John Betts - Fine Minerals > Home Page> Educational Articles > Minerals as Investments
by John H. Betts, All Rights Reserved
Lately some dealers have been touting minerals as investments. Their mantra is, "Better rocks than stocks." Of course these are mineral dealers and they are hardly disinterested parties. The translation of their advice is, "It is better for mineral dealers if you buy minerals instead of stocks."
Steve Martin, the comedian, is a well-known art collector. I read that when visitors to his home admire his art collection, they frequently request advice on how to collect art. His first piece of advice is: go out and buy a painting or sculpture that you like. Then wait a week, and try and sell it. The lesson will be learned very quickly that artworks are not easily sold, and rarely at a profit - especially if purchased from art dealers.
I offer the same advice to potential mineral collectors that are buying as an investment. Buy a mineral specimen that you like. Then try to sell it a week later. If minerals are a good investment, you should at least be able to get your full price back. Right?
In reality you will find the dealer that sold you the specimen will have experienced a sudden turn of bad luck, or the market took a quick turn down, or the dealers money is all tied up in another deal. Yeah, right. And I bet your dog ate your homework too.
Try selling your mineral specimen to another dealer. Maybe he will value the specimen more highly. But it is more likely that he will offer you about 50% of your purchase price. Try selling your new mineral specimen to another mineral collector. But how do you find other collectors? Try selling on Ebay. In theory the auction format will set the price at fair market value. In reality the buyers on Ebay are notoriously cheap and most only buy low-end minerals that are damaged or flawed. Try selling your mineral specimen at a natural history auction like those at Bonhams & Butterfield, Stacks, or Heritage Auction Galleries. You will have to tie up the mineral for 6 months while the auction catalog is prepared, and hopefully it will not end up among the 33% that fail to meet the reserve price and go unsold. Maybe you will get your investment back. Maybe.
The bottom line is buying a mineral specimen from a dealer is not a good way to invest. And minerals are not liquid assets like Krugerrands or stocks.
As a mineral dealer, I buy many old collections and see the original prices paid for minerals over 100+ years. Based on the thousands of old mineral specimens I have purchased and resold, I estimate minerals appreciate at a rate of about 7% annually. That means their value doubles about every 10 years. That is not a bad rate. But the 7% appreciation was at a time when stocks and real estate appreciated much more.
It is possible to make a good investment in minerals. Buy the collection of a friend at a fair discount off full price. Or buy from a distressed dealer. My first business mineral inventory was acquired by buying the mineral inventory of Astro Gallery of Gems when they files bankruptcy around 1989-1990. At an auction in Maine last summer I purchased several lots that averaged out to $1 per specimen. But as a dealer, I have a ready outlet to sell the minerals. The average collector does not have ready access to selling to other collectors. Except via Ebay.
Why buy Minerals?
You should buy minerals because they are beautiful, they appeal to you, each one is unique, natural, and not man-made. Do not buy minerals as investments - unless you have 20 years to wait for a return on your investment. And definitely do not believe a mineral dealer if he advises you to invest in minerals - the only person that will realize a profit is the dealer.
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© John H. Betts - All Rights Reserved