Future Antiques – Investing in Tomorrow, Today

Future Antiques - Investing in Tomorrow, Today

It is no secret that I like buying antiques for investment purposes.  But lately I’ve also been exploring the idea of investing in future antiques.  I define future antiques as contemporary artwork, jewelry or other objets d’art available for relatively modest sums of money that have a good probability of being highly desirable in the future.  In theory, buying undiscovered masterpieces for low prices when they are new and then waiting two or three decades should lead to massive profits.

Of course, this strategy is easier said than done.  The real problem is determining what will be considered desirable future antiques and what will be considered mediocre.  However, we do have a roadmap to help guide us – The Antique Sage’s five rules for determining an antique’s desirability.  Portability, quality of materials and construction, durability, scarcity and zeitgeist are the five distinct aspects that help define investment grade antiques.  Luckily, these rules apply to new artwork just as reliably as century-old antiques.

These guidelines do leave a lot of room for interpretation, though.  Many future antiques will score very highly on some of the five factors while lagging in others.  So how is the forward thinking art connoisseur or investor supposed to choose?

In my opinion, quality and zeitgeist are the two most important attributes to consider when looking for future antiques.  Quality is a fundamental attribute for antiques.  We are looking for items made from the highest quality materials available.  In addition, we want our future antiques to be crafted with the greatest care by artists of the highest skill level.

Zeitgeist is a little more complicated.  Zeitgeist can loosely be thought of as the prevailing artistic milieu of a given time or age.  Motifs, styles and subject matter are all hallmarks of zeitgeist.  All art produced in a given time and place will reflect the cultural backdrop of that period regardless of the individual training or personal preferences of an artist.

We shouldn’t forget the role of the artist when scouring the internet for future antiques, either.  I have found that many of the best contemporary works of art available today are often created by self-taught or non-traditionally trained artists operating outside of the established artistic community.  This is sometimes referred to as outsider art or folk art.  As an added bonus, informally-trained artists often charge less for their works than traditional artists.

Artists without formal training can have unique and fresh approaches that result in groundbreaking, visually distinctive work.  This can manifest itself in what I term the “It Factor”.  When I am sorting through a large number of works, the ones that have the It Factor make me stop and exclaim “Wow!”  The It Factor just means that an artwork, for whatever reason, is truly exceptional.

In order to get a better idea of what I’ve been talking about, let’s briefly examine a few specific examples of items that I believe will become future antiques.  The first piece is a contemporary nephrite jade pendant that I recently featured in an Antique Sage Spotlight post.  This exquisite work of art was hand carved by a self-taught artisan jeweler named Alif Ballangrud who lives on the coast of Oregon.  This breathtaking jade pendant exhibits all of the five elements of antique desirability, and really exudes the It Factor.  Perhaps best of all, this magnificent jade carving is for sale for the surprisingly modest price of only $425!  I have no doubt that this one-of-a-kind piece will be much more valuable in a couple decades.

Another work that I think has a high probability of ascending to the pantheon of future antiques is another one of my Spotlight posts – a 2011 drypoint print by Mariko Kuzumi.  This lovely nature-themed print deftly juxtapositions vibrant color with monochromatic lines to create a compelling work of contemporary art.  The artist, Mariko Kuzumi, lives and works in New York City, but I feel that her Japanese heritage really shows through in the work.  In any case, for only $200, this contemporary drypoint print is a marvelous piece with great future potential.

Future antiques don’t have to be conventional art, though.  For example, there has been a renaissance over the last few years in poured silver bullion bars.  Most silver bars produced by refineries today are struck or extruded, methods that lend themselves well to mass production.  But a tiny portion of the precious metal community has banded together and begun creating vintage-style, hand-poured silver bars.  Half collector’s item, half silver bullion, modern poured silver bars represent an attractive and unusual precious metal investment.

One of the premier makers of these new hand-poured silver bars is Backyard Bullion.  Backyard Bullion, also known by the acronym BYB, is a self-taught craftsman who started off in his backyard with a simple blowtorch and crucible.  But he has since evolved into a top-notch fabricator of poured silver bars.

These superb silver bars are available in a variety of shapes and sizes, but they all share a level of care and attention to detail that is only available in the finest of hand-made future antiques.  Some BYB poured silver bars are even hallmarked by the Edinburgh Assay Office in Scotland, a fact that will undoubtedly positively impact the future desirability of these objets d’art.  While BYB artisan-poured silver bars already sell for healthy premiums over the spot price of silver, I strongly suspect they will appreciate briskly in the years to come nonetheless.

Of course, every investing strategy has its drawbacks, and investing in future antiques is no different.  By trying to divine the future popularity and demand for certain types of art and antiques, you run the risk that misjudging the market.  Maybe that artwork you purchased directly from a promising artist ends up being ignored and shunned for no good reason.  Or perhaps your fine antique is finally appreciated for its great style and compelling quality, but only after several decades has elapsed.

Because of this uncertainty, buying future antiques should be considered a higher risk investment strategy, like investing in micro-cap stocks or high yield bonds.  As a result, I would strive to limit the exposure of these works in your investment portfolio to reasonable levels.  However, if done intelligently, buying the antiques of tomorrow, today, can reward the patient tangible asset investor with phenomenally high returns.

 

Read more thought-provoking Antique Sage investing articles here.

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Read in-depth Antique Sage investment guides here.

The Obscure Certified Coin Bubble of the Late 1980s

The Obscure Certified Coin Bubble of the Late 1980s
Photo Credit: PCGS

In today’s age of serial asset bubbles, it is easy to believe that financial history began in the late 1990s.  But this is not the case.  Few investors know this, but the U.S. rare coin market experienced a truly gargantuan certified coin bubble in the late 1980s.

I had my own, personal experience with this certified coin bubble.  In the late 1980s, I was subscribed to COINage magazine, a nationally distributed industry periodical.  Among its pages I found an advertisement for a coin I desperately wanted – an 1872 U.S. three-cent nickel that was certified MS-62 by PCGS.  This eccentric coin was available for the princely sum of $795, an amount that a 13 year old boy in 1989 could never hope to afford.  In the end, that was probably for the best.

The U.S. mint struck the three-cent nickel from 1865 to 1889.  This small, odd-denomination coin was a reaction to a shortage of small change that arose during the U.S. Civil War.  During the war, the U.S. government issued “shinplasters” – cheaply-made, legal tender fractional notes meant to temporarily satisfy demand for low denomination cash.  Once the war ended, the U.S. mint flooded the economy with small-denomination coins to replace the hated shinplasters.  The three-cent nickel was one of these new, post-Civil War denominations.

The three-cent nickel that I badly coveted wasn’t in a particularly high condition.  MS-62, otherwise known as Mint State-62, is much closer to the lowest mint-state grade of MS-60 than the perfection of MS-70.  An MS-64 or MS-65 example really would have been much better (and more expensive).  But a mitigating factor was that 1872 was a somewhat less common date for the three-cent nickel series.  The mintage was only 862,000 versus 11 million plus for the most common date in the series.

 

MS-64 & MS65 Certified U.S. Three Cent Nickels for Sale on eBay

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

 

That scarcity didn’t stop the coin from plummeting in value when the certified coin bubble burst.  Even today, nearly 30 years later, you can still buy a slabbed MS-62 three-cent nickel for only $200.  That is a stunningly high cumulative loss of nearly 75%.  If you measure the decline in inflation-adjusted terms, the situation is even worse, with a loss of over 88%!

There were several root causes of the massive certified coin bubble of the late 1980s.  First, memories of the 1970s and its dreaded inflation still lingered in the minds of many investors.  In early 1987 the price of silver spiked to more than $10 a troy ounce, almost double its normal price at the time.  Many people thought inflation might be making a comeback and rare coins seemed to be the perfect way to hedge this risk.

Another contributing factor to the late 1980s certified coin bubble was the 1987 stock market crash, widely known as Black Monday.  On October 19th 1987, the Dow Jones Industrial Average collapsed by 22.61%.  It was the largest one day percentage loss in the index’s history.  Even though the resulting bear market in stocks was over within a few months, many disillusioned equity investors looked for alternative investments.  Numismatically valuable U.S. coins seemed to offer a good substitute to the treacherous stock market.

But the most important factor in the certified coin bubble was undoubtedly the development of slabbing itself.  Third-party certification was an attempt to impose grading standards on an industry that was famous for its inconsistency.  In 1985, PCGS became the first third-party coin grading company.  PCGS found immediate success in the numismatic industry and soon spawned a close competitor, NGC, in 1987.

 

MS-65 & MS66 Certified U.S. Morgan Silver Dollars for Sale on eBay

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

 

The advent of independent, third-party certification had a seismic impact on the rare coin industry.  Before slabbing, numismatics was overrun with fly-by-night companies and boiler-room operations that sold severely over-priced, grade-inflated coins as investments to unsuspecting consumers.  The arrival of PCGS and NGC changed the industry nearly overnight.  Now dealers, collectors and investors could buy or sell slabbed coins “sight unseen” because they all trusted the grades given by the major grading services.

This situation is typical of all great bubbles.  A legitimate innovation or discovery takes place that promises the future creation of tremendous wealth.  In this case, the certified coin bubble was driven by the almost religious belief that slabbing would transform the numismatic market.  It was widely thought that certified coins would enjoy greatly improved liquidity generated via massive institutional demand from financial firms.  Proponents at the time felt these factors justified perpetually rising rare coin prices.

As the late 1980s unfolded, the enthusiasm for slabbed coins reached a fevered pitch.  As with so many other bubbles, it didn’t take long for Wall Street to join the certified coin bubble.  In February 1989 the respected financial firm of Kidder, Peabody & Co. started a limited partnership, the American Rare Coin Fund.  A year later Merrill Lynch launched a similar fund called the NFA World Coin Fund Limited Partnership.  UBS, another Wall Street firm, created an internal rare coin division dedicated to advising its high net worth clients on numismatics.  The potential for certified coins seemed almost limitless at the time.

 

MS-64 & MS65 Certified U.S. Liberty Head $5 Gold Coins for Sale on eBay

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

 

And then it all came crashing down.  The U.S. certified coin bubble peaked sometime in mid 1989 and slowly – almost imperceptibly at first – began to weaken.  By late 1989 some categories of high-grade, common date coins, like Morgan silver dollars, were clearly in decline.  But the real, gut-wrenching carnage didn’t hit numismatic dealers and coin shows until the 1990 – 1991 timeframe.

The PCGS3000 Index, a key indicator of the rare U.S. coin market, peaked at $181,088 in May 1989.  The index bottomed out in December 1994 at $46,819 – a vicious 74% loss.  Even now in January 2018, the PCGS3000 index rests at $57,076 – a loss of more than 68% since the 1989 peak.

I think it is important to learn the right lessons from the late 1980s certified coin bubble.  It isn’t that tangibles are bad investments – far from it, in fact.  I think that tangible assets are, generally speaking, great buys at the moment.  After all, some high-grade, certified U.S. coins are available today for the exact same prices they sold for in the mid 1980s!

Instead, you should be wary of any asset class that is over-hyped by the financial media and Wall Street.  Avoid investing in that hot stock or index fund that all your friends, co-workers or relatives can’t stop talking about.  Right now these dangerously overvalued assets include high-flying tech stocks, like Netflix, Amazon and Tesla, along with virtual crypto-currencies like Bitcoin.  Ironically, some certified U.S. rare coins are a great investment at today’s prices; it just took nearly 30 years to get there.

 

Read more thought-provoking Antique Sage coin articles here.

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Read in-depth Antique Sage coin investment guides here.


Art Nouveau Gilt Bronze Tiffany Desk Blotter Ends

Art Nouveau Gilt Bronze Tiffany Desk Blotter Ends
Photo Credit: Relic-Island

Art Nouveau Gilt Bronze Tiffany Desk Blotter Ends

Buy It Now Price: $369.99 (price as of 2018; item no longer available)

Pros:

-These attractive Art Nouveau gilt bronze Tiffany desk blotter ends were made by the famous American luxury house of Tiffany Studios in the early decades of the 20th century, between about 1900 and 1918.

-These Tiffany desk blotter ends measure 12.25 inches (31.1 cm) long by 2.25 inches (5.7 cm) wide.  Each one is stamped “TIFFANY STUDIOS NEW YORK 1153” on the side.  1153 is an inventory number that denotes both the type of item (a desk blotter end) and the design (Abalone in this case).

-A desk blotter is a flat pad or sheet that is placed on the surface of a desk to protect it from damage due to ink spills or pen indentations.  They were traditionally made from leather, although synthetic plastic desk blotters are fairly commonplace today.  Desk blotter ends were placed on either edge of a desk blotter in order to help hold it in place.

-There are over 20 known patterns for Tiffany Studios desk sets.  The beautifully interwoven vine and leaf design shown above is known as “Abalone” due to the use of iridescent mother of pearl elements.  Abalone is one of the more commonly encountered Tiffany desk set designs.

-Art Nouveau was a naturalistic art style that was extremely popular between 1890 and 1910, although it persisted slightly longer in the U.S.  It typically featured women, flowers, insects or other nature themes, often in flowing, languid poses.

-The typical Tiffany Studios desk set had 6 pieces, including a letter rack, ink stand and desk blotter ends.  Other possible elements were a letter opener, box, calendar holder, ink blotter or pen tray, among others.

–The zeitgeist of these Tiffany desk blotter ends is off the charts!  They personify the flowing, naturalistic sensibilities of Art Nouveau style that was so popular before World War I.

-These Tiffany desk blotter ends are in remarkably good condition for being at least a century old.  The gilding is largely intact and the mother of pearl inlay has few cracked or chipped pieces.  This is unusual because mother of pearl tends to dry out over many decades, leaving it susceptible to damage.

-Tiffany Studios was a celebrated luxury house that always produced goods to the very highest quality standards.  From its origins in the 1870s until its demise during the Great Depression, the firm had often been in the vanguard of American style.  Because of this, luxury goods created by Tiffany Studios are always in high demand, with a price to match.  Therefore, I find the $370 asking price for these Tiffany desk blotter ends to be fair.

 

Cons:

-While I believe the $370 asking price is fair, I’ve seen this seller put these same Tiffany desk blotter ends on sale for $300 before.  At $300, I think this matching set would be a steal.  If you like them, you could always make an offer to the seller at the lower price.  I think he would probably accept it.

-Some people might consider a set of desk blotter ends to be an anachronism today.  However, I think they would be a welcome addition to the desk of any vintage fountain pen aficionado or office traditionalist.  In addition, these Tiffany desk blotter ends would make a stunning decorative item for a fireplace mantel or shelf in any well-appointed home.

-Unfortunately, fraud is rampant in the field of Tiffany Studios antiques, especially Tiffany lamps.  While this piece looks genuine to me, I am no Tiffany Studios expert.  The only element I found at all questionable is the micro-pitting evident on high magnification, which I attribute to corrosion due to storage conditions.  If you are unsure about the authenticity of this piece, I would recommend that you solicit a second opinion from a knowledgeable source.

-Tiffany Studios was a different company from the well-known luxury jeweler Tiffany & Co.  Don’t confuse the two!

A 2018 to Do List for Alternative Asset Investors

A 2018 to Do List for Alternative Asset Investors

As 2017 departs and 2018 arrives, it makes sense for those interested in alternative assets to reassess their financial situation and make these smart moves.  So here is the Antique Sage’s 2018 to do list for alternative asset investors:

 

Rebalance your portfolio from conventional assets to alternative assets

The paper asset markets have had a tremendous bull market run over the past 9 years.  So there is every probability that the stocks, bonds and mutual funds in your retirement or brokerage account are worth far more than they were just a few short years ago.

So now is the perfect time for you to take a little of your winnings off the table.  Sell some of your stocks and bonds and reallocate the proceeds into an asset class that hasn’t performed as well.  Of course, there are very few asset classes that haven’t performed well recently.

But there is one asset class that was completely overlooked in 2017: bullion, fine art and antiques have lagged substantially behind.  In my opinion, this makes them perfect for alternative asset investors in 2018.  Their prices are low and their valuations are reasonable.  A move from traditional paper assets like stocks and bonds into fine art and antiques would simultaneously de-risk your portfolio while improving future return potential.

 

Don’t buy into the crypto-currency hype

Alternative asset investors may be sorely tempting to throw their money at those alternative asset niches that have done the best in 2017.  In this case, I’m referring to the crypto-currency complex.

Most crypto-currencies, including such illustrious participants as Bitcoin, Ethereum, Litecoin and Ripple, absolutely skyrocketed during 2017.  Bitcoin went from about $1,000 to $14,300 for an astounding 1,330% one year return.  However, Bitcoin was far from the best crypto-currency performer of 2017.  Ethereum rose by 7,470%, Litecoin increased by 5,775% and Ripple soared by an unbelievable 33,186%.

Now, I like the idea of crypto-currencies.  The world very much needs a form of money that is beyond the self-serving manipulations of corrupt central banks.  But Bitcoin, along with nearly every other crypto-currency currently in existence, has some pretty glaring flaws.

In short, it might be tempting for alternative asset investors to shift the entirety of their alternative asset allocation into crypto-currencies, especially in light of their recent outperformance.  But they should resist that urge.  Investment returns come in cycles.  Assets that perform well for an extended period of time inevitably underperform at some point in the future – usually when you can least afford it.

 

Buy yourself a wonderful piece of fine art

Life always seems to move faster than we would like it to.  There are always appointments to make, chores to finish and bills to pay.  But it is vitally important to step back and appreciate the world every once in a while.

A perfect way to do this is to buy a piece of beautiful art.  It could be a colorful print to display over your couch, or an avant-garde sculpture for your coffee table.  It could even be a fine piece of antique jewelry for you (or your spouse).  Almost anything that has been crafted by human hands with the primary intention of being aesthetically pleasing can qualify as art.

The only rule is that it should be a piece of art that appeals to you.  This might seem self-evident, but a surprising number of alternative asset investors get caught up in the idea of appreciation potential above all else.

Don’t fall into this trap.  Instead, buy a stunning piece of art just because it speaks to you.  If you are lucky, that artwork will not only give you countless hours of viewing enjoyment, but also a reasonable investment return as well.

 

Make sure you have enough cash or other short-term investments on hand

With the stellar run that both the stock and bond markets have experienced over the last several years, it is easy to believe that the good times will last forever.  And it is true that securities markets may continue to rise at a rapid clip for a while to come.  But the fortunes of the stock market can change with shocking abruptness.

Therefore, it is wise to reassess your financial position and make sure that you have sufficient cash on hand to weather an unexpected market disruption.  It is even more imperative for alternative asset investors – those who collect notoriously illiquid assets like fine art and antiques – to have a healthy cash buffer.

Having a large pile of cash or other short-term investments will help you fight the urge to sell less liquid investments at inopportune times.  This might not seem terribly important right now, when every asset known to man is rising without pause.  But having sufficient cash holdings will become vital if there is ever a market downturn.  It is good to be able to sleep soundly at night without having to worry about financial Armageddon.