A ‘Tangible’ Time to Invest?

I want to put some of my money into tangible assets such as coins or jewelry. What is the best way for me to learn enough about them to know when I am making a good investment?

The key word is investment. The simplest investment strategy is buy low, sell high. Right now the market is high. Given this, now may not be the right time to buy.

The 1988 recession taught the antiques-and-collectible trade two key lessons—there is a price at which every object no longer sells, and objects can price themselves out of the market. Twenty years have passed. The vast majority of individuals who are now part of the antiques-and-collectibles community have joined after 1988. They have little to no knowledge of past trends.

The current world economic crisis, especially the decline of the stock market, has renewed focus on tangible investments, e.g., precious metals, commodities, and antiques and collectibles. Look before you leap, an old adage, applies.

Tangibles are risky business

Tangible goods are more speculative than the stock market. Think oil. Six months ago, who would have believed that oil would sell for more than 50 percent less per barrel? The general feeling was there was no limit to the price oil would reach. Speculators were talking about $200 per barrel. Speculative bubbles burst. Consider the housing market.

Individuals who turn to coins and jewelry as investments are primarily focusing on the precious metal content of the pieces. If you pay “melt” value, you are speculating in metals futures. If you pay more than “melt” value, you are gambling.

Investing in any antique or collectibles, whether it be a coin or a piece of jewelry, requires an extensive study of market trends over decades. Further, investment means buying the top 1 percent of a market. This is the level that usually, but not always, exhibits steady growth. Investing in the common and even hard to find is an invitation to disaster.

Know how book value impacts profit

If you buy any antique or collectible at “book” value, you need to understand that a certain percentage of the price, often 50 percent or more, is profit to the seller. Admittedly, the margin is smaller in coins, but the profit still is there. The minute you become the owner, the item reduces in value by the profit made from its sale. Simply put, unless you buy right, you are not going to recover what you paid within the first few years of ownership, if at all.

Investing in tangible assets is an intermediate and long-term proposition. Short-term investing is an almost certain guarantee that the investor will lose money.

Whom can you trust?

If you insist on investing in tangible assets, the only person you can trust is yourself. Every seller has a vested interest in the objects they sell. They are not neutral. They are biased. Every person you consult will tell you they have the “right” answer. There are no right answers, only opinions. The more people to whom you talk, the more opinions you get.

Once the sale is made, the seller has your money and you have the object. Who is the winner? This is another critical question that arose from the 1988 recession. Is the winner the person who sold the object or the person who paid so much that he will never be able to recover his purchase price in his lifetime? The person with the cash wins. No tangible goods sale comes with an “I’ll buy it back from you for what you paid for it” guarantee.

It is your money. Spend it wisely.

Rinker Enterprises and Harry L. Rinker are on the Internet. Check out his Web site.

You can listen and participate in “WHATCHA GOT?” Harry’s antiques-and-collectibles radio call-in show on Sunday mornings between 8 a.m. and 10 a.m. Eastern Time. If you cannot find it on a station in your area, WHATCHA GOT?” streams live and is archived on the Internet.

“SELL, KEEP OR TOSS? HOW TO DOWNSIZE A HOME, SETTLE AN ESTATE, AND APPRAISE PERSONAL PROPERTY” (House of Collectibles, an imprint of the Random House Information Group), Harry’s latest book, is available at your favorite bookstore and via Harry’s Web Site.

Harry L. Rinker welcomes questions from readers about collectibles, those mass-produced items from the 20th century. Selected letters will be answered on this site. Harry cannot provide personal answers. Photos and other material submitted cannot be returned. Send your questions to: Rinker on Collectibles, 5093 Vera Cruz Road, Emmaus, PA 18049. You also can e-mail your questions to harrylrinker@aol.com. Only e-mails containing a full name and mailing address will be considered. Please indicate that these are questions for WorthPoint.com.

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