A surprising alternative to gold
Stock market volatility sends people searching for safe havens for their money. And precious metals are popular investments, but with the meteoric rise in the price of silver, Bengt Saelesminde suggests how you can turn forgotten antiques into shining profits.
Okay, I guess you know the story by now: over the next year, we need to prepare ourselves for another dip in the economy. And that will surely spur global governments to launch another desperate round of money printing.
A year from now, we could be right in the thick of it as the latest batch of fiat currencies reach their expiry dates!
So how do we protect our wealth? Well, we have our gold. That should do well as governments run the printing presses (there's more on gold later). But today I want to talk about a less obvious solution antiques.
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Like gold, or any hard assets' for that matter, antiques can't simply be recreated. That's why they've always been a great store of value. Though I say always, the market is cyclical things go in and out of fashion. And largely speaking, the last couple of decades haven't been kind to the antiques business.
But right now, there's a chance that the financial markets are lining antiques up for a rise. This is a great chance for you to seek out a tangible store of wealth, just as financial markets head for breaking point.
My favourite area of the antiques market
Whenever I look at the markets, I'm always looking to get something for nothing. Like buying companies that are trading below the value of their assets for instance.
Right now, I think we've got that in one sector of the antiques market. And that is in silver. I'm not talking about the whole silver market, but just the bottom end. At the cheap end of the market, silver items trade at, or close to scrap value. And that's an opportunity.
I'm sure you've noticed silver's meteoric rise from well under $10 an ounce right to around $35. That's what we call spot' silver; and it's what drives the scrap value of silver.
During the days when silver was say £8 an ounce, you might expect to pay something like £18 for a one-ounce sterling silver spoon. That is £8 for the silver content and then another tenner for the craftsmanship (and dealers margin).
But now that the silver price has surged, many buyers in the antiques markets aren't prepared to shell out for the extra value of the silver content. They won't even pay the scrap price for such a spoon. In my example, the scrap price would be around twenty-five quid. Ooooh, says the buyer. That spoon was only £18 the other year nope, I'm not paying up for that.
And here's the thing. That spoon is now a heck of a lot cheaper! If you can pick it up at, or near scrap, then you're getting all the craftsmanship for free.
And because many people won't buy the stuff now, a lot of silver is getting scrapped. Former family heirlooms, as well as interesting one-off pieces are heading for the smelter.
As the ingots come out, they go to fuel investor demand on the financial markets. So I say, let's get out there and save some of these pieces from premature cremation.
Let's get going now!
If you're worried about the steadfastness of financial markets; then this could be just the answer.
What's more, the pleasure you'll get from this scrap' can be immeasurable. And it's a safe investment no matter what happens in the markets, you've got your store of value right there in your hands.
And by the way; silver spoons, picture frames, bowls, candlesticks, rings, coins etc make for great presents. If you're ever stuck for a gift, you can just give away something from your collection.
Remember, I'm not talking about the sexy end of this market. Sterling silver for instance, is always popular in the UK and you'll generally have to pay up for that. I'm talking about the less desirable bits and pieces that have drifted in from other countries.
You can find some wonderful and ornate works of great craftsmanship going for little more than their scrap value at dealers fairs, auction houses, or even on ebay.
Of course you'll want to read around the subject first and get your bearings. Buy an introductory book. Once you know the basics, you'll see the great opportunities out there.
Get to know a couple of dealers that you trust get them to give you a call when they come upon a batch of scrap. And buying on ebay is generally pretty safe as people don't get away with misleading descriptions.
I wouldn't want to pay up for a full set of fine silverware. But why not create yourself an eclectic set of pieces from all over the globe? That's a lot more interesting to me.
Pick up some wonderful pieces for your home, for gifts, or just an investment and all for just the price of the raw material itself.
Back to our first port of call
Now I wouldn't recommend putting all your faith in silver spoons. It's just a very interesting investment. It gives me pleasure to seek out these antiques. And now looks a very interesting time for this ignored, but very dependable store of value.
But gold is obviously our first port of call during the fiat curency meltdown. I've said before that the best option for the traditional investor is a physcial gold ETF (LSE: PHAU).
But if you already own that, then Tom Bulford has a very interesting idea. It's a gold play that is going largely unnoticed by Western investors.
That may be because it is looking to mine a huge resource, nestled in the very isolated Tien Shan mountain range in eastern China.
The thing is that there is a swarm of activity in Tien Shan at the moment. 14 different mining operations are underway in just one-region of the mineral belt.
Tom calls it the "Tien Shan Gold Rush" and it certainly looks like one to me. Have a look at this report. It's a speculative, high risk gold play. But there is probably a good reason why so many companies are crawling over each other to mine this region.
This article is taken from the free investment email The Right side. Sign up to The Right Side here.
Important Information
Your capital is at risk when you invest in shares - you can lose some or all of your money, so never risk more than you can afford to lose. Always seek personal advice if you are unsure about the suitability of any investment. Past performance and forecasts are not reliable indicators of future results. Commissions, fees and other charges can reduce returns from investments. Profits from share dealing are a form of income and subject to taxation. Tax treatment depends on individual circumstances and may be subject to change in the future. Please note that there will be no follow up to recommendations in The Right Side.
Managing Editor: Frank Hemsley. The Right Side is issued by MoneyWeek Ltd.
MoneyWeek Ltd is authorised and regulated by the Financial Services Authority. FSA No 509798. https://www.fsa.gov.uk/register/home.do
Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Bengt graduated from Reading University in 1994 and followed up with a master's degree in business economics.
He started stock market investing at the age of 13, and this eventually led to a job in the City of London in 1995. He started on a bond desk at Cantor Fitzgerald and ended up running a desk at stockbroker's Cazenove.
Bengt left the City in 2000 to start up his own import and beauty products business which he still runs today.