The Lemon Fool

I wasn't sure where to post this, so please feel free to move this to another board.

I often see posts about ways of obtaining assets that will hold their value through time. People talk of gold sovereigns, coins, collectable stamps, wine, old cars etc.

When I was in my early twenties, I lost a beautiful gold watch left to me by my grandfather. I never forgot, and a few months ago, I spotted on Ebay what appeared to be the same watch, same make, though probably just very similar (memory plays tricks). It was expensive (c.900 quid) but after 40 years, I was finally able to ease my guilty conscience.

It was unused still in its original case and with small booklet, documentation etc, including the date (2005) of sale and original price.

A few days ago, I looked at my list of RPI/CPI and was surprised to discover that the price had kept perfectly (+/-5%) level with the RPI.

I'm far too close to retirement to start filling my house with watches but I thought this may be interesting to somebody. Possibly easier to sell than sovereigns, bigger than stamps but smaller than cars, wines and malt whiskies!

Of course, when your collection grows, putting the hour forward/back every six months would be a pain, but at least you'd have an excuse to do a quality control on your malt whisky collection!

Steve

stevensfo wrote:I wasn't sure where to post this, so please feel free to move this to another board.

I often see posts about ways of obtaining assets that will hold their value through time. People talk of gold sovereigns, coins, collectable stamps, wine, old cars etc.

When I was in my early twenties, I lost a beautiful gold watch left to me by my grandfather. I never forgot, and a few months ago, I spotted on Ebay what appeared to be the same watch, same make, though probably just very similar (memory plays tricks). It was expensive (c.900 quid) but after 40 years, I was finally able to ease my guilty conscience.

It was unused still in its original case and with small booklet, documentation etc, including the date (2005) of sale and original price.

A few days ago, I looked at my list of RPI/CPI and was surprised to discover that the price had kept perfectly (+/-5%) level with the RPI.

I'm far too close to retirement to start filling my house with watches but I thought this may be interesting to somebody. Possibly easier to sell than sovereigns, bigger than stamps but smaller than cars, wines and malt whiskies!

Of course, when your collection grows, putting the hour forward/back every six months would be a pain, but at least you'd have an excuse to do a quality control on your malt whisky collection!

Steve

Collectables/antiques can be good investments but it's important you know your area very well, there are a lot of experts out there and also a lot of fraudsters!

Gold is different as at any given time it has a fixed (spot) price so you just need to be sure it's genuine. This is much easier than with collectables, and especially so with coins such as sovereigns. Also, sovereigns couldn't be much simpler to sell. There are several online bullion dealers that will give you around the spot gold price for them - they make their money by selling them at a small premium.

BoE

Bubblesofearth wrote:

stevensfo wrote:I wasn't sure where to post this, so please feel free to move this to another board.

I often see posts about ways of obtaining assets that will hold their value through time. People talk of gold sovereigns, coins, collectable stamps, wine, old cars etc.

When I was in my early twenties, I lost a beautiful gold watch left to me by my grandfather. I never forgot, and a few months ago, I spotted on Ebay what appeared to be the same watch, same make, though probably just very similar (memory plays tricks). It was expensive (c.900 quid) but after 40 years, I was finally able to ease my guilty conscience.

It was unused still in its original case and with small booklet, documentation etc, including the date (2005) of sale and original price.

A few days ago, I looked at my list of RPI/CPI and was surprised to discover that the price had kept perfectly (+/-5%) level with the RPI.

I'm far too close to retirement to start filling my house with watches but I thought this may be interesting to somebody. Possibly easier to sell than sovereigns, bigger than stamps but smaller than cars, wines and malt whiskies!

Of course, when your collection grows, putting the hour forward/back every six months would be a pain, but at least you'd have an excuse to do a quality control on your malt whisky collection!

Steve

Collectables/antiques can be good investments but it's important you know your area very well, there are a lot of experts out there and also a lot of fraudsters!

Gold is different as at any given time it has a fixed (spot) price so you just need to be sure it's genuine. This is much easier than with collectables, and especially so with coins such as sovereigns. Also, sovereigns couldn't be much simpler to sell. There are several online bullion dealers that will give you around the spot gold price for them - they make their money by selling them at a small premium.

BoE

There are several online bullion dealers that will give you around the spot gold price for them - they make their money by selling them at a small premium.

But if I want to sell a sovereign, why shouldn't I charge a small premium above spot price as well? Albeit a bit lower to be competitive?


Steve

stevensfo wrote:

Bubblesofearth wrote:
Collectables/antiques can be good investments but it's important you know your area very well, there are a lot of experts out there and also a lot of fraudsters!

Gold is different as at any given time it has a fixed (spot) price so you just need to be sure it's genuine. This is much easier than with collectables, and especially so with coins such as sovereigns. Also, sovereigns couldn't be much simpler to sell. There are several online bullion dealers that will give you around the spot gold price for them - they make their money by selling them at a small premium.

BoE

There are several online bullion dealers that will give you around the spot gold price for them - they make their money by selling them at a small premium.

But if I want to sell a sovereign, why shouldn't I charge a small premium above spot price as well? Albeit a bit lower to be competitive?


Steve

I wouldn't buy one from you. I don't know who you are.

stevensfo wrote:I often see posts about ways of obtaining assets that will hold their value through time. People talk of gold sovereigns, coins, collectable stamps, wine, old cars etc.

I'm far too close to retirement to start filling my house with watches but I thought this may be interesting to somebody. Possibly easier to sell than sovereigns, bigger than stamps but smaller than cars, wines and malt whiskies!

I am warming to the idea of collectables. Not least because they are easy to gift or bequeathe to others, since they are portable and there is no third party or institution to be involved with that requires probate.

My preference would be for high-value coins since I know a bit about them, and nothing about watches. Diamonds are probably the ultimate in terms of value/weight ratio, but that really takes specialist knowledge.

I recommend investing in a good safe if you are putting a lot of money into small collectables.

CliffEdge wrote:

stevensfo wrote:
There are several online bullion dealers that will give you around the spot gold price for them - they make their money by selling them at a small premium.

But if I want to sell a sovereign, why shouldn't I charge a small premium above spot price as well? Albeit a bit lower to be competitive?


Steve

I wouldn't buy one from you. I don't know who you are.

Well said!!

Steve

One thing to bear in mind with watches is that the transaction costs are far higher than we're used to for dealing in shares. I've got a bit of experience in this as I dabble in antiques and have seen how much these things cost when treated as an investment. People underestimate both the costs and the difficulty in turning chattels back into cash (and there's the insurance and storage cost for valuable items).

Whilst there's always a market for gold and silver items (because they can be melted down and sold for their metal value), the markets for watches and other chattels can be highly illiquid to the point where you cannot find a buyer unless you offer them a colossal discount.

You can see the effects of transaction costs every day on the BBC and some satellite channels in the various Antiques shows such as Bargain Hunt, Flog It and Antiques Road Trip. Auctioneers' commissions for goods tend to be at least 15% + VAT (and 20% isn't rare) and you get caught for this when you're a buyer as well as a seller. So when a punter sells something on "Flog It" for £1,000 after the auction house's take they'll probably end up with a bit less than £800 for it. A round trip of buying and selling the same item at roughly the same price could easily cost 40%.

In contrast a round trip with £20,000 of shares in a S&P500 company can cost less than £10 for commission and less than £5 for the bid-offer spread (there's no stamp duty on American shares).

You might be able to reduce transaction costs by buying from shops, dealers, collectors, house clearances and car boot sales, but these people are going to want to take their cut.

As an aside there's an EconTalk episode that's all about transaction costs, featuring Mike Munger (economist from Duke University). Munger argues that transaction costs are amongst the most important things which shape the economy and affect people's decisions.

https://www.econtalk.org/michael-munger-on-sharing-transaction-costs-and-tomorrow-3-0/

stevensfo wrote:There are several online bullion dealers that will give you around the spot gold price for them - they make their money by selling them at a small premium.

But if I want to sell a sovereign, why shouldn't I charge a small premium above spot price as well? Albeit a bit lower to be competitive?


Steve

You can and many do on eBay. The issue is not buyer security (Paypal insurance covers this) but rather the fees you will pay. Any premium is likely wiped out by these. Dealers can offer low spreads because, through the scale of their operations, they can keep their costs low.

It does surprise me that sovereigns often sell on eBay for more than you would pay from main dealers.

BoE

Bubblesofearth wrote:

stevensfo wrote:There are several online bullion dealers that will give you around the spot gold price for them - they make their money by selling them at a small premium.

But if I want to sell a sovereign, why shouldn't I charge a small premium above spot price as well? Albeit a bit lower to be competitive?


Steve

You can and many do on eBay. The issue is not buyer security (Paypal insurance covers this) but rather the fees you will pay. Any premium is likely wiped out by these. Dealers can offer low spreads because, through the scale of their operations, they can keep their costs low.

It does surprise me that sovereigns often sell on eBay for more than you would pay from main dealers.

BoE

Yes, my comments were a little tongue-in-cheek.

Not just gold sovereigns, but the prices asked from Ebayers for silver coins have to be seen to be believed.

I've seen, especially German sellers, trying to sell 1 oz silver bullion coins for well over twice the normal price. Good luck to them. There's one born every day etc...

Steve

Many 'collectibles' have a huge buy/sell margin so generally IMO are not good investments. Then you need to insure them and also fashions can change.

As for watches, well I guess the finest Quill pens were collectibles at one point, but technology has moved on

I do find strange the value attributed to, for example, Rolex watches (other brands are available). It's a watch! I rarely wear a watch and certainly wouldn't want to wear something with a value in the £000s.

More pertinently for the OP, yes I agree transaction costs and illiquidity could easily wipe out the return unless you have an expert eye for an extremely good bargain.

Mechanical watches have had a huge run up in value in the last 3 years but now I think it is starting to unwind.

Lanark wrote:Mechanical watches have had a huge run up in value in the last 3 years but now I think it is starting to unwind.

This. Pay over list for a recent Rolex and in many cases you will lose money, a lot in fact if the recent trends continue. Watches certainly can be a store of value but are no longer a simple investment like they were a year or two ago. I have a few but since I am in the trade can buy cheap and get out when I need to. For those outside the bubble, I wouldn't recommend it other than as a hobby.

The point above about the spreads on asset classes are very pertinent. Sovs and gold bars can be traded at a 5% margin if you know what you are doing, other items like watches you are lucky if you get it below 10-15%, and then there is the upkeep issue. Watches need servicing every 5-10 years to remain healthy. The spread on diamonds is more like 25-35% so good luck maintaining value on those, they are a truly terrible investment.

Lanark wrote:Mechanical watches have had a huge run up in value in the last 3 years but now I think it is starting to unwind.

Indeed, it was just a matter of time.

Watis

You can get some nice boxes to put your watches in.

Which came first, watches or Tik Tok?

The appearance of very expensive watches in 40% IHT calculation (or lack thereof) probably accounts for a lot of the appeal.
Further down this road, the appearance of such items in insurance claims would be an interesting statistic also.
Combinations of the above wouldn't surprise me either.
There are reasons why jewellery can justify such huge mark ups in retail, and they aren't because it is sparkly.

W.

Bubblesofearth wrote:

stevensfo wrote:There are several online bullion dealers that will give you around the spot gold price for them - they make their money by selling them at a small premium.

But if I want to sell a sovereign, why shouldn't I charge a small premium above spot price as well? Albeit a bit lower to be competitive?


Steve

You can and many do on eBay. The issue is not buyer security (Paypal insurance covers this) but rather the fees you will pay. Any premium is likely wiped out by these. Dealers can offer low spreads because, through the scale of their operations, they can keep their costs low.

It does surprise me that sovereigns often sell on eBay for more than you would pay from main dealers.

BoE

The bigger issue with eBay these days is more to do with seller security. Watches are still ok to buy and sell there, the Watch Authenticator process actually protects the seller as much as the buyer but if you sell a sov there and the buyer is dishonest and says it either didn’t arrive or turned up as an empty box then don’t expect eBay or PayPal to be on your side. You can in theory sell a gold item over spot even after fees if you time it right but would you take the risk of an uninsured total loss?

scrumpyjack wrote:Many 'collectibles' have a huge buy/sell margin so generally IMO are not good investments. Then you need to insure them and also fashions can change.

A friend has a Rolex, was saying last year how he'd paid £3k (or thereabouts) for it 15 years ago before they started becoming popular again and it was now worth £11k. I asked him how much he'd been offered for it, and he looked blank.

Then he saw an extremely similar one in the window of a Jewellers' for about £10k and out of interest he went in for a valuation, they offered him £5k.

Paul

DrFfybes wrote:

scrumpyjack wrote:Many 'collectibles' have a huge buy/sell margin so generally IMO are not good investments. Then you need to insure them and also fashions can change.

A friend has a Rolex, was saying last year how he'd paid £3k (or thereabouts) for it 15 years ago before they started becoming popular again and it was now worth £11k. I asked him how much he'd been offered for it, and he looked blank.

Then he saw an extremely similar one in the window of a Jewellers' for about £10k and out of interest he went in for a valuation, they offered him £5k.

Paul

But his Rolex was used, whereas I assume the one in the Jewellers' window was new.

The watch I bought was unused, though about 18 years old. Apart from really collectible watches, the used watches are much cheaper. They'll require servicing, the dial cleaning, and sometimes the gold/silver replating.

Steve

PS How can anyone wear a watch worth that much??