While gold and silver are temporarily back in bear markets, the collectibles markets remain largely in a bull market, a sign of the times.
For instance, the rare coin market continues to go nuts. Some examples of record sales include …
— A 1794 Flowing Hair silver dollar, for a whopping $10,016,875
— An 1804 Type I silver dollar for $3,877,500
— A 1913 Liberty Head nickel for $3,172,500
All told, according to the Luxury Investments Index in the recently released Knight Frank 2014 Wealth Report, rare coins increased 10 percent in value over the past year and have increased an amazing 227 percent the past 10 years.
And according to the Professional Numismatists Guild, the U.S. market for high-quality, rare coins was about $5 billion in 2013 with a dozen individual coins selling for $1 million or more at auction last year.
But it’s not just rare coins that continue to do well as an alternative wealth-preserving asset. The high-end diamond market also remains robust.
Last week, for instance, Petra Diamonds Ltd. sold a 122.52-carat blue diamond for $27.6 million — a whopping $225,269 per carat. Last week, Petra also unearthed a 232.08-carat white diamond at the same mine, which is likely to go for much more.
Meanwhile, China’s demand for diamonds is also exploding higher. Polished diamond sales in China rocketed 14 percent higher last year alone, double the pace of growth seen in the U.S.
Sales of diamond jewelry to the Chinese have been the fastest growing in the world, averaging about 21 percent a year over the last decade. China now accounts for 13 percent of global demand, up from 3 percent just 11 years ago.
The art market also remains on a tear. Especially contemporary art. Sales of contemporary art at public auctions surpassed $2 billion for the first time last year, the Paris-based arts-data organization Artprice said.
The report tallied auction sales between July 2013 and July 2014, and it found that contemporary art sales grew 40 percent from the previous year. The number of big-ticket items that sold for over 10 million euros ($12.8 million) more than doubled in the period.
Those who follow the art market will remember the record-breaking Christie’s auction last November that saw buyers walk away with the most expensive publicly auctioned piece of art ever, Francis Bacon’s $142.4 million Three Studies of Lucian Freud (1969).
The same auction also saw Jeff Koons’ “Balloon Dog” fetch an amazing $58.4 million — the most expensive contemporary piece ever sold at a living artist auction.
Why are the collectible markets still going crazy?
The answer is simple and obvious: Savvy investors still want to get off the grid as much as possible. They want to minimize taxes. They want to hide and preserve wealth. They want privacy, to the extent possible in today’s world of authoritarian governments.
And why do they want all that? Because savvy investors know that …
1. The western governments of Europe and the U.S. will one day, not too far off, implode. And that …
2. As a result, it’s only a matter of time before the current monetary system also collapses, ushering in some of the most chaotic times the world has ever seen.
Think of the fall of Rome. The Fall of Byzantium. And countless other governments that have come and gone, countless revolutions that have changed the course of history, and more.
It’s happening. In Europe. In the Middle East. In Hong Kong. In Africa.
And soon, it will come to our own shores. The cycles of war continue to ramp up, and they too are a sign of the times. Bankrupt governments, lashing out at their own people and others, trying to raise revenues or deflect attention away from their problems, trying to conquer and convert other people to their views.
That’s where we’re headed. That’s where Western society is going. Toward chaos, breakdown and revolution.
But besides the collectibles markets, there are other investments that are also thriving. The correction I have been warning you about in equity markets may be here, but long-term the Dow Industrials and the safest of the safe major U.S. companies are destined to move much, much higher.
And while the shine may be temporarily off gold and silver, don’t count them out. Long-term, their bull markets are also very much intact, and I fully expect that we will still see $5,000 plus gold and $125 plus silver in the not-too-distant future.
U.S. real estate too is also looking good long-term. The threat of rising interest rates will not derail that market. If anything at all, it will make the property markets that much more bullish, as investors, especially foreign investors, scramble to buy property in the U.S. before mortgage rates explode higher.
The soaring U.S. dollar, which I forewarned you about, is also attracting foreign investors to our property markets.
Bottom line: We live in strange times, times that will be more chaotic than ever seen in our lifetimes.
As a result, don’t accept the status quo. Don’t accept old economic rules, or relationships between different markets.
Continue to think out of the box, as I do, and you will indeed protect and grow your wealth.
Stay safe and God bless,