April
03
How Scarcity Leads To Valuable Investments
Things that are harder to obtain are naturally more expensive. In fact, it’s the key principle behind many investments. Below are some examples of how scarcity can lead to valuable investments.
Precious metals
Precious metals are so-called because of their high value. But why are they valuable? It all comes down to demand and scarcity. Precious metals are more corrosion-resistant than other metals and throughout history this has made them very sought after. However, the supply of these precious metals is relatively low, with the majority already having been mined.
Gold
Gold is the rarest of the precious metals and most indestructible. Over 201,000 tonnes of gold has already been mined, and 53,000 tonnes is believed to be left in the ground. Consequently, gold fetches the highest prices per pound and tends to be the most popular precious metal to invest in. There are many ways to invest in gold including gold jewellery, historic gold coins or gold bars.
Platinum
Platinum group metals include a variety of different metals including platinum, ruthenium, rhodium, palladium, osmium and iridium. Together they are the second rarest type of metal. They are commonly grouped together because they are found in the same mineral deposits and similar properties. You can invest in platinum by buying jewellery or bullion.
Silver
Silver is the third rarest of the well-known precious metals. The exact figure of the global silver reserves is unknown, but it is believed 1.74 million metric tons have already been mined. Silver is more affordable than other precious metals but still very valuable compared to other metals, making it a popular investment for those on a lower budget. Types of silver investments include American silver eagles, silver bars or even silverware cutlery.
Properties in prime locations
Real estate is a popular investment that can also be affected by scarcity. Properties in prime locations are an example of this – because there are only so many properties in such locations, they are more scarce and therefore much more higher priced. Below are some examples of how a prime location can affect the price.
Sea views
A 2017 survey found that of the millions of homes in the UK, there were just over 10,000 available for sale with a sea view. Sea views typically add 30% to a property’s price tag. Panoramic views can add even more.
Landmarks
Properties that are near to landmarks or that have views of landmarks can also come with a premium price tag. Some examples of UK landmarks that add major value to nearby properties include The Angel Of The North (a 30% increase in value), Clifton Suspension Bridge (a 42% increase in value) and National Trust Wightwick Manor (a whopping 60% increase).
Sports venues/events
Proximity to sports venues and annual sports events can also push up property prices. One study found that London properties located near a stadium were 13.5% more valuable. Meanwhile, in Monaco, views of the famous Formula 1 race track can add millions to the price of property.
Rare collectibles
Collectibles are items that people like to collect and they can include anything from stamps to shoes. The value of collectibles is not just affected by demand but their scarcity. Below are some examples of common collectibles and how scarcity affects them.
Vinyl
Many music lovers like to collect rare vinyl. First pressings of popular records are a popular example – these are the first records that went off the production line. Records that were recalled or only printed in a very small number of copies can be incredibly valuable. For example, the infamous Beatles’ ‘Butcher cover’ of Yesterday and Today typically sells for thousands of dollars.
Movies
Some video tapes and DVDs can also be valuable due to only being manufactured in small quantities. This is the case with many Disney movies that were only produced in small quantities during specific years. The Beauty and The Beast ‘Black Diamond’ VHS tape is a prime example that has sold on eBay for tens of thousands of dollars.
Books
Certain books have become incredibly valuable too due to their scarcity. For those that love to read, these can be great investments. There are many historic books that are highly sought after and worth a fortune. When it comes to more modern books, there are still examples that are worth thousands such as first edition prints of Harry Potter and The Philosopher’s Stone.
Toys
If you’ve got old toys in your attic that are still in mint condition, it’s possible that some of them may be valuable collector’s items. Some toys have become so rare that they are worth a huge amount of money. Examples include rare Pokemon and Yu-gi-oh cards, original Polly Pocket sets and rare sets of Lego. Toys still in the box often fetch the most amount of money.
Antiques
Antiques can include all kinds of old historic items from coins to clocks. Some antiques are highly sought after but are not easy to find, resulting in them fetching a price tag of many thousands. Just look up ‘rare antiques’ on eBay to see all the items that come up. Old heirlooms that you don’t mind parting with could potentially be worth getting valued.
Cars
Some classic cars are also sought after by investors. This is something not many of us are likely to have gathering dust in our homes without us realising, but if you’re a car enthusiast it could be a fun investment to get involved in. The rarest cars ever made such as the Tucker 48 (of which only 51 were made) and Bugatti Royale (of which only 4 were made) fetch many millions. More well known models that are very valuable include classic DeLoreans and original 1961 Jaguar E-types.
Wine
The final collector’s item worth talking about is wine. Certain bottles of wine in certain vintages can be very valuable due to their scarcity. This typically includes acclaimed wines of which only small batches were made such as the 1992 Screaming Eagle Cabernet Sauvignon. Some historic bottles of wine, despite being undrinkable, can even fetch price tags of many thousands such as the 1869 Chateau Latife.
Conclusion
Scarcity combined with demand can make for incredibly valuable investments. If you want to invest in something that will increase in value over time, go for something sought after and rare. Chasing your interests can be a great way of investing in something that makes you money and brings you joy while owning it. Just make sure to look after it and don’t become too attached to it if you plan on selling it in the future (although you can always let your next of kin reap the rewards).