Why Are The World’s Wealthiest Investing In Rare Collectibles?
Ultra-high-net-worth investors (UHNWIs) allocate 20% of their portfolios to luxury collectibles, according to Knight Frank’s 2024 Wealth Report.
Why?
Because rare collectibles can provide robust inflation protection. And UHNWIs are – justifiably – terrified of inflation eroding their capital. (The value of the US dollar has declined by 88% since 1970 by some measures.)
Many rare collectibles sectors have offered 10%+ annual returns over the past 50 years. They have an intrinsic monetary value. They are physical objects.
Plus: many investors view their rare collectibles portfolio as a powerful hedge against underperformance and volatility in their traditional investments of stocks and bonds. Here are 4 inflation-beating collectible sectors the world’s wealthiest invest in. Each has historically outperformed inflation over the long term, including the 2022-2023 period when UK inflation averaged 6.5%.
- Rare autographs
Collecting rare autographs offers you the opportunity to own some of the world’s rarest objects, and become a custodian of history.
Politics. Science. Literature. Whatever your passion, you can own significant documents, letters
and manuscripts which changed history and shaped the modern world.
Inflation-beating performance:
● PFC40 Rare Autographs Index: 714% increase since 2000, averaging 32% annually
● Some individual signatures have grown over 1500% since 2000, including Neil
Armstrong, George Harrison and Prince William
● Consistently outperformed Dow Jones, FTSE100, and gold for over two decades
Notable sales:
● Albert Einstein’s note on happiness: $1.6 million (2017)
● Steve Jobs-signed Apple II manual: $787,000 (2021)
● Beatles’ signed Sgt Pepper album: $290,000 (2013) - Rare coins
Collecting rare coins offers you the perfect union of passion and profit. They are highly portable, easy to store, and made of inherently valuable precious metals. They feature beautiful, intricate designs considered works of art in their own right.
The global market for rare coins is worth $17 billion, underpinned by close to 200 million collectors and investors. This creates a consistently-growing demand for a highly-limited supply. For example, a mere 2% of all US coins ever minted still exist.
Inflation-beating performance:
● 72% value increase over the last 10 years (Knight Frank Luxury Investment Index)
● 9.5% average annual return between 1977-2022 (vs. 5.6% for gold)
● Consistently outperformed traditional investments for decades
Notable sales:
● 1933 Saint-Gaudens Double Eagle: $18.9 million (2021)
● 1787 Brasher Doubloon: $9.3 million (2021)
● 1907 Saint-Gaudens Ultra High Relief Double Eagle: $3.6 million (2021) - Rare luxury watches
The rare luxury watch market is one of the fastest-growing sectors in the collecting industry. There are more than 12 million rare watch collectors globally. Demand dramatically outstrips supply, with manufacturers such as Rolex and Patek Philippe having decade-long waiting lists for their most exclusive models.
The secondary market is surging, as 95% of all rare watches on the market are no longer in production. At the beginning of 2023, the global luxury watch market was valued at approximately $35 billion. A Deloitte report predicts the sector will grow by 75% between now and 2030.
Inflation-beating performance:
● 18% value increase in 2022 (Knight Frank Wealth Report)
● 147% value increase over the past 10 years
● 20% annual growth rate for top models (2018-2023)
● Outperformed S&P 500 during 2007-2009 recession
Notable sales:
● Patek Philippe Grandmaster Chime Ref. 6300A-010: $31.0 million (2019)
● Rolex Paul Newman Daytona Ref. 6239: $17.8 million (2017)
● Patek Philippe Pink Gold Ref. 1518: $9.6 million (2021) - Rare postage stamps
Rare postage stamps are windows into the past. Scarcity transforms certain stamps into investment-grade commodities. The celebrated US “Inverted Jenny” stamp of 1918 is a prime example of how a printing mistake turned a mundane stamp into a highly coveted collectible. In November 2023, an Inverted Jenny set a record price for a US stamp of $2 million.
The 1856 British Guiana 1c Magenta is known as the “Mona Lisa” of the stamp world and holds the record for the highest value stamp at $9.4 million. As the digital age transforms how we communicate, the tactile and historical value of rare stamps persists.
Inflation-beating performance:
● GB30 rare stamps index: 7% compound annual growth (2000-2023)
● Long-term growth of rare British stamps: 9% per annum over 50 years
● Current market conditions indicate strong investment potential in modern British stamps
Top sales:
● British Guiana 1c Magenta (1856): $9.4 million (2014)
● The Inverted Jenny (1918): $2.0 million (2023)
● The Plate 77 Penny Red (1863): $885,000 (2016)
Investment opportunities at Paul Fraser Collectibles:
James Dean signed 1948 high school yearbook: A James Dean “Jim Dean” signed high school yearbook, produced just seven years before his untimely death. Dean’s signature is impossibly rare and highly sought. £8,000 at Paul Fraser Collectibles.
Rolex Oyster Perpetual Celebration Dial – ref. 126000: Rolex’s most vibrant watch. Huge demand among collectors due to its unusual looks. Low supply – only produced since 2023 (and likely discontinued soon as it’s not a main line). You’ll be waiting years (possibly decades) to buy one from a Rolex authorised dealer. Value up 213% in the 12 months to April 2024. £16,000 at Paul Fraser Collectibles.
The rarest, most valuable British stamp in existence: Of the three plate 77 penny reds in private hands, this is the finest example. Just nine exist in total. £650,000 at Paul Fraser Collectibles.
About Paul Fraser Collectibles
We specialise in sourcing investment-grade items with the highest potential for future growth, based on
expert knowledge developed over decades in the business. We are the only provider offering investors
in collectibles a comprehensive portfolio management service you can fully rely upon, from initial
investment through to a successful exit. We have 2,000+ clients around the world, who have successfully
entrusted us with over £100 million.
We’ll work with you to build a collection that reflects your own passions, and which can increase in value
over the long term. Our goal is to help you achieve yours. To develop a long, profitable partnership which
helps you realise your financial ambitions, and enjoy your investments along the way.
Mike Hall is CEO at Paul Fraser Collectibles.
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