The idea of gold/silver stacking is basically collection of gold and/or silver.
This was whilst I was writing yesterday's post.
Well, stacking is pretty much, stacking coins, bars, collectible coins of gold and/or silver. You know, like stacks of bars in a vault. Not jewelry, cos the premiums on those are ridiculously high.
So I was thinking, hmmm, this seems like an interesting hobby.
From an investment point of view, I would think stacking would likely be cost ineffective.
But today, we're talking about some hobbies which might be able to make some money in the long run so... we'll talk about cost and hobbies, etc...
Ok so most hobbies cost money. And more often than not, it's just an expense. Watching movies, eating out, traveling, etc...
So I'll say... ok there is an expense for enjoyment.
Looking at gold/silver stacking, it's similar to jewelry collecting.
Stackers buy a bar or coin, they pay the gold/silver spot rate, plus a premium for the product. Usually the premium is pretty low, depending on the design of the coin or bar.
So maybe one would buy a Canadian Maple 1 troy oz (31 gm) gold or silver coin.
Gold spot may be US$1,470 and the premium would be around 3% for a gold coin.
Silver spot may be US$17 and the premium would be around 14% for a silver coin.
Yes silver has a very high premium currently.
The demand for silver collectibles has shown high demand recently so the premium is higher.
So I'd say the premium is the "cost of the hobby".
Sometimes you can sell the item to another collector and they are also willing to pay a premium over spot prices for rare coins. So sometimes, a collector can make back the premium.
So over here, we have 3 types of hobbies.
1. A pure stacker. These folks just want the weight of the metal. It's fun to see, fun to handle. They aren't willing to pay much premium.
2. A coin collector. These folk like the rarity of the coin.
3. A hybrid. Most stackers on Youtube are hybrids. They like the metal, but they also like the design of the coin or bullion.
Of course if a coin collector buys a rare gold coin, he'll try to find a hybrid collector to sell it to.
Cos a pure stacker won't pay much over just the gold spot price. Whereas a coin collector or hybrid collector would appreciate the other aspects of the rare gold coin and would likely pay more over spot.
IF we just talk about investing in the metal, then a precious metal ETF would probably be a better option as it probably has lower costs and highly liquid.
But HEY, we're talking about hobbies so... there's the fun in the hobby and it's not entirely about the investment of the product.
So in cases 1, 2 and 3, the person can enjoy handling the product, owning the product, seeing the nice shiny bling, then maybe sell it again for a better price in maybe 20 years time. Sure they may earn less than if they had just bought an ETF, due to transaction costs and premiums, but they maybe could make some money doing their hobby, so there's enjoyment in the hobby as well.
The difference in earnings between what they earn whilst doing the hobby, vs just investing in the ETF, is likely the "cost of the hobby".
BUT! Maybe they made money ABOVE the ETF... if they trade in old rare coins, after 20 years, the age of the coin may command a good premium as well. So they could possibly earn the gold/silver appreciation AND even more premiums on top of it.
It's not too expensive to start. A single Maple leaf silver coin costs under US$20 so it's not too hard to start collecting.
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What other hobbies can make money?
How about watches? I think collecting watches could be a profitable hobby.
Now, I'm talking collectors, so I'm not talking about watches to wear out.
$2,000 Omega watches are just fancy watches to wear out.
There's some resale value but I don't really think they would be considered collectibles.
For such a hobby, I think it would be risky to wear the watches out. Considering the risk of bumps and scratches. No, I think if I were to get into such a hobby, I would just keep the watches in a safe at home and look at them myself, or show them off to other collectors.
My friend who's a watch collector told me that Rolexes tend to retain their value quite well. May not make money out of it, but won't lose much.
The other famous brands also could become collectible time pieces, such as Jaeger-LeCoultre, Audemars Pigue, Patek Philippe, etc... So yes, it's possible to make money out of these.
My friend did mention a problem though, cos... sometimes the watch maker would do a re-release of certain old collections. Then the price of his old watches would drop, cos it's not as rare anymore. So it's just the risk and cost of doing the hobby.
Rich boy toys I would say... still, it's an interesting hobby to make some money if you're interested in watches.
For watches, I would say, there's a chance to make money as a hobby and investment.
Some people say that expensive handbags can also be a hobby and investment.
Errmmm.... Ok... I don't deny that's possible...
Possible but highly improbable.
Most ladies buy handbags to wear out. I don't know of many ladies who would keep their handbags in a safe, take them out and touch them, see them, clean them, then lock them back up and wait for it to appreciate in value.
So... I would think... handbags... well... it's possible, but highly unlikely.
Watches are much more acceptable and well known as collectibles and resale items.
Remember...
You never actually own a Patek Philippe. You merely look after it for the next generation.
Next hobby...
Expensive drinks...
Whiskey, wine, etc...
There are even investment funds for such products. You can buy funds which will hold rare wines and whiskeys and wait for them to appreciate and sell them.
It's similar to watches. You can keep them in the cellar but you can't drink them.
So basically, can see but cannot use them. But that's what most collections are anyway.
Many Japanese whiskeys have appreciated in value. Hibiki's, Yamazaki's, Nikko, etc...
I once knew of someone who had 10 bottles of Hibiki, he bought them at $300 each and I think they are worth around $1,000 now... I think...
There is a secondary market for these and if you're in the hobby, you'll know where to find other interested parties to buy them off you.
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Then there's other collectibles.
Like cards, baseball cards, Magic the Gathering cards, basketball cards, stamps, old coins, old bills, etc...
Even old cars... Although I've read that people pretty much lose money on old cars, but I suppose it depends on how they manage it, and how much effort and maintenance they put into the car.
There's actually quite a lot of fun hobbies that can make money. And I'm not talking about having a hobby doing yoga and then giving yoga lessons. That doesn't really count. I'd classify that as just working in a fun job that you enjoy.
Anyway, I think for such hobbies, one shouldn't get into it just to earn money. One should genuinely have an interest in such a hobby then pursue it, and eventually, after learning more about it, one would have a good chance to make money.
I think for such things, if someone goes into it just to make money, it wouldn't be fun and they would likely lose interest in it quite soon. Not to mention, for someone who enjoys it, it would be fun to learn more about the topic, to understand the product, become a specialist of the hobby, etc, and that knowledge and expertise will eventually be the factor which helps them make money in their hobby. Cos... even though these hobbies have a chance to make money, it's not 100%, if someone is overpaying for their collectibles, it's still possible to lose money even in the long run. Even if they are just buying a simple thing such as gold.
Are there any other interesting hobbies that you can suggest that can make money?
Personally, I'm interested in checking out some silver bars. Maybe, just maybe... we'll see when I get to the US.
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