Saturday, November 16, 2013
The ultra-wealthy are fleeing from paper money...
Inflation drives up the prices of collectibles, like fine art, fine wine, and watches. The wealthy want to get out of paper money... Buying a painting by Picasso or a wine from the legendary French vintner Petrus shifts them from dollars to rare and globally recognized assets. And the ultra-wealthy are always looking to acquire more of these.
Recently, a 1969 Rolex Daytona sold for a record $1.1 million at a Christie's auction in Geneva. It's the most ever paid for a Daytona at a public auction. And it's close to the record $1.16 million paid for any Rolex, which happened at another Christie's auction in May.
In total, the watch auction raised $13.2 million – four times the presale estimate.
For the world's elite, these rare and globally recognized assets are always in demand.
But the Rolex was just the beginning...
This week, auction house Christie's announced a rare Patek Philippe watch sold for a record $2.2 million. In total, the watch auction brought $43.9 million – the highest for any watch auction in history.
And it's not just watches. Fine art is breaking auction records, too...
A 1969 triptych by painter Francis Bacon titled "Three Studies of Lucian Freud" sold for $142.4 million at a Christie's auction this week – the highest price ever paid for a piece of art at auction. You can see an image of the work in this New York Times article.
A sculpture by contemporary artist Jeff Koons, "Balloon Dog (Orange)," sold for $58.4 million – an auction record for a living artist.
In total, the art auction totaled $691.6 million – smashing the previous record of $495 million Christie's set in May.
These huge prices can be partly attributed to the record amount of money in the world today and people's lack of faith in paper money. But the wealthy also amass collectibles for another reason...
If you're looking for another way to shield some of your wealth from the IRS, but buying multimillion-dollar pieces of artwork isn't in your cards, we have another option for you...
Dr. David "Doc" Eifrig has long espoused the benefits of investing in municipal bonds. Issued by state and local governments, these bonds pay healthy, tax-exempt yields to creditors. "Muni" bonds have sold off recently as investors feared increased defaults (following Detroit's bankruptcy and worries of a default in Puerto Rico) and general bond-market disruptions due to rising interest rates.
But Doc thinks fears of the sector are overblown... And munis are one of the few places you can collect double-digit income in today's market. He explained why he's bullish on muni bonds in the October issue of his new Income Intelligence service...
Recently, hedge funds have started to recognize the value there... and they're piling in.
Whether that's a good thing or a bad thing has yet to be determined – though they are providing liquidity and requesting more disclosure from issuers. But their presence in the $3.7 trillion sector is a major shift. According to the Wall Street Journal, this institutional money is buying everything from discounted Puerto Rico debt to highly rated bonds from Stanford University.
Hedge funds now hold billions of dollars' worth of municipal debt, up from almost nothing five years ago.
Even though new money is entering the market, Doc thinks you can still make big profits in the sector. He recommended a municipal-bond fund in Retirement Millionaire in 2011. His readers are sitting on gains of nearly 25%. But it's still one of the best places to collect big income today. Doc explained the municipal-bond market as an income-producing asset in last Saturday's Growth Stock Wire.
Doc has developed a set of strategies he calls "trading for income" that you can use to increase your portfolio's profits by thousands (even tens of thousands) of dollars... It's a way to time the entries into your income positions to maximize your yield.
Doc has several different and easily tradable assets he likes to recommend for this strategy. And right now, he says municipal bonds are a buy... The muni-bond fund he recommended in last month's "beta" issue is already up 5%. But it's still trading at a 3.7% discount to its net asset value. And at current prices, it's offering a tax-equivalent yield of nearly 10%.
You can learn more about Doc's "trading for income" strategies – and how to gain access to his muni-bond recommendation – here.
Date Range:11/7/2013 to 11/14/2013
Date Range:11/7/2013 to 11/14/2013