5 Odd Investments for the Stock Market Skeptic under $100

5 Odd Investments for the Stock Market Skeptic under $100
Photo Credit: Joe Haupt

These 5 odd investments don’t rely on the stock, bond or real estate markets in order to make you money.  Better yet, each one of these tantalizingly unusual assets is available for less than $100!

 

1) Pre-1982 U.S. Copper Pennies

Few people know it, but U.S. pennies aren’t made from copper anymore.  In 1982, the U.S. Mint was forced to change the composition of the coin due to the rising price of copper.  Consequently, pre-1982 pennies were made from an alloy of 95% copper and 5% zinc, while post-1982 cents consist of a solid zinc core that has been copper-plated (97.5% zinc and 2.5% copper).  In 1982, both solid copper and copper-coated zinc pennies were struck.

This would all be rather academic, except that right now the price of scrap copper #2 is around $2.20 per pound (this varies according to location and scrap dealer).  But it only takes around 154 circulated pre-1982 copper pennies, with a face value of $1.54, to equal one pound.  So each pre-1982 penny is actually worth about 1.43 cents in copper scrap.

This presents the enterprising coin sorter with an arbitrage opportunity.  According to estimates, pre-1982 copper cents represent around 15% to 20% of the remaining pennies in circulation in 2018, although this can vary considerably depending on geographic region.  If you are willing to take the time to pick these copper pennies out of circulation, you can easily accumulate a significant stash of copper bullion at below market prices.  And you can get started for only $5 and a trip to your local bank, or even just the loose change that is laying around your house.

There are, however, a couple downsides.  First, the U.S. government made it illegal to melt down pennies (and nickels too) for scrap in 2006.  That isn’t too much of an issue because rolls or bags of pre-1982 copper pennies can be traded for more than their face value without being melted.

The other problem is that the U.S. penny is not long for this world.  Inflation has rendered the smallest of U.S. denominations practically worthless.  In addition, the U.S. Mint hasn’t made a profit on the penny since 2005.

When the penny is finally discontinued, one of our era’s best odd investments will disappear with the lowly coin.

 

2) Indian Mughal Rupee Silver Coins from the 16th and 17th Centuries

Rare coins are a perennial favorite among alternative asset investors.  Unfortunately, the very finest examples can often be prohibitively expensive.  You don’t need to look any further than ancient Greek gold coins to verify this, where prices start in the thousands of dollars and only go up from there.

But what if I told you that a centuries-old, hand-struck silver coinage of tremendous beauty from one of the greatest empires on earth could be yours for less than $100?  Allow me to introduce you to one of the finest odd investments you’ve never heard of: Indian Mughal silver rupees.

The Mughal Empire ruled the Indian subcontinent between the early 16th century and mid 18th century.  The Mughals were not only extremely powerful, but also incredibly wealthy.  In fact, the Indian Mughal emperors were considerably richer than Western European monarchs of the time, such as Queen Elizabeth I and King Louis XIV.

So it shouldn’t be surprising that the Mughals struck a magnificent silver coinage to match their exalted status.  Mughal rupees were high denomination coins, each containing about 11 grams of nearly pure silver.  This made them exceptionally heavy for their time – about 3 to 4 times the average weight of most contemporary European silver coins.

In addition to being impressively large, Mughal silver rupees also possess phenomenal eye appeal.  These Indian artistic masterpieces deftly weave geometric borders, elegant decorations and flowing Arabic calligraphy together in an unrivaled numismatic tour de force.

But perhaps the best thing about these odd investments is their low cost.  Prices range from around $40 or $50 for common types in Very Fine condition to $200 or $300 for scarce examples in pristine grades.  However, discerning investors can easily find superb examples of these centuries-old Indian silver coins for less than $100.

 

3) Vintage Fountain Pens

Before the widespread adoption of ballpoint pens in the 1960s, every gentleman and businessman used a fountain pen.  These little luxuries were often made from the most cutting edge materials of the time, including hard rubber, early plastics and stainless steel.  Some examples were even made from sterling silver, gold-filled and, occasionally, solid karat gold.

The nibs of high quality vintage fountain pens were invariably made from solid 14 or 18 karat gold, while more modest specimens made due with palladium-alloy or gold-plated steel nibs.

Vintage fountain pens perfectly embody the zeitgeist of the mid 20th century.  However, in spite of all their positive attributes, these odd investments were often overlooked until recently.  Before the early 2000s, it was possible to find desirable vintage fountain pens from the 1930s, 1940s and 1950s at flea markets, garage sales and second-hand shops for only $5 or $10 each.

But as it became apparent just how special these pens were, prices inexorably rose.  Even so, it is still possible to purchase desirable vintage fountain pens in good condition in the $50 to $100 range today.

Although a tremendous number of companies manufactured vintage fountain pens, if you’re shopping in the sub $100 price bracket you are most likely to encounter pens from U.S. mid-tier makers, such as Parker, Eversharp, Sheaffer and Wahl.

 

4) Artisan Hand-Poured Silver Bars

Most people think of silver bullion bars as, well…bullion and nothing more.  But over the last decade, a veritable renaissance has bloomed among small precious metal fabricators.  These companies, which are often family-owned businesses, have begun producing a variety of hand-poured silver bars that are actually miniature works of art.

Artisan produced, hand-poured silver bars are a far cry from the soulless, mass-produced struck silver bullion bars that dominate the precious metals market today.  Instead, small-batch, hand-poured silver bars have soft, rounded edges, alluring pour lines and charming blemishes that make them irresistibly odd investments.

In fact, vintage poured silver bars made in the 1980s or earlier already trade for strong premiums among tangible asset investors looking for something intriguingly different.  And I feel it is only a matter of time until artisan hand-poured silver bars start selling for elevated premiums over spot as well.

A single $100 bill can easily buy one of these hand-poured bullion masterpieces from a recognized fabricator like Vulture Peak Mines, Prospector’s Gold & Gems, Scottsdale Mint, Bison Bullion or SilverTowne.  Hand-poured bars generally range in size from 1 troy ounce to 20 troy ounces, although anything larger than 5 troy ounces will cost more than $100 (with spot silver at $15 per ounce).

 

5) Vintage British Sterling Silver Liquor Labels

The aristocracy of 18th and 19th century Britain loved few things more than a glass of fine wine.  Unfortunately, paper labels for wine and liquor bottles were not developed until the 1860s.  Therefore, wealthy British lords and ladies had to find a way to distinguish the otherwise anonymous bottles of spirits stockpiled in their private stashes.

They accomplished this by using solid sterling silver liquor labels, also known as wine or bottle tickets.  These small, decorative plaques were engraved with the name of the appropriate spirit and then hung around the neck of a bottle via an attached silver chain.  Every well-appointed British Georgian country estate or stately London townhouse had its share of these upscale sterling name tags.

Although rendered technically unnecessary by the late 19th century, sterling silver liquor labels have continued to be made until the present day because of their elegance and high-end appearance.

Vintage sterling liquor labels produced from the 1950s through the 1980s are particularly interesting.  These odd investments can be found inscribed with the names of a variety of different spirits, including port, sherry, whiskey, gin, brandy, bourbon, scotch and rum, just to name a few.  So there is sure to be one that appeals to you, regardless of the kind of alcohol you enjoy.

In addition, vintage sterling silver liquor labels from the Mad Men era are significantly less expensive than their Georgian progenitors.  While a late 18th century example might cost you $150 to $200, a fully-hallmarked 1960s or 1970s British sterling liquor label can be purchased for a modest $50 to $100.

 

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1980s Mezzotint Print by Koichi Sakamoto

1980s Mezzotint Print by Koichi Sakamoto
Photo Credit: JapanesePrintsPlus

1980s Mezzotint Print by Koichi Sakamoto

Buy It Now Price: $79.99 (price as of 2018; item no longer available)

Pros:

-This signed and numbered limited edition vintage mezzotint print by the Japanese artist Koichi Sakamoto evokes a feeling of ethereal winter solitude.

-Including its generous margins, this landscape mezzotint print measures 50 cm (19.5 inches) wide by 33 cm (13 inches) tall.  The image portion in isolation is a slightly smaller 36 cm (14 inches) by 22 cm (8.5 inches).

-Mezzotint is a type of intaglio print where the artist mechanically roughens or textures parts of the metal printing plate with specialized tools.  This produces rich, velvety tones and half-tones, something that is not normally possible in conventionally engraved prints.  This website gives an excellent overview of the mezzotint process.

-Koichi Sakamoto was born in 1932 in Tochigi prefecture, north of Tokyo.  An active printmaker from the late 1950s until the 1980s, his works were exhibited at shows around the world, from Tokyo to Paris to Mexico City.  Sakamoto’s preferred techniques were etching and mezzotint, which helped him impart an unreal, dreamlike quality to his works.  Some of his earlier prints even experimented with surrealism.

-This haunting nightscape is both signed and numbered (#19 out of 50) in pencil, with is typical for Koichi Sakamoto’s work.  Limited edition prints are more attractive to the art investor because they have far more appreciation potential than art prints with unlimited runs.

-Japan went through a massive financial boom in the 1980s, which later collapsed with terrible economic consequences.  I find the otherworldly atmosphere of this Koichi Sakamoto mezzotint print to be fascinating because of its obvious parallels to 1980s Japanese culture – an unreal (economic) dreamscape that can’t possibly persist.

-I recently featured a different monotone winterscape print by Ohio artist Andrea Starkey.  I find it fascinating that two prints with a similar color palette and theme can convey such radically distinct impressions.

-Prices for Koichi Sakamoto mezzotint prints have steadily risen over the past 15 to 20 years.  It isn’t uncommon for them to sell for several hundred dollars apiece at auction now.  My expectation is that this trend of rising prices will continue for the foreseeable future.

-With an asking price of only $80, this vintage Japanese mezzotint landscape print by a recognized artist is an absolute steal.

 

Cons:

-Although not visible in the photo above, this mezzotint print has significant foxing and yellowing on the margins around the perimeter of the work.  While this is not ideal, most of it will be hidden when the print is matted and framed.  This minor defect is also the primary reason the work is selling for less than $100.

-The work comes unframed.  If you intend to display this gorgeously haunting print on your living room wall, you will need to pay an extra $100 to $200 to have it properly framed.

 

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Do Gold and Gemstones Have Intrinsic Value?

Do Gold and Gemstones Have Intrinsic Value?

One complaint often leveled against gold and gemstones is that they have no intrinsic value and are therefore “fads” or “speculations”.  A perfect example of this lunacy is an article I recently read titled “Gold Is No More of an Investment than Beanie Babies“.  The author, a professor of economics at Pomona College named Gary Smith, unequivocally argues that gold, gems and other valuables aren’t assets because they don’t pay dividends or interest.

All I can say is good grief!

Sometimes economic professors get so caught up in their textbooks and theories that they forget to look out their ivory tower windows into the real world.  So let’s try to answer the question of whether or not gold and gemstones have real intrinsic value.

No, gold and gemstones do not produce cashflow, but not every asset does.  There are about 4,800 U.S.-listed equities that don’t currently pay a dividend.  In addition, there is a type of debt instrument called a zero coupon bond that pays its par value at maturity, but makes absolutely no interest payments until then.  Warrants, options and futures also pay no income.

As you can see, demanding that a security pay a stream of cash flows in order to be considered an investment is an excessively restrictive definition.  In other words, all things that pay income are investments, but not all investments pay income.

But this doesn’t really definitively answer our question.  Lots of things don’t pay interest or dividends, but only a very small proportion of them could convincingly be called investments.  Maybe examining the meaning of the word “intrinsic” can help us make a determination.

According to Dictionary.com, the definition of the word intrinsic is: “Belonging to a thing by its very nature: [for example] the intrinsic value of a gold ring.”

We’ll set aside for a moment the fact that the dictionary definition of the word intrinsic specifically references gold.

When critics declare that gold and gemstones have no intrinsic value, what they are really saying is that they have no practical uses.  In other words, when stripped of their decorative, monetary or status-enhancing applications, gold and gems (allegedly) possess no industrial usefulness.

First, I will comment that it seems a little unfair to discount their primary strengths.  It is like asking what good cotton is if you can’t weave it into fabric.  But even with this considerable handicap, gold and gemstones still have a significant number of uses, thus endowing them with substantial intrinsic value.

For starters, gold does pretty much everything copper can do, except better.  Other than its exorbitant cost, there is no reason you couldn’t make all the plumbing and electrical wiring in your house out of gold.  And it would last pretty much forever, to boot.

Of course, gold has a lot of other uses besides giving copper an inferiority complex.

Almost every cell phone, laptop and desktop computer on the planet contains small amounts of gold, where it is used to plate vital electrical circuitry.  This is because gold does not tarnish or corrode, even under the most hostile environmental conditions.  It is safe to say that the computing revolution of the past few decades would have been impossible without gold.

Gold is also used in dentistry, where its chemical inertness and durability make it a perfect material for filling cavities.

Even the medical profession has adopted gold for some specialized situations.  The gold-based compounds auranofin and sodium aurothiomalate are sometimes used to treat rheumatoid arthritis.  In addition, tiny radioactive gold seeds have been implanted into cancerous tumors, helping to shrink them.

Space exploration is another industry that is heavily dependent on gold.  It is not only found in the computer components of every satellite and spacecraft, but is also lavishly used in orbital telescopes and space suits.  These gold coatings reflect solar radiation, thus helping to regulate temperatures and prevent heat damage.

Glassmaking also relies on gold.  A highly prized type of deep red glass called cranberry glass or ruby glass can only be made by dissolving gold salts in a pool of molten glass.  High-rise skyscrapers also rely on an ultra-thin coating of gold on their windows to help with climate control.

Much like gold, gemstones often get a bad rap as unnecessary baubles that have no intrinsic value.  But this ignores the modern world’s reliance on their unique physical and optical attributes.

First up are diamonds.  These covetable gemstones are the unsung all-rounders of the gem world.  Diamond’s superior hardness and toughness means that it is perfect as an abrasive or cutting edge.

Diamond drill bits are a mainstay of the oil, gas and mining industries.  And construction workers frequently use diamond-impregnated saw blades to quickly and easily cut concrete.

Another, less well-known application is the diamond-scalpel in medicine.  Diamond scalpels are used in any situation where an ultra-sharp, long-lasting blade is necessary, like eye surgery.

Perhaps diamond’s most interesting scientific use is the diamond anvil cell.  This high-tech tool skillfully exploits the tremendous toughness and near perfect transparency of diamond in order to crush a test sample between two opposing diamonds.  This allows for massive pressures and temperatures, similar to those deep within the earth, to be replicated in the laboratory.

Sapphires are another gemstone that has widespread industrial applications.  Titanium-sapphire lasers are commonly used in spectroscopy, LIDAR and other research applications.

But sapphire also has more down to earth uses, as well.  It is often employed anywhere a small, perfectly clear window of extraordinary toughness is needed.  For example, many luxury watches have sapphire crystals to protect their dials.  And Apple’s iPhone 7 made news when it was announced that it would ship with a sapphire camera lense.

Even more prosaic gems like garnet and quartz have extensive industrial uses.

Garnet sandpaper has been used as a cheap and reliable tool by woodworkers for many decades.  Indeed, it can be employed anywhere that a super-hard abrasive isn’t needed.  For more demanding applications, stepping up to aluminum-oxide (which is just another word for sapphire!) sandpaper makes more sense, although it is slightly more expensive.

Quartz possesses an unusual property known as the piezoelectric effect.  This means that it turns mechanical pressure into a small electrical impulse and vice-versa.  The most practical use for this strange property is in time-keeping.  As a result, a tiny quartz crystal resides in the heart of every quartz watch and clock on the planet.

I suppose that the biggest complaint a skeptic could have about the intrinsic value of gemstones is that their industrial roles are typically fulfilled by laboratory-created synthetic gems.  But I don’t think this takes anything away from the desirability of naturally mined stones.

To the contrary, naturally mined gems are merely being employed in their highest and best use.  Highest and best use is an economics concept that basically states that while an item might have many possible uses, it will tend to be primarily employed for its most valuable purpose.  And it will also be bid to a price commensurate with this highest and best use.

The fact is that the highest and best use for gold and gemstones are as jewelry, decoration and money.  This might confound and disturb uneducated critics, but thousands of years of human history confirm it.

 

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Ben Dyer Designer Brooch in 18K Gold

Ben Dyer Designer Brooch in 18K Gold
Photo Credit: Jewelry Treasures New and Old

Ben Dyer Designer Brooch in 18K Gold

Buy It Now Price: $1,500 (price as of 2018; item no longer available)

Pros:

-This 18 karat gold designer brooch by the celebrated North Carolina jeweler Ben Dyer is set with an opal cabochon, a trillion-cut aquamarine and a small accent diamond.

-This Ben Dyer masterpiece measures 2 inches (5.1 cm) long by 0.5 inches (1.3 cm) wide.  It weighs 7.2 grams (0.2315 troy ounces) – a substantial amount for such a delicate design.

-This contemporary 18 karat gold brooch, with its wild combination of textures, colors and forms, is an excellent example of Modernist jewelry.

-Ben Dyer is an accomplished goldsmith based in Hillsborough, North Carolina.  He is tremendously experienced in his craft, having first started making jewelry in 1975.  His work is characterized by flowing lines and elongated forms, combined with contrasting textures and gemstone accents.

-I estimate the weight of the aquamarine in this brooch at around 0.60 carats, the opal at about 2.5 to 3.0 carats and the diamond at 0.05 carats.  Altogether, the intrinsic value of the gemstones set in this brooch is probably around $300 (assuming $200 per carat for the aquamarine, $50 per carat for the opal and $800 per carat for the diamond).

-The gold melt value of this Ben Dyer original is about $188 (at a $1,200 gold spot price).  When combined with the value of its gems, the piece has a total intrinsic value of $488, give or take.  However, I have been fairly conservative with these estimates; it is entirely possible that the components of this fine brooch are worth more than my assumptions.

-The materials and build quality of this designer brooch are beyond reproach.  In my estimation, less than 1 in 1,000 pieces of estate jewelry stand at the same level as this marvelous specimen.  It is simply a superb piece of jewelry.

-High quality estate jewelry is growing ever more expensive as time passes.  It used to be possible to buy high end pieces like this for $1,000 or less a decade ago.  But since then, we have reached what I believe to be the permanent end of inexpensive fine vintage jewelry.

-The asking price of $1,500 for this Ben Dyer tour de force is probably less than half what it would cost you if you were to commission it directly from the artist.  This is the primary reason that buying fine designer or vintage jewelry in the secondary market is a necessity for anyone interested in jewelry as an investment.

-I believe this is a compelling piece of investment-grade jewelry at a very reasonable price.  But if you balk at the $1,500 price tag, you can always make the seller a lower offer.

 

Cons:

-At $1,500, this superlative piece of designer jewelry is not cheap.  And I fully appreciate that many people cannot afford to drop this sum of money on a piece of jewelry.  But in the world of investment-grade antiques, the best of the best rarely comes cheap.  And if you want an heirloom-quality piece of jewelry that you can pass onto your children or grandchildren, this is definitely it!

 

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