Nick’s Tips Regarding Food Storage:
- Buy in bulk to save as much as 80%. Can you buy stocks at an 80% discount?
- Store your food in a cool, dry place away from sunlight. A basement is ideal.
- Store what you eat and eat what you store.
- Rotate your stock.
Diamonds Diamonds are a depreciating asset masquerading as an investment. When you buy a diamond, you buy it at retail, which is at a 100% to 400% markup! There are 4 trillion tons of diamonds in the world... 4 trillion tons! They aren’t rare and they don’t appreciate. In short, diamonds are bull crap.
Fruit trees are an investment that requires an upfront cost and then some maintenance in the investment each year, but the maintenance costs generally go down quickly over time.
A decent 3-year old tree will cost you about $150. You'll need a pollinator, and so there is a minimum investment of two trees. During the first year, your trees will also need water to get established. So your initial investment including your labor and water will be around $600. After a couple years, your two fruit trees will be producing 150 pounds of fruit per year. Organic fruit costs about $1.50 per pound. So two fruit trees producing $225 worth of fruit a year will generate a 37% return on your initial investment.
Jewelry Forget jewelry with one exception: jewelry where the bulk of the value of the jewelry is in the gold or silver used to make it. Then, you are merely storing gold in the form of jewelry, which is fine.
Classic Cars Storing classic cars as an investment usually requires three things (at a minimum):
I don’t believe classic cars are a good investment any longer because millennials don’t care much about cars. They grew up using Uber. I've asked many young people who work for me to guess when my 1929 Ford Model A pickup truck was manufactured. The most-often response I get is "The 1950s?"
- a love for the model (nostalgia);
- the mechanical skills to maintain the car; and
- the room to store the car indoors.
Also, older cars are horrible to drive. They are small, uncomfortable, and handle worse than the cheapest new car.
Nick’s Tips Regarding Classic Cars:
If you are going to invest in a classic car, store it right. Here are some storage tips:
- Give the vehicle a good wash and wax. Putting on and removing a vehicle cover will lead to unwanted scratches if the car is dirty.
- Change the oil and filter.
- Fill the antifreeze.
- Fill the tires with air.
- Fill the fuel tank (preferably with premium) and add fuel stabilizer. The fuller the tank, the less room there will be for air, which carries moisture that can lead to fuel contamination and rust.
- Run the vehicle to move the fuel stabilizer into the carburetor.
- Put baking soda boxes in the interior and trunk.
- To keep out insects and vermin, put a plastic bag over the air cleaner/air inlet and exhaust pipe(s), or cover them with aluminum foil.
- Place mothballs in the tailpipe and around the outside of the car.
- Spray dry Teflon lube or silicone spray on all the weatherstripping to keep it from bonding to the doors.
- Close all the windows and doors.
- Select a dry, dark location with concrete flooring. If you must store your car on a dirt floor, place a plastic barrier under the vehicle, and place carpet pieces or plywood under the tires.
- Unhook the battery and store it separately – preferably, where it will not freeze.
- Place the vehicle on jack stands. This step stops the tires from getting flat spots and adds longevity to the suspension.
- Cover the vehicle with a breathable fabric (or just a cotton sheet) that doesn’t trap moisture.
Sports and Entertainment Memorabilia Unless you are in the sports memorabilia business, it’s a very tough market to navigate, especially with dealers rigging auctions, bidding up their own items, tampering with collectibles, and forging signatures. Fraud is so common in the sports and entertainment memorabilia world that the entire industry has become a joke.
And even if you could buy something authentic, like the collector who paid $3 million in 1999 for the home run ball that Mark McGwire hit, appreciation isn’t guaranteed. Now that McGwire admitted to using steroids, you'd be lucky to sell that ball for $100,000.
Stay away from memorabilia as an investment strategy.
Nick’s Tip for Investing in Memorabilia:
If you are procuring the autograph in person, take a picture of the celebrity signing the item with you in the background of the picture. This will provide provenance (evidence that the autograph is authentic).
My friend Joe Theismann, a Super Bowl champion quarterback, was gracious enough to stop by the InterNACHI® House of Horrors® Home Inspector Training Facility and autograph footballs for the entire staff.
Stamps Unless you are an expert in this area, I would stay away from collectible and even investment-grade stamps. There is just too much to know. Furthermore, stamp collecting is a hobby of past generations.
Nick’s Tip Regarding Stamps
The only investing in stamps that I recommend is buying U.S. Postal Service Forever Stamps just before they go up in price. For example, in January 2019, Forever Stamps went up 10% in one day, and they announced the day ahead of time.
On a side note, if you've ever received mail from the Master Inspector Certification Board (and we send out tens of thousands of pieces of mail a year), you'll note that we used actual stamps (not metered postage). We do this because people open letters that are stamped with real stamps.
Wine and Whiskey I don't recommend investing in wine for the following reasons:
- It requires some expertise.
- You have to store the wine correctly.
- You will probably want to insure it.
- Wine takes up a lot of space.
- Wine bottles break.
- Some wine spoils.
- Your investment might suffer loss from use (drinking it).
- You’ll likely have to wait a decade to see significant appreciation.
- Selling the wine at auction takes a lot of work and the auction house charges fees. Wine is liquid without liquidity.
When I was a teenager, I had a friend from a wealthy family. I was staying overnight at his house one night as his father prepared to go on a business trip, leaving us alone. His father's last words were, "Boys, stay out of my wine cellar. Most of the wines are inexpensive, but there is one bottle down there that's worth $25,000." After he left, and being all alone in the house, we just couldn't help ourselves. We headed to the wine cellar. Surely we could pick out some cheap bottle of wine that my friend's Dad would never miss. We chose the dustiest old bottle out of about 300 bottles of wine and, that night, we drank it all. Unfortunately, that was the lone, ultra-expensive bottle of wine.
I do recommend investing in whiskey for the following reasons:
- It’s not possible for whiskey to get too old. It may not be getting any better after a certain number of years, but it doesn’t get worse. The minimums are ten years for bourbon, and 20 years for scotch.
- Whiskey has an almost indefinite shelf life. As long as the bottle is kept out of direct sunlight, the Scotch Whisky will neither improve nor deteriorate, even if it is opened.
- And, in a survival situation, whiskey can be used as a combustible, a solvent, and a disinfectant.
- Drinking a little whiskey each day has several health benefits.
Nick’s Tip Regarding Whiskey
Store bottles upright, not on their side (like wine) - to protect the cork from the high-strength alcohol.
Old Paper Currency and Banknotes
Old notes can be a fairly good investment. The pricing of paper currency and banknotes is more stable than old coins because unlike old coins, paper isn't affected by the fluctuations in precious metals like coins are. Paper notes are also beautiful. They are works of art. And they don't take up much room to store. The problem with old notes is that they are easy to counterfeit. In fact, they were often counterfeited back in the year they were released. Because of counterfeiting, you should only buy graded notes. Paper currency grading is the process of determining the grade or condition of a bank note, one of the key factors in determining its value. I would even say that the grade isn't as important as it being graded. Being graded, regardless of the grade, at a minimum verifies that the note is authentic.
Visit Nick's Paper Currency and Banknote collection.
- Many cryptocurrencies are decentralized. They don’t collapse at a single point of failure.
- They are somewhat anonymous.
- You can fly anywhere with access to your cryptocurrency.
- It is easy and fast to transfer between parties around the world.
- It is an easy asset to hide from creditors.
- Some cryptocurrencies such as Bitcoin are deflationary in that the limited number of them will ultimately begin to decrease forever as passwords are lost accidentally or upon a death.
- Inflation protection. Governments can’t print them.
- Price volatility.
- It takes a lot of energy to mining for cryptocurrencies and that is bad for the environment.
- It takes a lot of energy to transact in cryptocurrencies. For example: One Bitcoin transaction uses as much energy as it takes to power the average American home for 6 weeks. Using Bitcoin isn't just expensive, it's unconscionable.
- They are backed by nothing. Someone makes them up on their computers.
- They have a short 14-year history as money or a store of wealth.
- They are not supported by the banking system.
- They are not an investment in a productive, profitable company. It’s speculation.
- You are speculating that someone in the future will pay more for your cryptocurrency than you bought it for. And of course that buyer has to be of the belief that he/she can one day sell it for more than they paid you for it. They only goes up and down based on demand.
- They are competitor to the government’s currency which makes it a target for regulation and even prohibition.
- Market manipulation by large players.
- You can lose access to all of your cryptocurrency if you lose your passwords.
- Transactions can’t be reversed.
- Transactions do not come with legal protections.
- Counterparty risk.
- A lot of cryptocurrency is held in exchanges like FTX which could steal from you.
- They are not widely accepted by many merchants.
- Digital transactions leave a trail. In early 2022 the U.S. Department of the Treasury confiscated a whopping 3.1 billion dollars worth of cryptocurrencies across numerous platforms from people around the world. This not only proves the government can find your cryptocurrencies, but that they also have no problem taking them without due process.
- Cryptocurrencies aren’t scarce. There are 23,000 different cryptocurrencies and this number keeps growing. Anyone can make their own. Would you invest in a business that had thousands of competitors?
- Cryptocurrency promotors spend millions on advertising. They are running a "Gold is dead" TV ad promoting Bitcoin. And FTX recently paid $130 million to put its name on the Miami-Dade County Sports Arena. Where is all that money coming from? Cryptocurrencies don't produce anything to make money to pay for advertising.
- Central banks are launching their own digital currencies to compete with the existing ones.
- Calculating the capital gains tax owed each year is a nightmare.
- A solar flare could shut down the internet and destroy cryptocurrency records instantly.
Cryptocurrencies are pure speculation, only. I can only think of one use for cryptocurrencies and that is to transfer money across national borders or to move your wealth with you to a different location. I suppose if Jews who were escaping WWII Germany had access to cryptocurrencies, they would have used it instead of sewing gold into the insides of their coats.
And on that note, we come to precious metals.
Silver and Gold I saved the best for last. In my opinion, the best store of wealth are silver and gold, and here is why:
You pay a premium when you buy silver or gold, but it is relatively small compared to anything else you buy in life. Costco, at 15%, has the lowest markups of any retail store in America. Their margin is often described as “razor thin.” Silver and gold have premiums of half of that (around 7%). If you buy right and in any serious quantity, you can often get that premium down under 3%.
Both are compact (albeit heavy) stores of value. Gold, however, is worth significantly more per ounce than silver and it is also the denser of the two metals, making the volume of gold worth far more than an equal volume of silver.
Silver and gold – especially gold – are nearly indestructible and will last thousands of years. If you are storing gold in your home and your home burns to the ground, your gold melts into gold.
- Difficult to Counterfeit
Gold in particular is difficult to counterfeit because it is one of the heaviest metals. Fake bars can be detected by simply measuring their specific gravity.
It’s easier to transport gold than silver, but both can be moved and shipped easily. Silver and gold coins and bars are regularly shipped when bought and sold.
Silver and gold are considered 100% fungible in that one ounce of silver or gold anywhere in the world is worth what every other ounce is worth.
- Market Price
It’s a simple matter to look up the value of any silver or gold coin or bar without a professional appraiser. Prices are always available online in real time.
Both silver and gold are easily divisible. You can buy and sell gold dust or gold bars. Both are used in coin money and come in multiple denominations.
- Used in Jewelry
Both silver and gold are used in making jewelry.
- Stored by Central Banks Around the World
Central banks don't store $100 bills or diamonds in their vaults. They store gold.
- Gold is Tier 1 Capital
Tier 1 capital is the most perfect form of a bank's capital. It's part of the reliable money the bank has stored to keep it functioning. Gold is considered to be Tier 1 capital.
- Used in Industry
Both silver and gold are used in industry. Silver is a good electrical conductor and has the highest thermal conductivity of any metal. Silver is used to make solder, silverware, solar panels, media storage, and batteries. Gold is used in dentistry, cell phones, computers, medicine, architecture, and satellites. Gold is so malleable that NASA covers the visors of their astronaut's helmets with a see-through layer of it to fend off dangerous effects of solar radiation.
Both gold and silver are extremely liquid assets. When you are ready to unload some metal, you can sell it at virtually any pawn shop, coin store, jewelry shop, on eBay, or to individuals. The gold and silver markets are about as liquid as it gets, so you never have to worry about getting stuck with either.
Silver and gold are scarce. They are both hard to find and getting harder to find and more expensive to mine every day. All the gold ever mined in all of human history could fill only about two Olympic-size swimming pools. There is even less silver than gold.
For thousands of years, silver and gold have been used for monetary exchange. All civilized nations recognize gold as the number-one standard of value. Central banks around the world don’t store diamonds... they store gold. As Chief Global Strategist for Euro-Pacific Capitol said: