“Gold gets dug out of the ground in Africa or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”
That’s what Warren Buffett said back in 1998.
Gold has long been considered a safe-haven investment. However, the price of gold has performed dismally in recent years.
For those who don’t trust the conventional financial markets, there are alternative more unorthodox ways to put away wealth.
We put together a list of some odd assets that have performed relatively well.
But be warned. These assets are very illiquid and there’s no guarantee that their values won’t plunge like gold before it.
At a 2010 auction, bond guru Bill Gross declared that rare stamps are 'better than the stock market.' Gross has reportedly spent up to $US100 million investing in stamps.
It is a lucrative hobby: The GB 30 Rarities Index, which tracks the performance of the collectibles market, rose 74% in the six years following the Great Recession as financial markets tumbled.
China is a leading producer of ceramic art. The Knight Frank Luxury Investment Index forecasts a 45% increase in their value over the next five years.
'As China was the world's premier producer of Ceramic Art for most of the past thousand years, people are mainly interested in pieces from that glorious period ending about 100 years ago,' notes Richard Mills, chief curator at Charle Associates. In April, a Ming dynasty porcelain cup with a painting of a rooster sold for $US36 million in an auction. It was one of only 19 known to exist.
The UK-based Wine Investment Fund shows that the liquor has outperformed gold, oil and the FTSE and Hang Seng indexes. The fund only invests in wines from Bordeaux Chateaux because they produce a limited quantity.
And as it turns out, The Vatican is the world's largest wine consumer. The US is in 56th place.
From old movie posters to autographs of dead rock stars, rare memorabilia can return a fortune for both people who already own them or buy them from other sellers. Since prized memorabilia is rare, prices only increase with demand.
Hersh Borenstein, owner of Frozen Pond Inc., a hockey memorabilia distributor, said: 'I know people who bought Gretzky (game worn) jerseys for about $US50,000 and then resold them for $US200,000; Bobby Orr jerseys that sold in 1996 for about $US30,000 and sold again four or five years ago for $US170,000,' he says. 'It's like artwork, there's a lot of money to be made, a lot of upward potential, but you've got to come up with the right items.'
Source: The Globe and Mail
The value of classic cars has risen 456% over the last ten years, the 2014 Knight Frank Luxury Investment Index shows. Cars like this 1958 Ferrari 250 GT auctioned for $US8.8 million in January have beaten all other luxury investments the index
measured in the past year, rising in value by 28%.
The value of vintage British cars and German collectibles has also increased consistently since January 2013, according to Hagerty Insurance, which specialises in classic cars.
Growing demand, limited supply and a low maintenance cost are all reasons to invest in a luxury watch, according to Paul Fraser Collectibles. Most watches are not investment-grade material. However, scarce Rolex and Patek Philippe models maintain or increase their value over time.
Toby Sutton of specialist auctioneers Watches of Knightsbridge notes that 'many pre-owned or vintage watches have increased considerably in value over the past decade.'
Like memorabilia, autographs are alluring for their rarity and association with famous people.
Paul Fraser, owner of a collectibles company with his name, notes: 'There are an estimated 200m serious collectors around the world, a figure that is predicted to double in the next 20 years. It's an increasingly 'aspirational' investment, with leading collectors fighting over the best pieces. Many museums, such as the British Library, are buying up exceptional examples. And best of all: There is a finite supply and a growing demand for the most attractive specimens.'
The price of an autograph belonging to Neil Armstrong jumped 1345% between 2000 and 2013, according to the PFC40 Autograph Index.
Sources: Paul Fraser Collectibles
Bond expert Jeff Gundlach called artwork a more portable version of gold that achieves the same store of value. A recent study found that an increasing number of ultra high networth individuals are investing in art and collectibles.
It notes: '76% of art collectors are buying art for collecting purposes, but with an investment view (up from 53% in 2012). This implies that the investment aspect of art is something that collectors are increasingly concerned about.'
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