Knife collecting and the economy

The Virginian said:
Thanks for your informative and thoughtful post.
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Ken, you are welcome...thanks for taking the discussion in the spirit offered, and not taking offense. You know that I speak and write plainly.

The Virginian said:
I think you might be onto something about high end gun shows. It might benefit more makers to consider attending these shows IF they bring the right knives for that market.
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A good gun show is an excellent place for any maker, save for the guys that are simply too busy to be bothered, to get feedback from customers and increase the bottom line. Tables are generally inexpensive, and many people are there to buy, with money in pocket. I can’t think of too many gun shows that I worked at where I didn’t leave most of my profits in the room.
The Virginian said:
As far as the market shift to tactical knives, I'm sure you are better than me at distinguishing long-term market shifts from changes in "what's hot," because we can all scan through this thread and see the warnings about buying "what's hot." Regardless, tactical knives generally bore me to tears and I have absolutely zero interest in collecting them. So I guess I probably don't even factor those knives into these kinds of discussions, which is wrong. I don't even look at those knives, so i guess they could be selling gangbusters and I might not realize it.

Anyway, I wish I could believe that more money chasing tactical knives would mean less money chasing the kinds of knives I seek to collect . . . but I am thinking it probably does not work that way. :(
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Ignoring tactical knives as a factor in the market is definitely leaving a big part of the picture out. It isn't about "hot"...tactical knives have been slowly growing in popularity and price since the term was coined. It may be the largest sector of custom knives at this point, in terms of mass product on the market, and in terms of total percentage of $$ involved. It is entirely possible for young, unseasoned collectors who eventually are looking for the new shiny to make the jump from basic tactical knives to higher end art pieces, or high end autos….and when we talk about specifically about those figures, 5k is middle ground. They have the money, and they are spending it.

Best Regards,

STeven Garsson
 
The Virginian said:
I am active in other collectible markets - coins, paper money, and Americana for example. What it seems to me has happened in those markets is what Don Guild suggests is the case in the collectible knife market. A flight to quality. The choicest, rarest and higest end paper notes, coins, and Americana are in as strong demand as I can recall and the prices continue to escalate through the economic depression as the buyers of these items are folks with very very large disposable incomes and those foiks have been affected comparatively less by the economic depression. In contrast, more common and lower priced pieces . . . have lost value and there appear to be fewer buyers with disposable money for those items.
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The investment-grade segment of the custom knife market is performing well, as many investors right now are seeking viable hard-asset alternatives to stocks and bonds amid economic uncertainty and rich valuations among most traditional asset classes.

The hobby and user-grade segments of the knife market, however, are suffering the effects of a weak economy, where consumers have suffered meaningful declines in real disposable income and simply have fewer dollars left over in their spending budgets for these types of discretionary purchases.

Indeed, the market has become somewhat bifurcated. Investors are buying, but consumers are pulling back. I expect these conditions to persist for some time. Well into next year at least.

As an aside, let me ask how many among you have ever declared the capital gains from your knife trades on your taxes? That's somewhat of a rhetorical question but I ask it to bring up an important point, which is that both capital gains taxes and dividend taxes are likely to rise next year, possibly by a significant amount, and it's entirely plausible that some well-heeled investors are viewing the high-end collectibles market as a discrete way to avoid taxes on their investments.
 
Wulf said:
As an aside, let me ask how many among you have ever declared the capital gains from your knife trades on your taxes? That's somewhat of a rhetorical question but I ask it to bring up an important point, which is that both capital gains taxes and dividend taxes are likely to rise next year, possibly by a significant amount, and it's entirely plausible that some well-heeled investors are viewing the high-end collectibles market as a discrete way to avoid taxes on their investments.
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If I sell my knives at a loss, do I get a tax deduction? ;)
 
I don't have much to offer here. I'm a low-end collector, although I handle the highest end of work.

I take my time with purchasing choices and I've not lost my pants on anything in years. (I sure did early on!)

STeven and Wulf: Great insights.

One thing I've witnessed firsthand is that even when financial times get tough, people gravitate to things that make them feel good. Knives are one of them.

My other job (rowing coach/maintenance guy) our membership tended to grow when the economy tanks deepest.

Human nature, when down: "Got to do something to make myself feel good." It doesn't make rational sense but, well, that's what people do.

Coop
 
I am a low end collector.

I have had the opportunity to buy a lot of new knives at parity. I have brought swords back when I was only getting 60-70c per USD.

I am enjoying this while it lasts.

When buying anything in Australia I pay approx 100% mark up on what I can get it from the US direct.

The recent economy shift has meant I am buying a lot more direct from the US.. My most expensive knives are at the $300 price point so I am certainly not a high end collector..
 
SharpByCoop said:
One thing I've witnessed firsthand is that even when financial times get tough, people gravitate to things that make them feel good. Knives are one of them.

Coop
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It's all about catering to the current market. Maybe I'm just lucky in that my sales have continued to grow for the last few years but I don't think so. I have done my best to make what is selling and discontinue what isn't. Even though I am enough of an artist to feel like I will make only what I am comfortable in making, when your livelihood depends on knife sales you make what the market wants/purchases. [With the exception of making the occasional piece just for the enjoyment of making it.]

Gary
 
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I heard awhile back, some socio-economist type person, say that in times of generalized economic difficulty that those with the cheese tend to surround themselves with material things while those without tend to surround themselves with people/community.
 
I've been away and unable to access the forum since over a week ago, so am just reading this thread for the first time - and it's a good one. Lots of good opinions. Since 2008, there have been any number of threads about this subject.

My two cents - I've seen quite a few TOP end pieces change hands privately. Same with TOP end artworks. And the values on such pieces have continually increased, without regard to the economic uncertainties - or perhaps I should say, instead, because of the economic uncertainties. The top works disappear because they tend, at a minimum, to hold value better - though from what I've seen, the stuff has just skyrocketed.
 
Well I guess I am doing ok since I just downloaded Knives 2013 and another one from collection sprung up. I guess my whine is, it is very tough to find value right now.
 
Hard to find value? Not in the market segment that I collect - which isn't high end folders.
 
Well, maybe what you collect isn't really worth that much anyway!

Sorry....no, I'm not, first blood rule applies.

Really, do we always have to play the weinie wars? I'm very honest about what interests me, and I stated that somewhere in here. But let's take a look at that statement from a business perspective. Although there will be some justified disagreement, I'll go out on a limb and state that with a few exceptions, high end engraved folders are the blue chips of the knife collecting market. When those prices are driven up to the point where long term investors see little return, then a tedious market situation develops. This would be similar to a "flight to quality" that we see in the stock market. Investors are looking at least to preserve assets and not take a hit, so if you think your getting "a good deal" on something in that sort of economic environment, maybe you're not! Investor types, please validate or refute, I'm just a humble medical guy.
 
marcangel said:
I guess my whine is, it is very tough to find value right now.
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Well, I admit that I am confused.

Your OP complained that you've been affected by this miserable, protracted recession, and you asked whether there is the demand there for exquisite art knives.

Now you are "whining" (your words) that it is tough to find value in these knives.

If the economy was causing a decreased demand for exquisite art knives, then I think that the prices for exquisite art knives would be declining (you know, the old supply-demand curves) and you should be able to find more values than ever.

Of course I do not believe that the economy has caused a decreased demand for exquisite art knives - at least the really rare high end pieces.


Please clarify, because what it sounds like to me is that your complaint is that you've taken a hit from the economy over the past few years (as have a lot of folks) and so you are no longer able to purchase the knives you want at their current going rates.
 
Actually, you stated my point quite well. Prices have risen dramatically on the high end, unfortunately my disposable income has not kept pace. Therefore, unless I turn over my collection, I will not be adding to it much, or at at all, since demand has driven up prices beyond at least my means. In time, this "softens" the market as there is less demand due to fewer collectors. My approach to collecting has been similar to Les Robertson's, with one difference I don't turn much over. I jumped into the Ron Best folders 2 years ago, and have acquired from the maker 4 Emmanuel Esposito knives over as many years. Those types of purchases are beyond what I consider "reasonable" for a hobbyist at my income level. As many have agreed, unless you really love it, the middle and low end markets are just a place to lose money, at least for now. If I were in this solely to turn a dollar, I'd be thinking about cashing out.
 
Art and collectibles are seen as a hedge against inflation
Maybe more people are adding custom knives to their investment portfolio because they think inflation (And knife prices/value) will rise in the future??
Just like Doug Casey advised 20 years ago??

Here’s what I found:

Art’s correlation with inflation rivals gold’s.

Since 1997 art actually tracked inflation a tad better than gold, sporting a 0.26 correlation versus 0.24. (Remember, correlations range from 1 to -1, with 1 meaning prices move perfectly in tandem.)

And during the last bout of out-of-control inflation, from 1977 to 1982, art prices jumped a healthy 130%.
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Art Investing: The Inflation Hedge Nobody’s Talking About
 
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