From Their Television Broadcasts April 17, 2002
There is a reaction in the markets to what is happening in the
Middle East: money is moving out of the stock market and out of
paper assets and it is moving into the hard assets including gold
and silver and even fine art.
We haven't seen a significant move into hard assets since the middle
1970's when inflation was spiraling higher; but we are starting
to see a similar move now.
Look at the evidence: the stock market has again failed to pierce
the 11,000 level on the Dow and the NASDAQ has dropped dramatically
from the 2,500 level. Meanwhile, the price of gold has moved above
$300 an ounce, and Michael Schwartz the owner of Galerie Michael
on Rodeo Drive in Beverly Hills says that prices for quality fine
art have rallied about 15-percent to 18-percent in the past year.
Michael Schwartz is reporting that high quality, rare fine art
is a proven safe haven in times of trouble and world chaos. Art
is not only portable and tends to hold its value because of its
rarity, but Art also adds some comfort in a trouble world. Stock
certificates in a portfolio lack that "fuzzy feeling"
that a fine painting or limited edition print can offer.
World oil prices have run up to the near-$30 a barrel level on
fears that some OPEC exporters will seek an embargo against shipments
to the United States, and that is triggering fears of spiraling
inflation.
Higher inflation is a friend of hard assets including art and the
metals.
At Goldline International, a precious metals trading firm in Santa
Monica (1-800-827-4653), call volume from investors and consumers
has increased thirty to forty percent in recent weeks. Meanwhile,
the price of the one ounce Gold American Eagle, a bullion coin similar
to a Kruggerand or Maple Leaf coin, has jumped in value from $285
to about $310 in the past four weeks.
The rise in metals prices is also spilling over into prices for
numismatic items including rare gold and rare silver coins.
When you buy the metals, be sure you know the difference between
"bullion items" which are items priced for their gold
or silver or platinum content, and "numismatic items"
which may contain precious metals but are also valued for their
collector interest or rarity.
A good example to show this difference is with an 1884 U. S. silver
dollar issued at the Carson City mint. While this coin in new or
uncirculated condition has about $6 worth of silver in it, as a
numismatic item it is worth about $100 or even more if its condition
is pristine.
Michael Schwartz of Galerie Michael at 430 North Rodeo Drive, Beverly
Hills reports there is a long history linking the success of art
investing in times or world trouble. He points to studies that show
that while stock valuations sank by $3-trillion in 2000, the art
market continued to gain 16-percent in value.
A study also showed that during the Vietnam War, from 1966 to 1975,
the stock market as measured by the S&P 500 index sank by 27-percent,
but art during this same time climbed by 256-percent.
Alan Mendelson, KCAL 9 News
