How the American Dream is alive and well... in the Collectibles markets

The Economic Cycles Research Institute's (ECRI) weekly leading indicators index, which tracks economic progress in America, has announced that figures are down by more than 10% year-on-year, a level which would usually indicate recession.

But while experts are yet to re-label these figures with the word "recession," it's clear to see that traditional investment markets are bearing the brunt of the current economic problems.

In the housing market, according to Capital Economics, a London based research agency, "the plunge in mortgage applications points to a more fundamental fall-off in demand," this has seen the value of houses on the market drop with it.

And with the UK based FTSE 100 levels correlating with those of the American based S&P 500, stocks and shares could soon fluctuate wildly depending on what happens next in the U.S.

For investors, these statistics would indicate the need to diversify their assets into an alternative investment market that has shown no correlation with traditional markets.

The good news is that such a market exists. The surprising news is that it's based in the United States. I introduce you to the patriotic and fanatical world of All-American collectible investments!

It's a world where the problems of the economy are quickly forgotten. Take Chrysler cars for instance.

In recent years, the US government was forced to provide $6.6 billion dollars in financing to keep the American automobile giants afloat.

The 1953 Chrysler "Thomas Special"

In contrast, Chrysler classic cars represent a formidable investment in the collectibles market.

A 1953 Chrysler "Thomas Special" sold for $858,000 at an RM auction on July 24, 2010 in the United States.

It's also a market that's dominated by investments of passion. Take the US's love of rare comic books for example, which is currently putting the "pow" into powerful All-American collectible investments.

Over the course of a few crazy days in February 2010, Heritage auctions witnessed the million dollar sales of two comic icons.

Detective Comics #27 Batman

The first saw the sale of "Action Comics #1" which featured the first appearance of Superman for exactly $1,000,000.

Back in 1938 the same comic could have been purchased for just 10 cents.

Yet just days later, a high-grade issue of Detective Comics #27 published in 1939 and introducing Batman sold  for $1,075,500, in a sale which, according to one source at the auction house, "pretty much blew away all of our expectations."

With the recent Batman film adaptations a suggested influence on this price, watch this space for similar price increases on titles like the Green Lantern, which has a film adaptation starring Ryan Reynolds coming soon.

And the American collectibles market also focuses on the fascinating history of the nation.

Highly collectible documents like letters that were used to relay vital information during the formation of the United States are sought after by collectors, investors and patriots alike.

Two letters from Washington to his nephews made impressive sales at recent auction.

One, in which he gives marital and family advice, sold for $120,750 off an estimate of $40,000-60,000. Better still, was the auction of a letter from Washington in which he set out his views in favour of the American constitution which sold for $3,200,000.

As an investment these pieces are second to none in the American collectibles market. This is thanks to the limited supply of such documents against the high number of individuals interested in investing.

Yet for many traditionalists, the All American collectibles market also offers opportunities to invest in stamps and baseball cards, two of the most popular forms of collecting in the country.

Having been manufactured since 1880, the rare baseball card market has seen collectors continually creating world record prices for buying and selling single cards in what has become a billion dollar industry.

Babe Ruth
Autographed Babe Ruth Pictures
are available to buy for £7,500

Legends like Babe Ruth have seen Baseball cards, featuring their likeness, sell for thousands. On May 1st 2010, a Ruth card from 1916, when he first joined to Major League, sold for $82,250 at auction.

Yet the most astonishing returns come with cards like the original Honus Wagner card, an early professional whose card is extremely rare and recently sold for $2,800,000, six months after selling for $2,350,000.  For the initial investor, that meant a profit of $450,000 in just six months.

Stamps too, have seen remarkable returns for collectors investing in these alternative markets.

On July 23, 2010, a set of three 1c-$5.00 1902-03 Regular issue Panama-Pacific small die proof stamps  were sold at auction for $23,000.

It's believed that only 3-5 examples of each were ever made, with only two complete sets in existence.

As a further testament to the value of these rare stamps, it was also revealed that the other complete set can be found in the Smithsonian Collection in Washington.

In terms of world record prices, they don't come much better than the American "inverted jenny" stamp either.  First issued in May 1918, the image of an airplane at the center of the design was accidentally printed upside down, with around 100 produced.

At auction in November 2007, the stamp sold for a world record price of $977,500, thus demonstrating the potential auction prices at the heart of the American stamp market.

Elvis's diamond ring
Elvis's diamond ring

But no American collectibles investment would be complete without a foray into the wonderful world of celebrity culture, which has provided some of the most unique and valuable memorabilia on the market.

A December 2009 auction of memorabilia saw a diamond ring, given to fan during a concert from Elvis Presley fetch $107,500 while a bathrobe worn by Marilyn Monroe sold in Las Vegas for $120,000 at a Julien's auction in 2009.

Ten years before the piece had sold for $6,000 at Christies. That equates to a return of 35% per annum.

And in terms of Investing in Art, they don't come much bigger than figures like American Pop Artist Andy Warhol.

His work was frequently influenced by celebrity culture and today he represents one of the premier investments of the American collectibles market.

In November 2009, Sotheby's saw the sale of Warhol's 200 One Dollar Bills piece.

The piece depicted black-on-grey life size $1 bills in regular rows and columns and came with an auction estimate of $8- 12 million attached, eventually selling for $43,800,000.

Roy Lichtenstein's "Collage for
nude with red shirt"

American art continues to impress at auction and makes for an investment with huge potential as more and more collectors look towards modern pieces as sources of investment.

Investments like the recent sale of American pop artist Roy Lichtenstein who sold his "Collage for nude with red shirt" for £2.7m against an estimate of £600,000-£800,000 in July 2010.

The market for American collectibles certainly offers up some fantastic investment opportunities

And yet these pieces are only the tip of the iceberg.

Earlier this month, collectibles expert Paul Fraser discussed the growing value of all collectibles related to the Apollo space programme, with Neil Armstrong's autograph going up in value from £550 in 2000 to £5,500 in 2010.

An investment in space related collectibles could prove highly rewarding. As could an investment in another "Moonwalker" Michael Jackson, whose death in 2009 has prompted quickly increasing interest in memorabilia attached to his career. 

For instance, the diamond glove he famously wore on stage when unveiling the moonwalk sold for $319,000 against an estimate of $50,000. With Jackson memorabilia becoming some of the most sought after collectibles on the market, the message is clear: invest now.

What is certain is that while the traditional American markets like stock and share or housing may be down 10%, the value of rare investment grade collectibles from the United States is up, making them the ideal hedge against inflation and the risks of the current financial world.

All American collectibles are certainly proving that the American dream is alive and well.


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