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Distortion In The Market: False Scarcity


Valric
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This is another topic which deserves a discussion. It's a fundamental rule of economics that prices are driven by the scarcity of a good for a given level of demand. However, in the west at least, we do not have full information w.r.t to the true state of scarcity of the things we buy. The reasons for this are multiple, but I think it's fair to say that it's mostly driven by supply-side transaction costs: it's costly for Japanese dealers to communicate in English and deal with oversea customers who do not share the same cultural norms, and fundamentally it's not a status enhancing activity among their peers so they don't do it. 

 

This means the market is not efficient at providing us with the true supply of Japanese antiques. The corollary from this is that we as customers tend to form our impressions and expectations of scarcity and prices based on the limited offerings we see, which largely takes advantage of ladder theory to convey impressions of good deals to us because the knowledge asymmetry. This problem is especially acute in the low-grade market because this is where the supply is highest and the chance of market distortions most pronounced. 

 

Take low grade iron tsuba. These things are so plentiful they're used as paperweights. We've all heard stories of dealers with shelves absolutely stacked with that stuff. The real of value of these is far below the 'ladder price' we see on the western-oriented dealer sites. The same as De Beers historically controlled the diamond supply and thus prices, the inefficiencies in this antique market allows a few key players to form impressions of scarcity which trickle down into higher margins. 

 

It's the same thing with the Chu-saku Ebay Wak. We all have seemingly agreed here that the price of a wak should be 500-1000$, and most of us here nod our head in agreement because it conforms to our expectations. But I fear this is our collective delusion. We paid 500$ so we pass on this price expectation to others because we paid it ourselves. I can imagine there are warehouses full of stuff, and it's not even worth peddling the chu-saku wak on the Japanese market. Playing the devil's advocate I would say that a nihonto which does not justify the price of a mid-grade polish should be close to worthless as an art object by virtue that it can't be appreciated as it was supposed to be appreciated. But we keep buying them from the problem-specialized dealers who control the supply. 

 

Fundamentally, something very strange is happening in the broader market. I believe the distorting forces are far greater than most of us would dare to imagine. There are ten times more Juyo items than Tokuju items, and yet the average price differential is about a 3x. I can't find Jussi's post on the estimated number of Hozon/TH, but I assume the same distorted quantity-to-value relationship exists. This is not normal and it also exists in the Japanese market. And the Japanese market is going to be far more efficient at price finding with their internal auction systems, and the like. The question which I can't answer is what sort of equilibrium did it get stuck in? Who benefits from the distorted price-scarcity function? How did it come to be in the first place? and will we ever see the big correction? 

 

What this means is that here, in the west, we have two layers of distortions: The base layer present in the Japanese market, and the supply-side manipulation on low-grade items. Both these effect compound (i.e. multiplied) in distorting the price of low-level items, and we blindly take it all in and assume it's how things are. And then we encourage beginners to buy into the same beliefs.

 

We live in a distorted bubble. This is not good and must be kept in mind. 

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Hi Chris,

 

I think this is an excellent post on a well chosen subject. Ultimately, (stating the bleeding obvious) I feel that what it comes down to is that some people have access to items at what is closer to a wholesale price than others or can source items that are sufficiently attractive that this of itself creates price elasticity and they can be marked up accordingly.  

 

There are markets within the market: for example sellers of items on NMB often begin by pricing them at or near to what they paid for them from a dealer and, as you say, particularly with mumei shinto wakizashi, if they sell it is at a price rather lower than the dealer price. As such NMB has its own micro-climate to some extent and it is perhaps more of a "buyers' market" than elsewhere. 

 

As for the Japanese markets, perhaps the auctions are not efficient market places: a licence is required to participate and so there is a closed-shop that can only be accessed by a fixed number of dealers who are presumably known to one another and perhaps have business relationships going back many years. Were I in that situation I would be having conversations ahead of auctions to find out who was bidding on what and how far they were prepared to go and perhaps agreeing not to bid on certain items in return for a clear run at others. Also, it's hard to assess the impact of Japanese societal factors on this market in terms of the age, seniority, perceived rank of the bidders - it would not be too hard to imagine a situation where kohai defers to sempai as in other areas of Japanese society and perhaps some individuals benefit from this in terms of what is bought and sold and for what price. Also outside influences - the Yakuza have had their fingers in the sword pie previously and may have some influence here. 

 

A couple of things I have heard that might be relevant are that one reasonably well known shop indeed does have a warehouse full of items in various conditions that are pulled out and sold from time to time - it would be a surprise if they were the only one. Also that the new money in Russia and China is distorting the market to some extent as they are buying up better quality items. 

 

I'm sure others have better-informed views on this. 

 

Thanks for starting an interesting thread.

 

Kind regards,

John

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Just to comment on the views that out of polish mid to low end wakizashi are not worth $500 and not collectible or art objects...
Those that collect military fighting knives will know that mass produced knives like the M3 in M6 scabbard, and the wartime Fairbairn Sykes daggers and many others, easily sell for over $500. Some variations go up to $2500+ and that's before you get to the 1918 daggers, Marine Raider, Smatchett, etc etc.
This is for a 70 year old factory mass produced knife.
So why shouldn't a 200-500 year old sword be worth that in any condition? Desirability, age, skill of manufacture and actual useage are light years ahead of the modern fighting knife. I put it to you that the value of these swords is way UNDER valued, not overvalued, and that desirability is far higher. Maybe the market just hasn't caught up. Maye it never will.
But art aspect aside, $500 in edged weapons terms doesn't get you much in militaria.

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Hi Brian, 

 

Just to clarify: I said worthless as an art object, not as an artefact. Militaria are valued because they are artefacts of moments in history. It's a different thing. My comment basically says: if a painting's value is fully derived from its aesthetic qualities, and it's covered in muck then you can't possibly appreciate its aesthetic qualities. Thus, if the value of the painting in a restored state is lower than the cost of restoration, then the value of the painting is negative, i.e. worthless. Now you can say the premise of the value is flawed, and in fact a painting is a historical artefact and some portion of its value ought to be derived this property. One can always argue that the boundaries are blurred, that art is in the eye of the beholders, etc. It's all fair and games and this can debated without ends. I'm taking the most extreme position as an exercise in caution. 

 

Who benefits from the distorsion in the price-scarcity function? 

  • Owners of mispriced items. This is rather obvious. 
  • Dealer, and I don't fully understand it. As John say, the internal market is very insular and follows its own set of unspoken rules and deference to authority. 

In fact, another interesting way to to look at it is that nihonto price distribution is basically socialised: the distribution ought to be more Pareto-behaved, i.e fat-tailed, with many items close to zero and a few accounting for the majority of the value. For instance, old masters art market is extremely fat-tail. You can get some unknown Italian 19th century print for five dollars, or a Da Vinci for 250 million. Here you can buy a chu-saku wak for 1000$ and a masamume for 1 million. 

 

Basically my point is that there is some invisible market force which is reducing the pricing spread as a function of scarcity. While not unique to the west, the distorsion here is especially pronounced and ladder theory contributes to 'upending' the value of items which are near zero. Dealers masterfully play this game. Ultimately the distorsions in the western market are far simpler to understand compared to those affecting the Japanese market, which eludes me. 

 

The only parsimonous answer I can come up with is an extreme pareto-distributed function for collectors. Basically this means that 1% of Japanese collector snatch 99% of the good stuff, and they are in a position of 'buyer oligopoly' because there is a deference factor to top items: you need to trust that the buyer will care for it and will be discrete about it.

 

And these 'costs' emanate from the client: nobody must to know that the Tokugawa heir had to sell his ubu ko-yamashiro heirloom last week to pay off his gambling debt. Selling to a westerner is also a no-go because you can't trust them and hell, it may end up on Christies in five years and everyone will ask question and the shame will be immense. In this sense, the seller is trading money in exchange for a lower risk of shame. 

 

And this directly feeds into the game of the the monopolistic buyers who uphold the seller's unspoken contract. He will not pay a price commensurate to the scarcity function of the item because the item cannot go on the broader market and this facilitates oligopolistic coordination between top buyers. Needless to say if you make a mistake here as a dealer, you're done. This in turns trickles down and causes price stickiness. I'm not confident in this explanation at all, but perhaps its a contributing factor. 

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Chris there is no price disortion in Nihonto. The price follow the buyer. And i think there is no worthless in objects because you will ever find someone who will own it if the price fits.

By collecting you can follow a path. You can buy something to speculate on the price. You can also buy for your enjoyment. Or both. 

 

The dealers dont make the price. 

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Very interesting topic. To come at it from another angle you can simplify and toss numbers around like ~13000 known smiths yielded some two to three million blades, then add variables like smith reputation, modern market influencing factors such as the created and perceived eras like koto, shinto and so forth.

 

I am a beginner but I know there is a degree of value inflation (or deflation for the "nobodys") based on the smith reputation game instead of a pure quality based pricing ladder as one could expect for a sword as a tool versus as an art object.

 

Not totally without merit, but sometimes unknown smith X made a blade close if not equal in quality to known smith Y, but X's blade lacks the name or later created era brand to fetch the same price. Another case of this being today a art piece market rather then a quality driven one, although Masamune is at the top mostly for the quality and scarcity of his work (like Da Vinci) rather then him having a well documented eccentric life with say a trail of broken hearts or bones in its wake.

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Chris

Another good, thought provoking thread and hopefully it stimulates a bit of debate. Lately, most of the posts have been around people selling things and also in military items.

 

I do not understand why you are struggling with the rationalisation of the information asymmetry. It provides opportunities both within Japan, but even outwith, for dealers to realise profits. Exactly because of these inefficiencies Western dealers can make a profit, even though, more and more Japanese dealers become increasingly more active on the Web. So Western collectors can compare prices.

Western dealers can put a profit margin on something not always overly desirable or expensive in Japan (plentiful there) and dress it up and present it as premium and sell at a handsome profit in the West.

 

You raise the possibility of extreme Pareto situation in Japan. To some extent you are right. There are 3-4 collectors on Japan who are billionaires or at the very least multi-millionaires. They have many thousands of blades. They effectively set the top blade / level prices. Often the most exclusive blades are reserved for them or shown to them first.

Then you also have 3-4 very high-end dealers who are also collectors and who also influence the market to some extent.

The Japanese dealers all, or mostly, know each other. The preagreements you talk about might and likely happen.

 

The above facts will persist as it is not customary or easy to change tradition and culture in Japan. Dealers in Japan might wish to preserve the status quo and the same applies to the Western dealer.

 

Then there is another factor -no one knows the entire market. Some people, who might have been collecting Juyo and TokuJo Zufu, might get close to an idea of the top NBTHK blades and the same with the Yuhin items from NTHK perspective. But even that is not the entire market as high quality blades are still emerging unpapered etc.

 

You should view information asymmetry as an opportunity. Diminishing indeed but still very much there.

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Concentrate on what you are buying, and not the circumstances (few of us are 'Sightholders').  Understanding your rung on the 'ladder' will lead to sounder decisions......no matter the state of the broader market.  The price of Vicuña means little to the buyer of Polyester, or vice versa.

 

-S-

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.... but are not antiques markets supposed to have highly distorted supply because of prevalence of long term collections?

Leonardo's very questionable oil goes for 0.5b only because there are virtually none in private hands.

Most reasonably prolific painters have thousands of paintings in their name, a few even above 10 thousand. If not for museum storage we would not see very average impressionist works getting to a million dollar mark. There are simply not enough semi-serious collectors to absorb impressionist market which is actually about 100 thousand pieces altogether - out of which only about 1000-2000 are traded actively.

There is an argument that before Napoleon art market was even more anemic as there was almost no offer and little demand.

 

With Japanese blades there is clearly a huge distortion between the average holding time of a regular blade compared to tokuju.

But then you don't have museums playing a large role. Almost all western museum blade collections are garbage that beginning collector with reasonable funds can outpace in a year. Japanese museums do control the very top segment to a significant extent but don't have tens of thousands of pieces in storage as do western institutions.

So in case of really big upheaval I would still bet on impressionists coming down first.

But in Japanese market the price levels of 1920s when kokuho could be had for the same price as decent Juyo today are not impossible.

On the other hand, Juyo or even no papers whatsoever, the top level pieces in good condition are very rare.

Very many of top paper blades are such because they are just really old, or have rare signatures, or simply no one knows why.

There are Sadamune Juyo which are such only because the tanto's shape is Kamakura.

 

If we are to see not 300 but all 8000 of Juyo being actively traded, a reverence for this paper will collapse and we will be back to individual per item based appraisals. On the other hand, there are simply not enough serious western collectors to absorb even the tokuju segment at their current prices. Yet one could argue that martial arts/anime segment will be large enough to still actively trade 1000$ blades.

 

Kirill R.

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This is a great thread. Thank you.

Let me add that the Japanese sword market may in part be supported by echos and recollection of the treasure hunting that marked the 1960s-1980s. There are still people who either remember those times OR have heard the stories of that era. Those beliefs encourage some people to buy things that they are SURE will make them money. The old treasure hunting paradigm no longer works. But there is enough life in the recollection to support the low end of the market. Stuff that has NO real value can still be floated out to where it will be bought by somebody who wants to take a chance. At this point there is also a an amazing reservoir of stupid people who know enough to support a flawed market. Look at the appearance of fake gendai and tarted up gunto. I assume that such items are being bought only by dorks who have read a few web pages. Whatever the case, this action supports the bottom of the Japanese sword market. It adds to the froth and bulk of the sword market.

Peter

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....

 

If we are to see not 300 but all 8000 of Juyo being actively traded, a reverence for this paper will collapse and we will be back to individual per item based appraisals. On the other hand, there are simply not enough serious western collectors to absorb even the tokuju segment at their current prices. Yet one could argue that martial arts/anime segment will be large enough to still actively trade 1000$ blades.

 

Kirill R.

This is wrong on many levels - from significantly understating the number of Juyo blades to the respect for the Juyo paper collapsing....People have plenty of data points to compare “weaker” Juyo and their prices (various examples on Aoi Art website, as that is a very prolific source of info) to higher-end Juyo. Juyo signifies a degree of quality and worthiness that would not “collapse”.

And people need to exercise their judgment no matter what the level of the blade. There are Juyo blades on the market which are tired or without boshi or are a bit shorter - they might be cheaper but there will be something to learn from them and will invariably be very good blades (might not be excellent/outstanding but that is a perception of the user).

 

Many people on this forum have said multiple times that Japanese blades are underpriced compared to other forms of art (when the blades are however indeed art and of historic importance, that is - not when these are mass/machine produced). So, drawing parallels to better-understood and more “populous” art domains such as paintings or other collectibles such as cars cannot justifiably be done. The only connectors between them are human greed, self-interest, emotional exuberance/irrationality etc.

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Coming back closer to the subject of the original posting with a very personal and erroneous take, I feel that a tremendous spread in European art is largely caused by institutional-government holders, which moved out of market the very best segment and even average-best segments.

One Leonardo's oil, and very problematic at that, against 100 or so that are not for sale - essentially what is being offered is about or even below 1% of what exists. And even with this there are plenty of economics publications suggesting that the spread was helped in 1970s by influx of Japanese collectors, and in 2000s by the Gulf and Russians. Similar situation to some extent is seen in early Islamic blades historically nearly all taken to Constantinopol and still stored there, those Mamluk blades being sold for 300-500k a piece are a tiny portion that managed to fall through the cracks. If you manage to plunder Turkish government properties, Islamic market will be turbulent for decades.

 

You look at Japanese paintings, there are some really good examples there, but the spread is actually very small. Small community of those interested, small institutional holdings. Japanese lacquer - aside from very old pieces from Nambokucho and a few 19th century names like Shibata Zenshin, 20k USD will be absolutely gorgeous top class work.

 

With nihonto there are not that many 100k+ segment buyers. Most are in Japan. There is only miniscule influx of international presence in this segment from new economies (and old economies are generally speaking retreating from collecting). There are about twenty Russian collectors with serious European paintings in 200k-2mln range. There are probably only three serious nihonto blade collectors there. There is even greater ratio among the Gulf investors. Almost no interest at this level in India. Some in China, but I don't know Chinese market at all.

I actually would not worry about 1000-2000$ segment of the market - there is a lot of it, true, but there is also a strong popular interest to support it. 

Tokuju I guess is also a kind of level where you are probably not going to see them going for sale many at once, and the very best pieces are still covered by strong Japanese economy. One thing I learned to kind of keep in mind with the very top pieces that in the worst possible scenario people take them to a local museum and still get at least the original purchase price taken off their income tax wise. That can set the very bottom valuation level.

 

What I find somewhat bizarre is how few Juyo blades are being traded per year. And they are not hiding in the museums.

Ok, antique market always has long time constants - price increasing or dropping by 20% simply does not alter supply-demand, instead you have generation-length waves and its normal to see just a small portion of high end market being traded at any given time.

But I would actually be a little worried that one day people holding Juyo for life will start selling them more actively and you will see that international market is certainly not able to absorb them. There are really a lot of such blades out there. You look at their valuation in the past 20 years, and it definitely does not improve. So I do feel there is some potential for further price decrease there, and also for questions raised "how this came to be a Juyo" and "what exactly are the reasons it was attributed as Masamune?". 

One thing that helped the top segment of European market is that you have dealers, curators, academians fighting in public and it supposed to deliver catalog raisonne where the top pieces are all publicly vetted over the course of decade long exchanges.

You don't have this kind of openness in Japanese scholarship.

 

Kirill R.

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This is a nice subject but I am not sure I follow correctly. When we speak of Nihonto we are looking at each one as an independent creation first. So each one is a unique item, even if it is at a certain rank in papers it must be evaluated as art for its own merits (I believe). If I have 2 Juyo blades made by Tomoyuki (Bungo) and they both rank Juyo, chances are they will command different prices based on he variables that follow even with the same paper, and the variables are many and then it comes down to buyers personal tastes and the accepted value for the school in question, right? Any day of the week we can have a Tomoyuki Juyo and a Chogi next to each other and the Chogi gets the higher price, even if Chogi is far more prevalent at Juyo. I think with the advent of the internet and the capacity to educate, markets can be shifted and that is the key. A da Vinci can be identified as such because there is more information available to experts today than there was before and vice versa, a confirmed da Vinci can also be discredited based on new information. 

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With DaVinci the paper trail going directly back to the artist's time is expected. For those lacking such there will be 20 pages of tests, discussions, comparisons of painting styles and paints used. And you will still always get disagreements in the end.

 

For a Japanese sword there will be three lines describing its geometry+ and one line saying that Sensei saw it, and found indeed genuine and precious.

Just an observation.

 

Kirill R.

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Ok, I have to bite !!!!

 

After over 20+ years of study, collecting, show attending, DTI,  and club membership participation; I think this:

 

The DTI displays showcases the most wonderful blades. The koshirea was reserved for the most special of smiths and quality with papers.

 

The USA shows have the displays of those who want to ride themselves of bad past purchases; with many exceptions of some good choices.

 

But, the DTI and shows, showcase the papered blades, as the front performers.

 

Sword vs blade; sword vs blade; etc.

 

The blade to me is the engine of the sword, without its power all else is but beautiful historical artifacts.

 

I find at the DTI as well as the USA shows, the sword, with all it's grander, is lost without the whole package.

 

This year, I searched the DTI for fully, mounted, papered, originated matching koshirea, and found but one I, that I purchased and had sent home to me. Unless you loose your mind and spend without rational.

 

This is a fact that extends into the USA shows as well.

 

I look at the USA auto trade shows, engines for sale, wheels, interior, bodies, etc: yet none are the car.

 

Hence, my assertion is to find a true, fully matching, papered, and original mounted sword, is indeed, very hard to find.

 

This agrees with the side that says a good fully mounted sword is hard to find, but the junk and parts are out there for all others; and great papered stuff.

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But I would actually be a little worried that one day people holding Juyo for life will start selling them more actively and you will see that international market is certainly not able to absorb them. There are really a lot of such blades out there. You look at their valuation in the past 20 years, and it definitely does not improve. So I do feel there is some potential for further price decrease there, and also for questions raised "how this came to be a Juyo" and "what exactly are the reasons it was attributed as Masamune?". 

 

Your posts are well worth reading

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Let's be clear about what is meant by price-scarcity, or value-scarcity. 

 

Everything of value is organized in a hierarchy. At the top are the things with the most value, at the bottom the things with the least value. Value is defined as the highest willingness to pay drawn from the market population at time t. There are fewer things of high value compared to things of low value. The steepness of this slope represents the rate by which value increases as a function of scarcity. 

 

My basic argument is that this slope climbs too slowly, and starts off too high. 

 

It's not about particular smiths, or about judging a blade for itself or any of that. Now we can take papers as a 'proxy' for this slope, although we all know it is a bad proxy because it discretizes a continuous variable and everyone gets it wrong, leading to ladder theory, and I think we've talked about this endlessly. 

 

What Rivkin says is that I assume that demand is constant, which is obviously false. 

  • Anime/martial arts population exerts demand pressure on low tier items
  • Dealers exerts control over the supply of low tier items to boost margins
  • Extreme scarcity of 100k+ buyers. 

And this could very well be our anomaly. Take European masterworks, Chinese potery, 20th century impressionists or collectible watches. We're dealing with a majority of 100k+ buyers there, and these things reach astronomical prices. It's not status enhancing to collect nihonto for the very wealthy, except in Japan perhaps, while having a collection of 1930's rolex to parade clearly is. 

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Again i think it is down to education and culture. With art it is about the individual item and then the other variables that play into its value determination which as said are many.

 

On the 100k market size of buyers, there are a lot more than we think. And they are very private people, but in this category of buyers they tend to view anything artistic of value if it comes with all the right boxes ticked and if they are educated on the subject.

 

Just like we cannot see the multitude of high value pieces we also cannot fathom the demand at those levels because those purchases do not happen in public view.

 

Watches are a different game altogether, Rolex even more so. But comparing watches to swords is not a good analogy since there are only 5 good brands worth collecting with an infinite number of crap brands out there. It is easier to educate the public on why 5 brands are great to collect against so many artists and nihonto. It is easier for the general John to understand watches vs other art. The watch collectors market is huge only because of the marketing dollars behind these brands and same for cars and paintings and sculpture. Very difficult to do with swords.

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Rayhan

I am with you here. We have strayed into comparisons to other art (eg Renaissance painting) or manufacture (watches, etc) as we have done before while the only useful inference is to conclude that Nihonto collecting (and crafting) is fundamentally different to those. Rolexes are not unique as swords are, were made in high numbers by a machine and because they were a utility (not cheap but still a utility) cannot be compared to handcrafted works of art (we are not talking of the kazuuchimono stuff).

 

I agree with you on another point too. The high-end market is thriving and has completely different dynamics and is frequented by very private individuals. I have observed at arm’s length how it happens. It took all of 1 min for a gentleman to buy the 42m yen TokuJu Yoshifusa formerly owned by a daimyo (and in splendid koshirae) at the 2018 DTI. The fact that we do not know them, or do not see them, does not mean they do not exist. They do not opine on forums. They do not engage in petty arguments. They do not question what will happen if there are more swords on the market or if people had better knowledge (in fact they thrive on that lack of transparency and knowledge) or question Juyo vs TJ vs Yuhin vs JuBi.

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Like many others I've really enjoyed the topics you've brought up lately Chris.

 

I did some calculations about potential amount of NBTHK papers issued for swords last fall, and Darcy gave some pointers as my Jūyō count was bit off (I was near the actual amount of total items not just swords)

Here is bit better estimate.

Hozon                  - c.120,000 swords

Tokubetsu Hozon - c. 65,000 swords

Jūyō                     - c. 11,600 swords

Tokubetsu Jūyō    - c. 1,050 swords

 

Now as Kirill presented numbers about Jūyō swords being traded, I can present facts of the online (meaning that the sword appeared at major dealers website) sales of Jūyō and above swords pre 1450. Don't ask why 1450, that's my personal cut off date as I cannot keep tracking every sword sold online and as my personal interest fades after early Muromachi that was kinda logical date. Unfortunately some items are lost soon after the sales and cannot be dug up. But here are the ones I have managed to save in my online sale info list.

 

671 swords Jūyō or above.

 

9 Jūyō Bijutsuhin

34 Tokubetsu Jūyō

628 Jūyō

 

These are all generally pre-1450 give or take an odd one where the smith worked exactly around that time. And these all have been publically been sale online at their websites over the years. These are all different items, I think I have few of the above swords recorded being sold by 3 to 4 various dealers. While the great majority have only been up for sale once.

 

As has come up in this thread, there are more of the private big collectors than is often publically known. As from those above swords I've listed being sold online, the great majority is not for sale anymore so they've gone somewhere. I think only Jūyō Bijutsuhin listed online currently is the Hōjōji that Iida Koendo has for sale.

 

Now as I've started digging through the Zufus I am realizing how there is such great variety in Jūyō items. While I am not collecting at Jūyō level, nor am not sure if I ever will. I am going to throw a curve ball question to collectors. Have you encountered an item that you'd be willing to hunt? As I've documented lots of swords over the last few years there are items that really stand out for me. Kind of items that would make me want to track down the owner and ask if they would be willing to part with that given item. I know I've gotten romantic idea about those swords and to be honest wouldn't really care about "market prices" in case of those items, I'd be happy to overpay for them. For me some of those are even lower tier items (below Jūyō), they are just swords that hit a spot in me.

 

In my current view I think that generally western collectors buy too many items. That is one of the reasons why we will constantly try to "beat" the market and get our money back or optimally profit. Of course there is really no right way of collecting as it is a personal thing. Buying stuff is easy but selling them is tricky. And like was said earlier, trying to get "rid" of the items at distorted prices can prove to be problematic.

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Hozon                  - c.120,000 swords

Tokubetsu Hozon - c. 65,000 swords

Jūyō                     - c. 11,600 swords

Tokubetsu Jūyō    - c. 1,050 swords

 

671 swords Jūyō or above.

 

9 Jūyō Bijutsuhin

34 Tokubetsu Jūyō

628 Jūyō

 

 

Very interesting ! Puts my database-gathering script to shame. I was guessing from sales about third of swords offered have post-green NBTHK papers (greater portion on higher level, but the overall average number will be dominated by lower pieces). So the total number of swords can be around 0.6 million. 

 

Did you monitor against the same sword double counting on Juyo level? I think with 671 swords, it might be that I substantially undercounted the percentage of Juyo being up for sale. My estimate was about 50k (no double counting) nihonto sold in 10 years, which is roughly 8% of the total estimated from papers. If we are to assume about 800-900 Juyo sold, that's very close to also 8% of the total. Which might contradict my assumption that Juyo pieces would be held for a much more significant time period compared to lower grade swords. But then if we are to look at double counting, same sword being resold, it might actually be that we will see this far less on Juyo level.

 

On the hunt - I feel many will answer yes. Yes on some of the favorite pieces not having great papers.

 

Kirill R.

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Thank you all, this has been a very stimulating discussion. 

 

Jussi, your work is very impressive. Since when did you start counting systematically? If we can establish the yearly online juyo trade volume, it would give us some precious hint. 

 

I have a high quality response in mind from the numbers your put forth but it will take some time. For now what stands out is that the number of Juyo traded online is large in relation to the total number of juyo items (assuming this count is relatively new, need the numbers here). This doesn't even account for offline sales. This means that the Juyo market is remarkably healthy, and thus the prices we observe do not lag much behind the current state of the demand landscape.  

 

I have not hunted a sword, not yet. For me, if it comes up more than once in the same year I'd be wary of a trap. 

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The fact is still that my tracked data is quite biased. They have all been actually for sale at mostly Japanese dealer websites (and few western ones), and I should have links to about 90% of them, but as I track only certain segment that is for sale the bias is on the higher end. I think I've been going as far back as I can with Webarchive on the dealer sites, I think very few Japanese sites were listed at that database earlier than 2000 and most just starting from 2005 onwards. I'd think it would be "safeish" to say that the majority has been listed and sold in a 15 year window.

 

I just looked bit more about my saved swords in list and it is quite obvious that it shows quite extreme bias as I seem to have little bit over 1500 swords listed there at the moment. I've done all entries by hand so I've checked most of them carefully. At Jūyō swords there should not be double entries as I have shinsa number down on about 95% of them and if they are same length I compare the pics, nakago etc (as to my surprise there have been multiple times of mumei swords with same attribution and exact same length passing in same session). I've tried to eliminate all the doubles as I've moved the data from sale list to my measurement list too. Of course there might be the weird occurance of identical length, curvature, width, ana etc. between Hozon & Tokuho swords but I've put them under one entry if the stats are identical and pics match too.

 

9 Bijutsuhin

34 Tokujū

628 Jūyō

483 Tokuho

361 Hozon

 

As can be seen there is extreme bias toward higher end. In reality the number of Hozon & Tokubetsu Hozon greatly outnumber rest of the pack in swords in general. Because the time period I am focusing on features most of the highest regarded smiths in Japanese sword making history, and there is the historical age factor too.

 

Just remembered I have 2015 and 2016 DTI indexes saved on my computer (I have not listed any DTI info on my above sales data, but on few occasions the sword featured at DTI was also featured on dealers website). Those that are really into high end swords in market/profit mind could easily track if some of them pop up often at DTI.

 

2015 / 53 Jūyō / 14 Tokubetsu Jūyō / 3 Jūyō Bijutsuhin

 

2016 / 62 Jūyō / 7 Tokubetsu Jūyō / 2 Jūyō Bijutsuhin

 

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