REAL DIVERSIFICATION: GOLD PORTRAIT COINS AND MEDALS

 

When diverifying into real things it is always best to choose things you undertstand well.

Bcause nothing is a sure thing;.  You have to select wisely even in the realm if real things.

But let's say for a moment you have a decent working knowledge of world history and an interest in human culture.  There could be many different real things that would fit into this universe. 

But Gold coins and medals were issued to mark all the most significant milestones in human cultural history.  And they were issued in a form that is durable and chemically inert - it will never tarnish.  It will perfectly preserve that historical moment for all of human eternity wtih a minimum of care.  

And the form has a natural lustre that only improves over the centuries.  Add to that a portrait of the Monarch, or General, or King who presided over the event - engraved by an artist of great skill - and you have an artifact with tremendous intrinsic value.

Take this marvelous portrait of Alexander the Great minted in about 280 BC.   It looks pretty much the same as it did in 280 BC.  And it will look the same in another 2000 years. It's tough to say how many exist.  I'd guess about 50.  In this beautfiul condition maybe 10.   If you happened to be fascinated by Greek history and culture (which is the culture and history of the entire western world) this coin's contermporary portrait by an artist of supreme skill of Ancient Greece's greatest General may hold a certain fascination for you.

A classical artwork my a masterful artist that captures the personality of one of history's most interesting men.  In very limited supply.

What is that worth compared to say: stock in Tesla, or a unit of cryptocurrency, or a corporate bond from a highly leveraged company like Carvana, or a 1970 Cammaro, or a bottle of Grand Cru from 1958 that can not actually be drunk as it will turn the mintue it's opened, or a robe worn by Chubaca on screen in Star Wars - or a guitar once played on stage by Bob Dylan?  Or a huge stack of dollar bills?  

Well, you could compute the answer of what it is worth today against any of those things.

The question however is what is it worth over time against those things.

That is a very tricky question.

And it is a bit of a trick question.  Because Tesla, Carvana, Crypto are all risk assets that retain value only insofar is they appreciate on a sea of liquidity or crash as liquidity is withdrawn.   They have no track record worth considering.   Any of them may or may not exist in 5 years.  

THe Cammaro, the Wookie Robe, the Guitar, the coin and the Wine are hard assets that actually gain in value as risk assets lose value.  They may gain too even when risk assets gain in value.   After all, a tide of liquidity raises all assets.  

But They will all certainly exist in 5 years.  

The question is how they will perform over time.  

"Over Time" is the key element for all investment.

"Over Time" how have these assets performed?

The fact is, very few Hard Assets have track records of more than a few decades.  Is that enough time to understand performance over time?

And here we come to the most attractive element of historical gold coins and medals - they have a track record of appreciation over time - oftern hundreds and even thousands of years.  Through inflations, deflations, even surviving pestilence, famines, wars and the collapse of civilizations.  So do some rare historical documents, and some old master artworks and some historical artifacts.

It takes some work to discover and understand this track record.  But is is worth the while.  

Understanding  this is true Value Investing - Intrinsic Value Investing - as opposed to Momentum Investing in Current Fads.

It depends on your personality which appeals to you.