on this Mexican Silver Libertad reverse proof set is based on the landmark Angel of Independence statue located in central Mexico City.  It is widely considered to be among the most beautiful coin designs currently in production anywhere in the world.

-Reverse proofs are relative newcomers to the numismatic world, having first come to prominence in the mid-2000s.  The dies of a reverse proof are treated in such a way that the traditional proof effect is reversed, with mirrored devices set against frosted fields.

-This Mexican Silver Libertad reverse proof set is limited to just 500 sets.  The overall mintage of 2018 proof Mexican Silver Libertads is correspondingly low, with a total mintage of 10,000 specimens for the standard proof coin and a mere 1,500 for the reverse proof version (inclusive of the 500 sited above).

-This Mexican Silver Libertad reverse proof set comes in its original brushed metal and hardwood Banco de Mexico case.  I have long felt that good packaging positively impacts the future investment performance of modern coins, and this stylish contemporary case is among the best.

-The mintage numbers of these attractive silver coins are ridiculously low for a modern proof coin.  As a point of reference, the popular U.S.-issued American silver Eagle coin has a 2018 proof mintage of around 500,000 specimens.

-This Mexican Silver Libertad reverse proof set is exclusively distributed through the well-known bullion dealer APMEX.  You cannot get this unique set from any other precious metal dealer.

-Given their incredibly low mintages, stunningly good looks and modest pricing, I believe that Mexican Silver Libertad proof sets – much like their Gold Libertad proof counterparts – offer a credible investment opportunity to today’s intelligent tangible asset investor.

 

Cons:

-This 2018 Mexican Silver Libertad reverse proof set only contains 2 troy ounces of silver, resulting in an intrinsic value of around $30 (with the spot price of silver hovering near $15 an ounce).  At a buy-it-now price of $208, this means the set has a very high premium over its melt value – almost 600%.  These are definitely collector-oriented coins, as opposed to pure bullion pieces.

 

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