The Last Cheap Asset Class
By Dr. Steve Sjuggerud
May 14, 2007
In late 2005, I told my readers about what I called a Holy Grail-type investment...
It's an investment where best-case return could be hundreds of percent... and your worst case is still a positive return.
It's in what I consider to be "the last cheap asset class." Let me explain...
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In the last few years, the prices of virtually every asset have soared. Property prices have gone nuts. Stocks around the world (from Germany to Tokyo to New York) are all at new highs. And bond prices are so high, you're earning next to nothing in interest. There's hardly a cheap asset to be found anywhere.
But there is one cheap asset class... fine collectibles.
The chart below of rare gold coins tells the story... collectibles that once traded at amazing prices 20 years ago are barely worth their meltdown values today. It's unbelievable.
This is why I say that collectibles are the last cheap asset class... you get a lot for your money. They are cheap, ignored, and they are actually in an uptrend. (You just don't see the uptrend above because the chart is of the premium over melt value, not the coin price. And the price of the gold coins has been rising slower than the price of gold has been rising, so the coins premium over melt value in the chart is going down.)
As I say in the chart, since you're paying such a small premium over meltdown value for such a rare and exceptional work of art and piece of history, there's not much downside in coins. It's the same situation in rare, collectible stamps...
Back in 2005, Stanley Gibbons, the 150-year-old leader in collectibles in Britain, was offering an exceptional deal a few years ago. I flew to London to be sure it was legitimate.
I liked what I saw... and I ended up personally buying Beatles autographs through a contract that offered a worst-case return of 7% a year for 10 years. I recommended readers do the same in stamps, which are a more liquid market than autographs, with a much longer pricing history.
It's turned out to be a great investment so far. Stanley Gibbons does periodic portfolio valuations, and it turns out that every single Sjuggerud Confidential subscriber who bought from Stanley Gibbons is up.
Of course, the market has been up as well, as the chart shows. But the chart also shows that, historically, collectible-type assets are not necessarily correlated with stock prices. When stocks do badly (like for the decade of the 1970s, or from 2000 to 2003) collectibles can do very well... and vice versa. Take a look:
Collectibles Often Zig When Stocks Zag
Just last week, I visited Stanley Gibbons again in London. It's been taking good care of my readers since 2005, and on this trip, Stanley Gibbons invited me to become a director of the company. I was flattered, and I accepted.
I talked to the company last week, and it is willing to extend that same extraordinary deal it offered back in 2005 to Sjuggerud Confidential subscribers now to my DailyWealth readers... but it's only good through the end of May. And if it is overrun with inquiries, it has the right to stop offering such an exceptional deal.
My favorite money-making opportunities here have unlimited upside and virtually no downside. I think rare gold coins fit this bill... as they're at their lowest premium to melt value ever. (My most valued contact in rare gold coins is Van Simmons of David Hall Rare Coins info@davidhall.com, 800-759-7575).
The deal from Stanley Gibbons on stamps and autographs, for example, is even better... where your worst case is a positive return. Give Stanley Gibbons a call at 011 44 20 78 36 8444 and ask for Geoff, or send an e-mail to GAnandappa@stanleygibbons.com. Also, you can click here to read that issue of Sjuggerud Confidential where I shared all the details.
To me, fine collectibles (in many cases) are the last cheap asset class. They haven't been overrun by the big money – yet. But I believe they will in the near future. There are many risks, of course. So it's important that you stick with reputable dealers.
If you do, chances are you'll do very well.
Good investing,
Steve
P.S. The world's biggest investor - Bill Gross, who manages more than $700 billion - is also the world's biggest investor in stamps. He is selling off a portion of his massive collection for charity. More about Bill and his charity sale here.
Editor's note: Steve Sjuggerud is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.
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