Market Finds: Shelby Cobra: Roi de ROI?

Shelby Cobra: Roi de ROI?

Avatar By Barmak Behdadnia
September 28, 2012
2 comments

As I sit back and watch CNBC, the price of gold bounces about…$1615.10/ounce…1614.90…1615.20…1614.80.  It’s slowly on the rise again as the U.S. Fed considers Quantitative Easing Part III.  Could be a lifesaver on the Titanic, or if the United States and, I daresay, the world is feeling lucky in the casino it will stop the rocking of the boat.

Myself, I’ve placed my money in silver.  Yes, it’s more volatile than gold, but when I bought it the Chinese still needed silver for industrial reasons.  “Yeah, right!” you’re saying, “what a moron!”  Perhaps it was a misstep to bet on silver then, but today Bernanke has come to my rescue and my silver chart only sees blue skies as it heads upwards.  But, I stray…

More and more, mainstream, media outlets discuss alternative investing, which to me sounds a little fringe like alternative lifestyles or alternative music scene.  Being a modern man, I’m open to accepting both; thus, I’m most certainly open to accepting the idea of alternative investing.

The vintage automobile has become quite the hot topic in alternative investing circles.  Kinky.  Imagine: take my wife’s Prius out of the garage and park a vintage Jaguar next to my large stack of silver bars (and a few gold bricks for good measure).  The thought of a vintage automobile was so enticing I had to investigate.

I came by LA TIMES, Auto Critic, David Undercoffler’s recent article on the RM Auctions in Monterey, California, this past August 17 and 18.  A dazzling 1963 Shelby 289 Cobra MkII with about 30,000 miles was expected to sell for an estimated $600,000 to $700,000.  Mr. Undercoffler described that in 1963 the car had a: “relatively robust price tag of $5,500 to $6,000, a figure certainly higher than the asking price of the more refined Chevy Corvette of the day.”

Let’s do the easy and basic method.  $6,000 and now expected to fetch $600,000.  In 49 years, it is now 1,000 times its original price.  In 1963, gold was priced at 35.25/ounce.  I can tell you straight out that I wish it was selling for $35,250/ounce, but, sadly, it is not.  In regards to appreciation the right vintage automobile is better than gold.  Please note there are a lot of wrong vintages, and they are not better than gold.

At $600,000, this Shelby is equivalent to 371.15-troy-ounces of gold.  This will come as an incredible shock when you as I just realized that this is not even the equivalent to one standard bar of gold which weighs in at 400-troy-ounces.

Now, I don’t really keep gold in my garage. Your average investor doesn’t go to the bank and walk home with a standard bar (though certainly some investors do hold the physical bar of gold).  Luckily for us, there are ETFs that provide the convenience of holding the physical gold while an investor only holds interest in the fund.  However, there are costs that are passed onto the interest holder, because having physical access to gold comes at a price.

Both vintage automobiles and gold must be insured.  The difference comes in the maintenance of holding either a vintage automobile or gold.  To physically hold gold, one needs a fortress, security and somebody to dust.  This cost is minimized by the fortress holding an amount of gold worth exponentially more than the cost of a garage holding a few vintage cars.

A vintage automobile requires a secure garage, an important periodic drive, a topnotch mechanic and somebody to clean and dust.  There are a lot of soft and hard costs for the tenderness, love and care that an auto needs.  Everyone I speak with that holds a vintage auto will state that it gives back far more than it receives.  The beauty is not just skin deep.  The beauty is also on the inside.  The fragrance of the engine intoxicates while the fragrance and touch of the interior makes them shake with the anticipation of a schoolboy.  The time spent caring for it is an emotional courtship of elevated importance.

Meanwhile, gold is unemotional, distant and cold, an absentee lover, always making exaggerated promises that surely can’t be kept, but still holds people under an inexplicable spell.

How does one come to part with a vintage automobile of great stature?  It does appear that the parting is with great fanfare, drama and tears.  It seems that death do us part is more appropriate with vintage cars than marriage as many do not part with their automobile except in death.  The vintage car takes it in the stride and the elegance of royalty and awaits a new subject to worship her.

One parts from gold thinking what one thinks when parting from a one-night stand and Chinese food, it did the trick but I still feel empty.  The parting happens as easy as a yawn.

Just in case, it wasn’t clear: I don’t keep gold in my garage. In fact, I don’t have a garage.  If I did, I would be keeping significantly less than a bar of gold.  If you have an extra $600,000 waiting to be invested, I do recommend you go out and buy a car like this Shelby.  It would bring one great joy and surely pay for retirement and then some.

Shelby Cobra 289 Cobra Mk II (photo Pawel Litwinski / RM Auctions) 

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Andreas Lavesson
Andreas Lavesson

No matter, I’d rather take the Cobra over gold.

Amir

Cobra or gold 49 years ago, you’re making out alright.

Now if you bought an anniversary edition Datsun 280ZX in the late ’70s, early ’80s or a Mortgage-backed security 7 years ago…I’ve got a bridge in Nebraska to sell you…real solid “investment”.