One of the recurring themes of my blog is opportunistic investing. I would rather patiently wait to buy the right asset at the right price, rather than throw gobs of money to blindly hit the bid. As 2023 progresses, I believe we will see some juicy deals in the world of antiques.
Ever since the COVID pandemic hit in early 2020, I have favored purchasing pieces that are more liquid rather than less liquid. This can be a challenge in the antiques and tangible asset category where illiquidity abounds.
In the context of antiques, liquidity refers to items that sell for a modest premium over their melt/scrap value. In the circumstances of a forced sale, the worst you will do is recover an object's intrinsic (scrap) value. But when you pay very little over melt value to begin with, any potential loss is strictly limited.
Bullion is obviously the most liquid of tangible assets. But premiums on gold, silver and platinum bullion have been rather high during 2022 as a result of overwhelming retail demand. Precious metal refineries and mints simply can't keep up with demand - something that doesn't look likely to change in 2023.
It is no fun paying a 25% premium over spot for an ordinary tube of generic 1 ounce silver rounds.
In these cases, I have found that buying rare coins, vintage watches or other relatively liquid, high quality antiques is a savvy investment alternative. After all, if you are going to pay an elevated premium over intrinsic value anyway, it is much better to buy a piece with some dimension of collectible, historical or cultural value instead of a modern bullion coin or ingot with little hope of ever trading as more than bullion.
As 2022 rolls into 2023, I wanted to let you peak over my shoulder at two of my recent trades that are perfect examples of investing in liquid antiques.
The first purchase was an 1878 U.S. Liberty head $5 half eagle gold coin I found while browsing Etsy. I'm a big fan of investing in lightly circulated, common date pre-1933 U.S. semi-numismatic gold coins in the current environment. They combine a solid cornerstone of bullion value with a generous dollop of numismatic potential. If they can be found for the right price (generally between a 10% and 50% premium over spot), they represent compelling tangible investments.
Photo Credit: AtlanticCollectiShop
Luckily for me, the price was right.
The seller had recently cut the asking price of the coin to $575. I also had a 5% discount code that the seller had previously sent me after I had added the piece to my watchlist about a week earlier. After applying the coupon the final price was $546.25, which represented a very reasonable 35% premium over melt value.
I was sold.
This particular gold half eagle ticked a lot of my checkboxes. First, the piece had been slabbed by PCGS - a well respected third-party grading service. This not only guarantees the authenticity of the coin, but also provides a professional opinion on its grade. Third-party grading is a godsend in the world of coin collecting, where small differences in grade can impact the value of a rare coin by hundreds or even thousands of dollars.
In this case, the assigned grade was AU-55. AU is shorthand for About Uncirculated. This is considered a higher grade among coin collectors - the last stop before encountering the highest tier of grades (Uncirculated pieces). According to PCGS, a coin in this condition shows "slight wear on the high points with minor friction in the fields. Luster can range from almost nonexistent to virtually full, but it will be missing from the high points."
In fact, I often prefer buying AU-55 or AU-58 coins over ostensibly higher graded MS-60 or MS-61 coins of the same type. Why? Because lower Mint State (MS) coins are often ugly specimens covered in bagmarks, hairlines and ugly toning. A nice AU coin will technically have wear, but is often extremely attractive otherwise.
And in coin collecting eye appeal is everything.
In this instance, our gold half eagle exhibited excellent eye appeal characterized by wonderfully original surfaces. It is common for old gold coins to have been cleaned at some point in the past in a futile attempt to improve their appearance. This almost always destroys their decades-old patina, resulting in a brassy, unnaturally bright tone. A cleaned coin without its original patina is always worth less than one with its patina intact.
Happily, our example avoided this unpleasant fate.
Another attractive feature of the gold half eagle I purchased was its date. Although an 1878 $5 gold piece from the Philadelphia Mint is considered common date, it is still 144 year old and from a near-mythological era in American history. This coin could have been present during the shootout at the O.K. Corral in 1881. It might have graced the pocket of inventor Thomas Edison at his Menlo Park laboratory during the 1880s. It may have witnessed the devastation of the San Francisco earthquake of 1906.
History becomes real. And you can hold it in your hand.
The final factor that made this U.S. $5 gold coin so desirable was, once again, its encapsulation by PCGS. The style of PCGS holder that housed the coin is known as an Old Green Holder, or OGH for short. These are vintage holders that PCGS employed between 1986 and 1998. They are in high demand by collectors for two different reasons.
PCGS OGH & NGC Old Fatty Certified Pre-1933 U.S. Gold Coins for Sale on eBay
First, Old Green Holders are collectible in their own right. PCGS last issued them around 25 years ago. The earliest examples are over 35 years old and were present during the infamous late 1980s certified coin bubble. All Old Green Holders are vintage pieces by now and many collectors enjoy owning them for their own sake, even if they don't hold particularly rare or expensive coins.
The second reason Old Green Holders are typically bid at a premium is because third-party grading is widely regarded as having been more conservative in the early years of the industry. This means there is a greater chance that a coin housed in an OGH is a premium quality example within its stated grade. In rare instances, coins in OGHs have been resubmitted to the grading services and come back as the next higher grade!
Coin grading is ultimately subjective, so some slight variation is to be expected. This is true even when a coin is evaluated by expert graders. However, Old Green Holders have developed a durable reputation for housing solidly graded coins. As a result the market often bids them at a 5% to 10% premium to identical coins with the same numerical grade from the same grading service, but housed in later holders.
Our 1878 U.S. gold half eagle scored particularly well on this metric.
Its OGH is Gen. 3.1, which was issued between 1993 and 1998. This is especially desirable because it is a gold coin housed in an OGH - and a 19th century gold coin at that! So if a collector wants an OGH that houses a classic, pre-1933 U.S. gold coin with a lot of eye appeal, this example would be one of the most affordable and accessible candidates available.
A collector could also opt to purchase a similarly priced ($400 to $700) slabbed $1 Liberty/Princess head gold coin or a $2.5 Liberty/Indian head gold coin. But these specimens would be much smaller and less visually impressive than a $5 half eagle. On the other hand, $10 Liberty head eagles are another reasonable choice, but also sell for more than twice the price. A slabbed $10 Liberty head gold coin, even if only in AU-50 condition, would cost at least $1,200 in today's market - even more if housed in an OGH.
In any case, I can only see pre-1933 semi-numismatic U.S. gold coins becoming more valuable as 2023 progresses - especially those housed in vintage NGC or PCGS holders.
Moving on from the space of numismatics, I have another vintage purchase that I wanted to document.
I sometimes search Etsy and eBay for jewelry categories that are overlooked in today's fashion world, such as brooches or cufflinks. Because these types of jewelry are out of style today, it is sometimes possible to find great bargains on vintage or antique pieces.
As I was browsing Etsy, I stumbled across a magnificent pair of estate 18 karat yellow gold leopard-print pattern cufflinks listed for $350. The first thing that caught my eye about these cufflinks was their unusual leopard pattern motif. The unique design had been cleverly applied via a crosshatched Florentine finish. I had never seen anything quite like it before - a pair of Florentine leopard print cufflinks! It absolutely screamed outrageous 1980s fashion, although they could have been made anywhere from the mid 1970s to the early 1990s.
Photo Credit: TheButlerDidItInCB
The other interesting thing about the cufflinks is that they were marked 750, a reference to 750/1000 - the purity of the metal. 750 indicates a European origin and is equivalent to 75% fine or 18 karat gold. This is a high purity gold alloy that is typically used in fine or designer jewelry.
Unfortunately, I was unable to decipher the other hallmarks on the cufflinks, so I couldn't narrow down the piece's country of origin or maker.
Now all of this information was mildly intriguing to me, but not nearly enough for me to entertain purchasing the cufflinks.
What did tip the scales for me was when I saw the weight of the piece stated in the item description - 13 grams. This is a very substantial weight for a pair of cufflinks, reflecting not only the high density of 18 karat gold, but also the excellent build quality of the jewelry. Cheap karat gold jewelry is almost always as thin and light as the manufacturer can make it in order to save on material costs, while expensive karat gold jewelry is usually much heavier in weight.
13 grams is almost obscenely heavy for a pair of cufflinks. To give some perspective, I consider less than 6 grams to be a light-weight pair of cufflinks, 6 to 9 grams to be medium-weight and 9 to 12 grams to be heavy-weight. 13 grams is off the high end of the scale!
Now that I had the weight and purity of the piece, I could calculate a scrap value.
In these situations I always assume the true purity of the jewelry in question is lower than its stated/stamped purity. This is because the enforcement of hallmarking laws varied widely from country to country and it was common in certain regions for some fabricators to cheat on their gold content just a little to squeeze out a slightly higher profit margin. In this case, I assumed the cufflinks in question were only 70% fine gold instead of 75% fine.
I also applied a 95% payable gold rate on top of the assumed 70% purity. This is due to the fact that if I ever chose to scrap the jewelry, I would have to pay the refinery their cut. Each refinery has its own fee schedule, so refining charges can vary. However, I have found that it is pretty common for legitimate refineries to charge no more than 5% of recoverable gold. These charges may be lower, especially if you are sending in a larger lot containing several troy ounces or more of recoverable gold.
So the final formula calculation was 13 grams (gross weight) x 0.7 (fineness) x 0.95 (refinery payable gold) x $1710 (gold spot price at the time of purchase) = $475. Remember, the cufflinks were listed for just $350. So a $475 scrap value equates to $125 in free gold!
Now I was sold!
Vintage 14 Karat & 18 Karat Gold Cufflinks for Sale on eBay
The fact that these 18 karat gold leopard print cufflinks were high quality designer jewelry dripping with opulent 1980s style was simply icing on the cake. Once purchased, I have the option of either scrapping the cufflinks outright or holding onto them for their potentially higher resale value as vintage jewelry. For now I'm patiently holding them.
These are the kinds of deals I like the most, although they are very difficult to come by. After all, few people are willing to sell jewelry below its melt value!
As 2022 comes to a close and 2023 arrives, I am more convinced than ever that high quality antiques represent one of the best investments you can make in today's treacherous financial markets. Provided you don't overpay, I simply don't see how you can go wrong.
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