Alternative stores of value thread

Finance
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Please use this thread to discuss only alternative stores of value, those not already discussed on others of our threads.

Off limits here:

  • stocks
  • bonds
  • CDs
  • gold
  • silver
  • cash or cash equivalents
  • crypto
  • land and other real estate

On topic here:

  • paintings and other art
  • diamonds and other precious stones
  • fine musical instruments
  • collectable automobiles
  • antiques and other collectables
  • high value camera lenses
  • ammunition and firearms
  • fine wine
  • rare coins and stamps
  • A store of value is an asset that maintains its value, rather than depreciating.

Rather that “maintains its value”, I would say “maintains its purchasing power after conversion to cash”. Stores of value are especially important in times of significant inflation.

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Alternative stores of value face, nearly across the board, issues of fraud. I’m going to pick on paintings in this post:

These frauds involve millions of dollars and victimize even very sophisticated art experts and investors.

But at the same time, genuine art can be an excellent store of value when carefully chosen at time of purchase.

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I have a modest amount of my money invested in

  • private equity, in a variety of small companies
  • hedge funds, in several funds where I know the managers as fellow traders/investors

These are certainly more risky, especially private equity, but so far they have been outperforming inflation in aggregate over the last year or so which is more than can be said for most traditional assets.

I suppose another broad category would be

  • commodities, not just gold/silver, but you can invest in crude, nat gas, coal, various base metals, lumber, hogs, etc.

these are quite high on the risk side, but often do well during inflationary environments. Futures are available for many of these via many brokers. There are a few ETPs for some of the popular ones (USO for oil, UNG for gas), as well as some mutual funds and ETFs (DJP, PCRIX) which hold diversified commodity baskets. That’s without getting into commodity-focused stocks.

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Not that I would do this as I have purchased Lego as future gifts that have gone down in price and as noted in the article, “Not all sets are equally successful, and one must be a real LEGO fan to sort out the market nuances and see the investment potential in a particular set.”

I post this both for amusement but also as a reminder of “invest in what you know” even if it is toys.

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This is your thing, isn’t it? Do you have any confidence that those who deal with your estate will get a fair value out of your collection?

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I very seriously doubt it.

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That was kind of my point – it’s only a store of value for the expert, in this case a niche expert. Paintings and antiques can be sold by an auction house for a fee. Something like lenses, precious stones, and stamps probably lose a whole lot of “value” quickly in the wrong hands. Or even in the right hands if smaller market = bigger fees.

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The above a good tutorial for those having interest in diamonds as an investment. Warning:

That piece covers the many pitfalls of putting your money into diamonds. And I do mean MANY!!

My take:

A key thing I like about diamonds is their resistance to oxidation, when compared with many other alternative investments. They are small, store well, and do not rust. Transporting valuables across time is something to which I have devoted a bit of thought over the years. I’ll sum up:

It ain’t easy!

And that’s an understatement.

In addition and perhaps worse:

It can be costly.

You cannot devote too much thought or consideration to such matters when investment in alternatives beckons. :wink:

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Diamonds are a girls best friend! But as an investment, I would say probably no.

My :cry: sad story… I inherited my mother’s diamond wedding ring. Perfect 2 carot (sp) that I‘ve never taken off my finger for many years. A couple weeks ago I happened to look at my finger and the diamond was gone. Made me sick, no way of finding such a small item. Yes, I know it should have been insured. Also I should have had a jeweler inspection to make sure that the diamond was secure. But gone now and never to be forgotten… :frowning:

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That is a terrible article. It contradicts itself by claiming that diamonds can be a good investment, except they’re extremely difficult to resell and will usually lose 50% of the original purchase price. I suppose they can be good if you’re living through hyperinflation, or maybe if you don’t have enough room for truckloads of illegal cash.

Uhm, yes it is. There’s only one reason they’re popular – the DeBeers’ advertising (and control of the indutstry), and humans being irrational. Diamonds were not a big deal before advertising.

Personally I never understood the appeal. We can make cheap synthetic stones that are even more sparkly than diamonds, and it takes an expert to differentiate real from synthetic, and last I looked into this they only way the experts could tell them apart was because the synthetics were too perfect.

The article doesn’t even mention synthetics and look-alikes.

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Yikes! I am sorry for your loss, and can’t believe you can talk about it already. If my wife lost her grandmother’s earrings (beautiful) or rings (not so beautiful), she would be devastated, even though they are insured.

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What do rich people do?

https://www.inc.com/aj-agrawal/5-assets-wealthy-people-use-to-preserve-wealth.html

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Royalties. Some are album / song proceeds, some are product sales like one ice cream flavor, etc. you can buy and sell the royalties on custom exchanges like this one.

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Listerine royalties

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The above got me to thinking. Or at least what passes for thinking for a person my age. It’s very hard for me to keep up at this point so prepare yourself for some obvious stuff in the following:

As I already posted elsewhere to pattyb53, the debt service on our current debt would capsize us at the interest rates she mentioned. But what about the debt itself in the first place, perhaps $30T currently plus over $100T in unfunded future promised obligations. And that does not include state and local government debt.

Given the current political climate, those debts will never be paid off. Why not? Because there is not the political will in America to do so. Instead the political will is further to INCREASE the debt!! So what lies ahead?

I think we’re already getting a dose of our future, and Americans do not like it one bit. Regardless, the only way to deal with such overwhelming red ink is to DEVALUE the dollars in which it is denominated. $30T sounds large, but note that little dollar sign in front of the 30. As those dollars become increasingly worthless, the burden of the debt itself shrinks. Consider:

At present government nominally has as “job one” the reduction of inflation. This is BS at two levels. First, only inflation can deal with our massive debt. Second, inflation reduction does not at all mean return to the status quo ante.

Said another way, inflation reduction targets temporary reduction in the growth of prices. But it does not address return to the price levels of two years ago. To do that would, from where prices are today, would require deflation. And trust me, deflation is anathema at the Fed. They go out of their way to avoid it. So while inflation might be reduced temporarily, especially just in advance of an election, it will continue because it is the only way government can deal with so much debt.

“No tax increases for those making less than $400,000” is obviously a total fraud and complete BS. Inflation, AKA dollar devaluation, is the unkindest and most unfair tax of all, impacting without mercy as it does Americans least able to pay. But it is the only answer to so much debt.

In the face of the above, and on the topic here, I’m not having a lot of luck discovering a way out. You need to be owning things which do not deteriorate and whose prices, expressed in dollars, increase as the value of the dollar collapses. That’s a tough assignment. About the best I’ve been able to do is to stay even, and even accomplishing that takes a lot of effort. I don’t have answers. I wish I did.

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It’s actually not so great to pay off the debt. It has happened once before, with terrible consequences for the economy. IMHO it only needs to be a reasonable portion of GDP, which means we need to reduce the debt (not pay it off entirely) and/or grow the GDP faster than the debt. Devaluing the dollar as you mentioned should also help.

Deflation is anathema everywhere, not just the FED. It’s recessionary, nobody wants that. So no, unless there’s a really bad recession, most prices aren’t going down to what they were and I don’t think anyone expect this, or at least nobody should. Some big items may come down because they just went up too much, like cars and real estate.

Not really. Owning income-producing assets like businesses, stocks, and real estate is now and has always been the answer (for those who can afford it anyway).

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I happen to own this lens, bought several years ago. It is a parfocal zoom lens used in the making of motion pictures. There is one for sale right now on eBay:

Link to lens on eBay

The asking price you see there is ridiculous. In my opinion, copies of this lens today are worth only roughly $2500. However

For my copy of the lens I paid just $1, plus $20 for shipping.

So for me, my copy of this lens remains a good store of value.

So far.

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Low brow music creators pay off with Alexa / Spotify

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