Nihonto market in the US

[Surfson]

While waiting for the heating guy, I have been mulling the factors that might influence Nihonto value in the US.

 

In support of prices:

1. The end of the outflow of souvenir swords from WWII. Nearly half a million nihonto came in to the US, and they are mostly in the hands of collectors now.

2. New collectors in europe and China. If you sell on ebay, you will find that half of the buyers are in europe or Hong Kong (the gateway to China).

3. Continuing admiration of nihonto based on their compelling beauty. Hollywood regularly makes samurai movies, and there is incredible intrinsic art and craft in nihonto that attract new devotees.

 

Undermining prices:

1. Demographics of collectors in Japan and the US. They are aging in both locations, and large collections and individual pieces will flow out increasingly I believe.

2. Increasing quality of fakes from China. We have discussed this on the NMB, and true collectors can discriminate. The main problem is that many novices will decide not to take up the hobby if they have early bad experiences.

3. Dumping of low end swords from Japan on the US market. There are at least two ebay dealers (you know who you are) that buy problem swords off the bottom of the Japanese market and dump them in the US. This will also discourage early to middle stage collectors when they find out that their Tadayoshi has problems.

4. Cost of restorations. The cost and time involved are quite discouraging to collectors at all levels.

 

Just some random thoughts on a tuesday. Cheers, Surf

[Alex A]

I hate to say this, and im not the only one thinking it, but if the dollar gains strength, theres going to be an awful lot of European collectors (as you mentioned) with sad expressions on their faces. Obviously, this would impact on US sellers.

 

Alex.

[Brian]

Robert,

Can't argue with any of that. Think you covered it pretty well.

 

Brian

[pcfarrar]

I hate to say this, and im not the only one thinking it, but if the dollar gains strength, theres going to be an awful lot of European collectors (as you mentioned) with sad expressions on their faces. Obviously, this would impact on US sellers.

 

I don't think there is much chance of the dollar significantly gaining in strength any time soon. :lol:

[Anthony de Vos]

Hi!

 

I know this is not an economy forum, but Alex, as long as the US continue to increase their balance sheet with 85 billion dollars a month through Fed, and the Saudies considering to trade oil in all currencies, thus making the dollar to loose the petrodollar status, there is not going to be a strenghtening in the dollar.

 

Regards,

 

Anthony

[Alex A]

I read in all the wrong places

http://business.time.com/2013/03/20/can ... nce-again/

 

Alex.

[Anthony de Vos]

Hi!

 

Alex, for a balance to the regular mainstream economy news read Zero hedge, for a wider picture.

 

In order not to stray from the subject, I think both Europeans and Americans alike will benefit from Prime minister Abe's attemt to double the Japanese money supply until 2014, if buying the swords from Japan.

Swords bought from Japan will cost less, but the competition on our markets will then increase since there will be a larger supply.

 

Anthony

[nihonto1001]

Great topic. I would like to add that people are usually surprised when they realize they can buy a real Samurai Sword. A goal with my site is to bring the knife guys over to sword collecting. However, it seems like more sword guys have purchased Microtech knives, than the inverse. I am not complaining.

 

The question is, how do we get the word out?

[Surfson]

Changes in currency markets didn't make it into my top 4 in either category. If the dollar does get much stronger, values of swords will likely decline, so that should be put on the minus column, I would think.

[kusunokimasahige]

It might become better for EU collectors (than it already is) when the EU-US and EU-Japan free treed agreements will be signed.

 

But that might still take a while, with the NSA hassle....

 

KM

[Curran]

This is what I do for a living.

US$ getting stronger? Maybe sporadically, but longer term Not Happening.

 

No going back to April 2002 or 1990s hipness (=want USD for reasons other than fear) in the eyes of the world.

Only thing I think Surf should have included is how changing international laws and shipping requirements prevent the flow of swords.

These barriers have many results, and are partially responsible for my shift more to fittings after 2004.

[Soshin]

Hi Everyone,

 

I have been in the market for getting a Nihonto for the long term. I had some money saved up from sales and then a Yagyu tsuba came long and now all my money is gone. I hope the market stays soft. :lol:

 

P.S. Let me know if anyone sees a good Mino katana in polish at a fair price. :lol:

[Eric H]

I don't think there is much chance of the dollar significantly gaining in strength any time soon.

The US$ as also the British Pound have constantly lost value against the CHF since 1970 and the economic situation of today signalised that this will continue in the future.

 

US$/CHF 1970 : 1 US$ = CHF 4.31

2013 : 1 US$ = CHF 0.91 today

 

GBP/CHF 1970 : 1 GBP = CHF 10,32

2013 : 1 GBP = CHF 1,47 today

 

Look at the US Debt Clock : http://www.usdebtclock.org/

 

Eric

[Adrian]

They locked the CHF to the Euro a few years ago, so the trend isn't going to continue.

[reeder]

Great topic. I would like to add that people are usually surprised when they realize they can buy a real Samurai Sword. A goal with my site is to bring the knife guys over to sword collecting. However, it seems like more sword guys have purchased Microtech knives, than the inverse. I am not complaining.

 

The question is, how do we get the word out?

 

I've been a knife guy and been trying to get into Japanese swords, pick some up here and there when it doesn't break the bank, usually what most here consider junk blades (mostly Showato with problems) but I have been slowly learning about them as I get them, enjoy them, sell or trade them and try to learn more to upgrade. I have a few Japanese sword books I've been going through, but I try to look at every sword I come across and talk to local dealers as much as I can. I think swords are harder to get into as there is so much more to learn about them (which I've greatly enjoyed but I don't think I will have near the knowledge base as most here in another 40-50 years) and they are quite more expensive than knives. One can buy & sell pretty nice WWII knives for $50-$500 a blade. Of course there are knives that are much more expensive than that, but the point being it doesn't tie up a lot of funds and a WWII Kabar vs post war Kabar are easy to identify and there are a lot more people collecting knives to sell to when you decide to sell. Also, I feel a lot more comfortable spending $100-$150 on a really nice Kabar or guard marked M3 knowing that I should be able to get my money out of it without much problem if I decide to sell later.

 

I'm in my late 20s and one thing that really scares me about collecting and investing in blades (both knives and swords) is there isn't a whole lot of interest in these things from my generation and younger generations. Sure everyone thinks a real Samurai sword & WWII relics are cool, but they're not spending the money on them. There's some interest in WWII rifles from younger generations because of video games like Call of Duty World at War, but even then mostly $100 Mosins or cheaper Arisakas are being purchased rather than M1 Garands, matching K98s, and some of the other higher dollar rifles. I see little to no interest in collecting blades and it always amazes me that at some of the shows I set up at, I'll offer a decent Kabar to a younger guy that shows interest for $40-$75 depending on what I have in it, am told "let me think about it" and watch them go down 2 tables to spend $25-$40 on a POS Chinese pocket knife because it's tacticool, I just don't get it. I don't take swords to local shows, but some of the other sellers do and I don't think they sell them to anyone but other dealers. Everyone thinks they're cool, picks them up, molests them, but no one buys them other than other dealers here and there. When you see that it's hard to justify dropping that kind of money into swords.

 

Not necessarily related specifically to Nihonto, but collectables in general. I apologize if some of this is mistyped or doesn't make any sense. My keyboard or computer is lagging and getting extremely frustrating typing here. Tried to correct what I caught.

 

-Brandon

[Surfson]

Thanks for the great post Brandon. You may find that you are ahead of your peer group. As they get more money, they may branch out from knives to swords, including nihonto. But we sword collectors have not ever been organized beyond our shows, and have never reached out as a group to younger generations. You mentioned the challenging information that one faces as a nihonto collector. It is actually one of the things that is appealing to many people. I'm sure that you can master the WWII US kaybar world in a fairly short amount of study. Not so with nihonto. I would encourage you to keep studying Japanese swords, as they are truly the ultimate in edged weapons, world wide. Cheers, Bob

[Ken-Hawaii]

This is a topic that has been discussed here several times, Brandon. And, no, you are certainly not the only person who has observed the distinct lack of interest in Japanese blades by the past generation or two. That unfortunately includes Japanese swordsmiths, too.

 

Ken

[Jussi Ekholm]

It takes certain qualities for younger generation to get into nihonto collecting.

 

I like I guess most of my peers started by collecting Chinese made replicas. Some years into that I already knew I will be focusing on nihonto. But for young collectors the Chinese made replicas are very appealing form of collecting. Heck, I still have good bunch of various Chinese made Japanese swords, and for me it's the "fun part" of collecting. For me nihonto are for collecting purposes only, and Chinese made replica stuff is for cutting & fun.

 

When you look at the Japanese style sword market in general most of the stuff sold is under 300$. Of course they are not nihonto, but most of the young or even older folk don't want a nihonto. They just want swords they can cut with. For most the origin of the sword does not matter, but the price does, what kind of nihonto will you get for sub-300$'s?

 

Another is the fact that many people have no clue about real Japanese swords. What I mean by this is that many younger swordfans think them as super expensive godly swords that can do everything. I've heard multiple times how you can cut through steel poles with real Japanese katana, and they are so sharp you can't touch them. And many times I've heard how they cost 20 000€, 50 000€ or so.

 

I know the absurd thoughts about the performance of the katana stems from anime, as I've watched my share of it. But what really puzzles me is where they get the price to their head? As this has been common thought among many young sword fans in Finland, and even sometimes I see it in the Internet. Of course the easy explanation is that not the tiniest amoung of research has been done.

 

I would encourage you to keep studying Japanese swords, as they are truly the ultimate in edged weapons, world wide.

This is just one opinion. Even though Japanese swords are my favorite swords, there are amazing swords found all over the world. Viking swords and iron age swords might be 2nd in my list. Indo-Persian stuff might come 3rd and so on. I don't think there are truly any ultimates.

 

I believe you in the USA have quite good organizations regarding Japanese swords. And what is important it's easy to find info on them. On forums when someone asks, I have been able to point out sometimes specific sword clubs near someones area and you have JSSUS in general. And you have multiple big shows around the country. Information is easily accessable for those who seek it, it's just the fact that swords are not that popular, and people don't search information. It might be pretty hard to get a lot of new collectors in as this is a hobby which you have to be quite intrested from the start.

 

There have been discussions about popularity of traditional martial arts in Finnish martial arts board. The popularity of UFC and another MMA has drawn people over traditional arts. I think that those martial artists that practice traditional martial arts have bigger possibility to get into sword collecting. I feel that those who practice Japanese sword arts might eventually become intrested in the Japanese sword in collecting mindset too. Where as those that practice MMA, kickboxing & such martial arts will never get such connection with the weapon itself due to their art.

 

As Curran mentioned international laws, I might add that here in Finland if you can prove the item coming outside EU (in this case sword) is antique or art you pay 10% tax, if not you pay 24% tax. Finnish customs has sometimes given me headache as they are quite inconsistent with their decisions.

 

My post ain't really relevant for nihonto market, but more in general for collecting.

[Eric H]

They locked the CHF to the Euro a few years ago, so the trend isn't going to continue.

On 6 September 2011, the SNB (Schweizerische Nationalbank) put the minimum exchange rate of the Euro against the Swiss Franc at a fixed lower bound of 1 Franc 20. This indicates that the massive overvaluation of the Swiss Franc constitutes an acute threat to the Swiss economy. The Euro had just achieved virtually a parity with the Swiss Franc exchange rate.

 

Eric

[kusunokimasahige]

Most "young" people I know collect World War Two stuff. No interest in Nihon-To. When they know I own Samurai items and Japanese art, they seem interested though (my pupils). But they more think of it as "cool" than actually interesting.

 

Young people often lack money, time and zeal to study this subject let alone start collecting. The Anime/cosplay kids are annoying at best, even though that is a big part of the international movie memorabilia and action figure market. It is however a reason for many to start studying Japanese these days. I think collecting in general is a quirk just like hoarding .

Some collect stamps, others Holly Hobby stuff, and then there are many people involved in the antiques business who I often come across rummaging with books filled with silver marks, porcelain marks and what have you.

 

Studying what you collect is important, not only because of the value.

 

KM

[cabowen]

In my opinion there are three major barriers to entry: money, the learning curve, and the future of sword collecting.

 

You need money, lots of it, if you are going to enter the world of Japanese sword collecting on anything other than the lowest level. Good swords and proper restoration are very expensive, as most are aware. Few young people can ever hope to play the game unless they have a large trust fund or strike it rich with a dot com. I started collecting Japanese swords when I was 12-13 years old. I probably had 6 or so swords by the time I started high school. I never paid more than $50 for any of them. A few were very decent. I had a part time job at the local newspaper company that allowed me to place ads for free. This is how many of today's old time collectors started- 30-40-50 years ago when swords were relatively speaking, plentiful, and very cheap- the $50 a barrel days. It allowed nearly anyone to get into the hobby. Many of the old timers with 200 + sword collections could never accumulate these same swords if they had to start over today. Those days are over.

 

No need to discuss all of the difficulties and the steep learning curve. And the language. Few people have the rather peculiar qualities necessary to spend a life time of learning for a hobby fraught with pitfalls.

 

That brief period from post war till the late 1980's was the golden period of Western collecting as it let anyone in the game. That door is now shut and once again, as it has pretty much always been in Japan, Japanese sword collecting is a rich man's hobby.

 

As a result, the number of collectors is shrinking. This doesn't bode well for those with large, expensive collections, looking to get a nice return on their investment. Those that paid $100 each will still do well, but those paying retail prices in the last 10-15 years will probably lose money. In the face of declining demand, prices are bound to fall, and continue to fall. Most people who can't afford losses won't be too interested in boarding a sinking ship. This is why collecting swords is not a good investment. More reason why it is a rich man's hobby- you have to be rich to not only afford good swords, but to absorb the likely losses going forward...

[BIG]

True words but nonetheless....

[Alex A]

Wise words Chris, kind of makes me glad im not rich enough to accumulate too much loss :D.

 

Alex.

[raiden]

All I can say is at the DTI, I saw all types of foreigners buying everything from a $500 tsuba to a over 100k Tokuju. I think with the internet the hobby has actually grown, as well as the interest. More good information is available nowadays as well. I think if it wasn't for the fake Chinese market, there would be more legitimate collectors, I mean how many blades get sold on ebay alone every month? My advice is as always, buy right, safe and study well. Certified blades never hurt if they are from reliable sources.

[Alex A]

Ive always been curious to the number of swords sold to non-collectors, just folk with money buying as a curiosity.

[kusunokimasahige]

It is like being in a casino. You see high rollers spending two or more times your yearly salary in 10 minutes.

 

KM

[seattle1]

Hello:

What an interesting bunch of posts from Surfson's discussion of the Nihonto market in the US, as the replies covered a lot of territory. I would like to touch on one issue and that is the financial one. Where is it written that any "hobby", for the lack of a better term, should be judged by its return, particularly the dollar sense of return? Yes money is needed to buy swords, but so is taste and knowledge, and to a degree those things are both complements and substitutes in some situations. All three can be acquired by any collector, and actually must be acquired, but the money part doesn't have to be counted with many digits.

More particularly the benefit from collecting any intangible object is the satisfaction from the object, what economists call utility, as well as at least the consideration of its potential market value. It is quite clear in an economic sense that a gain over time is the satisfaction from ownership plus the price change expected, and both are variables. It is about as close to an iron rule as there is to say that when swords are compared to any financial asset of the same risk, say a share of xyz stock, the strictly dollar return is less for the tangible non dollar yielding asset. The other ingredient, the satisfaction, in equilibrium, is what makes up the difference and it is that joy of ownership of the fine sword, rare stamp, beautiful French Impressionist, etc., that separates collectors from the merely financially gain seeking.

If you wanted to focus just on the financial, that alone presents many challenges of calculation as actual returns are complex calculations related to currency value changes, initial costs, commissions, taxes, changed historical circumstances, etc.

Collecting is an endless activity and just a lot of fun. Making new acquaintances, travel, learning, and once in a while some good luck. Other things equal, money won't make collecting swords less fun, but I do not believe it is the essential ingredient to enjoy this hobby or almost any other. Many of us have probably collected other things and know that there are lots of entry points from a few bucks to mega bucks in virtually anything one might want to collect. Of course if you just have to have that Rolls-Royce Silver Ghost, the first rung in the ladder is high, but that is not so for Japanese swords in my opinion.

Arnold F.

[Surfson]

Mike, among the foreigners buying big pieces, were many of them Chinese? The biggest change that I have witnessed is the interest among the nouveau riche Chinese. A friend of mine in Chicago is a student at Northwestern and he has a website in China at which he sells nihonto. He buys them on ebay and sends them over 20 at a time. This is one of the factors that I listed on the plus column at the beginning of the thread.

 

Chris, it is interesting that the price of decent signed swords (in the $2K-$4K range out of polish) has not changed that much since the Japanese bubble in the 80's. The good news is that they haven't declined that much.

[Surfson]

Arnold, I was hoping you would enter in to the discussion. Interesting that rather than a rigorous financial discourse (which I realize that you have published in the JSSUS and elsewhere), you made a great defense of the joys of collecting nihonto that one can't put monetary value on! I am waiting to receive two swords back from polishing in Japan and feel like a kid waiting for Santa Claus. I seriously doubt if one will turn out to be financially favorable when sold, but it really doesn't matter that much, as I expect that my kids will be selling it when I'm not around. Cheers, Bob

[raiden]

None of the foreigners that I saw buying were Chinese. They were from the US and Europe and some from a few other areas such as South Africa. In fact there were not any Chinese besides Cyrus that I saw......