In The News: Rare Collectibles Can Make You Rich
by Frederik Balfour
July 27, 2015
Bruce Marchant said he's found the protection he needs against stock market gyrations: in the arms of an amazon in a white bikini.
She adorns his vintage poster of the 1958 sci-fi flick, "Attack of the 50 Foot Woman," which 10 years ago cost $5,000. Today it’s worth $16,000 -- a 220 percent return.
"In the past decade things have really shot up,” said Marchant, who owns London-based Reel Poster Gallery, “If you are a shrewd collector, there is no question they are a good investment.”
The movie posters are among a slew of alternative investments that are outperforming traditional assets, from Hermes Birkin handbags to Apple 1 computers to Nobel Prize medals, as collectors bet on rarity and star value.
Prices are rising as an increasing pool of wealthy individuals chases a limited number of items. In 1994 Bill Gates paid a record $30.8 million for Leonardo da Vinci’s Codex. The 72-page, handwritten notebook could be worth as much much as $60 million today, according to Cassandra Hatton, a senior specialist of books and manuscripts at Bonhams New York. It sold for $5.6 million at auction in 1980.
Gates is one of a new generation of collectors who made their money in tech and display a nerdy bent for scientific scribblings and devices, said Hatton.
‘The Imitation Game’
A 56-page notebook belonging to Alan Turing, the British mathematician whose cracking of the German Enigma code during the Second World War was the basis for the film “The Imitation Game,” sold for more than $1 million at Bonhams' New York auction in April to an anonymous bidder.
The auction house estimates a letter penned by Charles Darwin may sell in New York on Sept. 21 for between $70,000 and $90,000.
Aging geeks who held on to their original Apple 1 computers are sitting on a windfall. Bob Luther, a self-described serial collector, picked one up for $7,600 in 2004 and sold it at Christie’s in December for a cool $365,000.
Two months earlier, the Henry Ford Museum in Dearborn, Michigan, bought one in better condition for a record $905,000. Another of the iconic machines, this time in pristine condition, could beat that record in a Bonhams sale in October, Hatton said. The owner bought it new in 1976 for $666.
“We are told the one we are offering is a 10 out of 10,” said Hatton, “the one we sold was only an eight.”
Movie posters got a boost in January 2013, when a German poster of the Fritz Lang 1927 dystopian classic “Metropolis” sold for $1.2 million. One of only four known copies, its owner bought it for $690,000 in 2006 and it was put on the block when he declared bankruptcy.
The winning bidder was Ralph DeLuca, a 39 year-old collector and dealer who quit his job in finance 16 years ago when he decided he was better off putting his time and money into posters. “I shifted to tangible assets and they have been a tremendous investment,” said DeLuca who said he has received an offer of $2 million for his Metropolis.
You don’t have to be a millionaire to participate. Original British posters of the James Bond movie “You Only Live Twice,” starring Sean Connery, sell for about $1,500, while a pristine “Dr. No,” the first film in the franchise, can fetch more than $15,000.
Whether it’s comic books, Chateau Lafite wine or ancient Greek coins, the overwhelming majority of collectors are men. Not so with handbags. In that world, the Hermes Birkin rules supreme, and you don’t have to wait decades for a profit. The bags are so hard to find in the company’s shops that they can be flipped quickly for as much as triple their sticker price.
“You buy it on the primary market and sell it in auction,” said Caitlin Donovan, a specialist at Christie’s handbag department in New York.
A matte white Himalaya Niloticus crocodile Birkin 35 with palladium hardware sold for 157,000 euros ($172,700) at Christie’s Paris in March, more than three times what the owner paid for it new in 2009. In June, a fuchsia crocodile Birkin with diamond and gold hardware sold for an auction record of HK$1.72 million ($223,000) in Hong Kong.
Like all investors, collectors also run risks, especially when a brand becomes a fad and new buyers push prices up to unsustainable levels. The market for Leica cameras peaked in 2012 when a rare O-Series from 1923 sold for $2.79 million at a WestLicht auction in Vienna. “Some cameras were selling for 10 times their estimates,” said WestLicht owner Peter Coeln. “All these cameras went through the roof.”
Then prices plunged as much as 50 percent. A rare black Leica MP from 1958 sold for 264,000 euros in June, down from 600,000 euros for a similar model at the height of the market.
Perhaps the most exotic item attracting a following is agarwood. Prized for thousands of years for its scent, the wood’s aroma derives from resin the tree produces to fight off infection. At an L&H Auction sale in Hong Kong in May, a 58 gram (2 ounce) agarwood bracelet sold for HK$2.99 million.'
“It’s simple arithmetic, there is a limited supply” said Paul Kan, a collector of 40 years who said he prefers the scented wood to more traditional collectibles. Kan said prices have risen 10-fold in the past decade as the number of buyers from China skyrocketed.
And if the market slumps? “You can always smell it,” he said. “Chinese porcelain and ceramics don’t give you that.”