Could trading cards become an investment vehicle like gold that can protect against inflation and economic turmoil? Trading card expert Eric Bitz believes so. Here's why.
PITTSBURGH, PA / ACCESSWIRE / June 24, 2021 / If you follow financial news, you've probably seen some pundits and experts warning of inflation in the months and years ahead. Meanwhile, gold, real estate, and cryptocurrency prices have all increased dramatically in recent months. Eric Bitz believes that trading cards too may enjoy a price increase and also that they may offer a great way to hedge against inflation.
"Financial markets are immensely complex, of course," Eric Bitz notes, "but we've seen gold prices, cryptocurrency prices, and other assets surge in value. This is likely driven at least in part by inflation or at least fears of inflation. Gold, among other assets, is considered a safe-haven asset, and I think trading cards could be too."
Safe-haven assets are assets that hold their value even in the face of extreme circumstances and events. During recessions, for example, gold prices have often held their ground or even increased in value while stock markets plummet.
Gold is perhaps the most well-known safe-haven asset. Gold supplies are limited, and basic economics states that if supply is limited, but demand is high, prices typically trend up. While governments can print up new money, no one can make gold out of thin air.
"Governments have increased the money supply and kept interest rates low," Eric Bitz points out. "This often spurs inflation, and many economists are predicting that we will experience inflation at some point. If that does happen, supply-limited goods, like trading cards, may protect your wealth."
To combat the economic turmoil caused by the COVID-19 pandemic, the U.S. Federal Reserve launched aggressive stimulus measures and cut interest rates. Both of these activities can stimulate the economy.
That said, where there are rewards, there are also risks. Aggressive stimulus measures and lax monetary policy may cause inflation. If this occurs, your money will lose value and the costs of many goods and assets may increase.
If you park your wealth in assets that increase in price, your wealth may be protected even if money itself is losing value. The traditional safe-haven asset has been gold, but now, trading cards may offer protection as well.
Eric Bitz Talks About the Importance of Limited Supply
Perhaps the most important factor in keeping gold prices high is the limited supply. If massive new deposits of gold were found, gold prices might decrease. Experts have searched far and wide for gold and while new deposits are occasionally discovered, it's unlikely that gold will flood the market any time soon.
The same could be said for valuable trading cards. Many cards are valuable precisely because supply is limited, often to just a few copies. And since valuable cards are out of print and were part of limited print runs, there's no way to dramatically increase the supply of trading cards. Sure a few legitimate cards may occasionally be discovered in someone's attic, but supply is always limited because production was limited
"When you look at the most valuable trading cards, the number of cards available is very limited," Eric Bitz says. "Governments can dramatically increase the money supply, which may reduce the value of individual dollars. But you can't really increase the supply of rare trading cards."
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SOURCE: Eric Bitz