Graded Magic the Gathering cards as an investment

Introduction to Magic: The Gathering (MTG) and graded collectibles – 2021 Updated Post Pandemic Hype

We have been writing about many ways to invest money over here on Investing Tips 360. From conservative asset classes like mutual funds and stocks and property, through alternative investments and robo advisors, and even highly speculative forex trading. Never have we wrote about an asset so niche and intriguing as BGS / PSA graded Magic: The Gathering (MTG) cards. Talking about investment diversity!

To understand what the heck we’re talking about we will have to open the discussion by explaining what Magic: The Gathering is, what card grading is, and why we would consider it as an investment more than we think of it as a hobby.

What is Magic: The Gathering

Magic: The Gathering is a trading/collectible card game that was designed as such. Each player/collector assembles a deck composed of 60 cards from his own collection, and hence – getting good cards result in better odds of winning a match.

It is probably the most successful game of its kind which is still being played by people of all ages more than 25 years after its initial release in 1993. It is estimated there are currently 12-15m players worldwide, and several pro tours with millions in prizes. Matches are often being broadcasted online, and even on popular television channels (ESPN). In short, Magic: The Gathering is an extremely popular and complex card game and has a strong fan base.

What are graded magic cards

Card grading is a service that authenticates collectibles and assigns a numeric value grade to them on a scale of 1-10 based on the condition. These grading companies give a sense of security for less knowledgeable investors/collectors who want to avoid counterfeits but moreover they serve value to the truly dedicated collectors who want to have the most flawless piece of anything they collect. Cards are inspected through magnifying glass by industry experts to determine even the smallest damages.

Why are graded MTG cards an investment?

Well, Magic: The Gathering cards, raw or graded, have a strong secondary market driven by four types of buyers – avid collectors, players (who want to play with the cards), investors who buy the cards with the intent of liquidating them years down the line and achieve a good yield on their cash, and speculators who simply buy and sell in this secondary market with the purpose of driving short term profit. All 4 types of buyers are moving this sophisticated secondary market spanning across hundreds of millions of dollars or more.

Graded cards are unique in a sense of appealing more to collectors, investors and speculators than to players (who are generally not interested in paying a premium just to get a card to play with), and hence are more resilient to things that have a major impact on most MTG cards – any decline in the popularity of the game, or specific cards which are banned from playing, or new sets that come out and impact the prices of prior sets.

With that being said, Magic: The Gathering cards are simply a collectible. They do not hold any intrinsic value as opposed to shares in a company. Their value is simply derived by what people are willing to pay for them in any point in time.

Speak to an expert for free

InvestingTips360 recommends using the following contact form to contact an expert collector/ player/ seller of MTG cards and get free guidance on the cards worth pursuing, pricing, or even purchase from that source directly:

Is Magic: The Gathering graded card buying a good investment?

The answer, my friend, is blowing in the wind, the answer is blowing in the wind. If we had bothered writing about this rather niche form of investment it’s because we feel it could be a good way to diversify your investment portfolio. In general, the rule of thumb would stipulate, about 2-5% of your portfolio in exotic things and that can definitely be one of them. Based on performance over the past 5 years, there is a lot of money to be made (some sets have moved up x5 in prices over this period), and based on a demographic analysis of collectors who are into Magic: The Gathering graded pieces – there may be even more promising prospects in the future. The people who collect the older sets of 93/94 are mostly people who played it back in the day and are today in their mid 30s or 40s; they have yet to reach the peak of their earnings, and are likely to have more disposable income over the next 10-20 years.

In spite of staggering performance over the past few years and a growth in the popularity of the game on a competitive and hobbyist level, spending your funds into an asset that has no intrinsic value and is not in direct correlation to the global economy is highly risky. Tying up real money into graded MTG cards means that money can evaporate one bright day, and even if the market is doing well – it will be hard to liquidate (and require serious effort or substantial middle-man seller fees).

Are magic cards recession proof?

One claim we have been consistently hearing by collectors, investors and speculators in this space is that Magic the gathering cards are recession proof. They are not. “Cardboard crack”, as it’s named by aficionados, isn’t really crack. It’s an EXTREMELY ELASTIC product which, in my honest opinion, that will suffer more than any other equities comes a real and prolonged recession. So far on the Coronavirus crisis, we have only seen a handful of drops but nothing extremely series, so far (other than big stores halting all vintage buylists)… the reason is that the world has only been shut down for a month! most hardcore oldschool MTG players and collectors/investors who bought cards for $x,xxx-$x,xxx,xxx to begin with are financially SOUND. One month of financial shutdown isn’t going to scare them. If the aftermath of this whole thing will be scarier than currently expected, we will see prices decline by an easy 50%, POSSIBLY. If the aftermath will be “back to business” then now it’s a good time to pick up things for a 10-20% discount against last months’ prices.

2021 Update: The Pandemic Shows Collectibles and MTG in Particular Gain Strengths During Inflationary Periods

Unless you have been living under a rock… which is quite possible considering how bad 2020 was, you know that the past year has been CRAZY for everything investing – trading – collectible related. Collector’s Universe (PSA grading company) went x5 in stock price over this year, and 1st edition Pokemons, graded video games and Magic the Gathering shot up in value.

It’s a whole new level when famous Canadian blog that advocates long term passive investing writes about collectibles as an asset!

Magic The Gathering graded cards 101: Which cards to buy

So which of the hundreds of thousands of cards printed by Wizard of the Coasts (now a part of Hasbro and one of the main reasons for its continued success) should be bought and held by investors who want to get the best yield on their investment?

  • Focus on early sets. The golden standard is Alpha, the first site with the most limited print run that has been considered, for years, as a non-playable set with less collectible value and hence it’s more difficult to find cards in good shape in.
  • Focus on cards in as good condition as possible. The real demand for cards that can blow up in price are cards which are not only graded by have great scores. Unlike sports cards, a PSA 7 card is not considered in particularly good shape because the cards are only 30 years old and many of them have been preserved well; the value is in the PSA/BGS 9 /9.5 / 10 cards (more on that below).
  • Focus on iconic cards. If you have never played the game or have been a part of its pop culture it will be difficult to navigate through the murky waters of cherry picking but getting familiar with the 10-20 top iconic cards in the game is easy to do, even for an outside investor.
  • Buy cards priced below what they should be worth. A good indication is eBay last sold version but you will have to make the adaptations to the card you’re buying because the difference in grades (Beckett grading service also have sub-grades for each card)
  • Develop specialist knowledge in order to understand what you’re buying into the full extent or deal with EXTREMELY reputable providers who are able to verify the cards you are buying for you. There are a lot of MTG fakes and scams.

Contacting a reliable seller

InvestingTips360 recommends using the following contact form to find a reliable and honest seller of graded and raw MTG cards including a wide inventory of 1 of a kind misprints, signatures, sketches, and original art. Use the form below to explain your position, and whether you are looking for guidance, buying, or selling:

Magic The Gathering 102: grading companies (BGS/PSA) and how to grade cards

The two major service providers in the card grading business and Magic: The Gathering in particular are PSA and BGS (Beckett Grading Services). In MTG, simply put, BGS holds the more collector value and high-graded items by these companies have a bigger market and hence, higher prices, but it’s perfectly fine to go with either of these grading companies based on personal preferences. There are a lot of pros and cons to each, but going with either of those is fine. Any other company is a no-no if your goal is to invest into products which are highly sought-after and (relatively) easily resealable.

An example of a PSA graded Alpha MTG card:

An example of a BGS graded Beta MTG card:

Not sure how to grade things yourself? not looking to take extra chances on expensive cards? use the services of Nicholas Susan aka MTG_Grader who will help you submit regardless of where you live!

Where to buy graded cards?

Our favorite graded magic cards store on ebay is the aforementioned Nicholas Susan – MTG_Grader. You will find a variety of great cards for reasonable prices and the seller is highly responsive! you could always ask for specific cards you’re interested in directly.

We have more recommendations and you can get them by speaking to our resident collector/expert using the form below:

James Rabinovich
Latest posts by James Rabinovich (see all)

Source link