Price Elasticity, Veblen Goods, and The Modern Mineral Specimen Marketplace, or “Am I Going to Have to Stop Collecting Minerals?” –
Philip M. Persson P.O. Box 17748 Golden, Colorado, 80402 Persson Rare Minerals LLC [email protected]
“Nowadays, there are a lot of people who know the price of everything and the value of nothing.” -Oscar Wilde
“There are three kinds of people in this world- those who see, those who see what they are told, and those who will never see.” -Amy Cappellazzo
The evolving market for collectibles has been a topic of increasing interest with experts and the public alike, with major documentaries such as “Blurred Lines” (2017), “The Price of Everything” (2018), and “Made you Look” (2020) delving into the increasingly-scrutinized yet notoriously opaque market for fine art. Provocateurs such as Kenny Schachter and Stefan Simchowitz have make increasingly pointed critiques over the seemingly arbitrary and capricious nature of the market for high-end art, and their criticism has found a growing audience as art evolves from a niche collectible to an asset class for the global super-rich. Other collectibles associated with the “luxury market” have faced similar scrutiny in recent years, including fine wine, vintage automobiles, and pop culture ephemera. One field of collecting that has received far less attention from media outlets and the public is mineral collecting, a hobby with a 500+ year history which has often found itself at the intersection of science, amateur naturalism, and capitalism. Similar to the aforementioned collectibles, the mineral collecting hobby as well as the market for minerals, particularly what have now been branded as “fine minerals”, has undergone seismic changes in the past several decades, so much so that many older collectors, dealers and museum curators find it to be nearly unrecognizable in its current form. These changes have a range of implications and outcomes from positive and negative, which will be elaborated upon in this essay.
For the vast majority of its history, the field of mineral collecting was bifurcated into two general camps: in one, the “gentleman naturalist”, a euphemism for the (mostly) male, upper class, educated group of collectors whose interest in minerals was related to a broader interested in assembling of a “cabinet of natural curiosities”, including fossils and preserved animals and plants. This practice, perhaps more grounded in the establishment of social rather than intellectual capital, led to the creation of what were probably the first large, comprehensive mineral collections in history. The other modality of mineral collecting followed academic lines and was more concerned with the scientific value of mineral specimens (and, with time, the assembly of vast instructional holdings of a systematic nature) than with mineral aesthetics or the attendant social status that came with owning a particular fine “cabinet.” It was not until the late 19th and early 20th centuries that mineral collecting began to reach the non-nobility and socio-economic strata below the “1%” of that time period. Mineral dealers such as Ward’s, George English, and A.E. Foote began to market “minerals for the masses”, advertising not only to wealthy collectors and elite institutions, but to ordinary people with limited discretionary income. In decade following World War II, the middle class was poised to explode in much of the Western world, particularly the United States, and the concept of a “necessary hobby” gained traction among the newly middle class. The establishment of hundreds of clubs and societies of an inclusive, non-technical nature centered around mineral collecting, the lapidary arts, and earth science during this period also contributed greatly to the growth of mineral collecting from ~1940-1960. The concurrent creation of publications aimed at the needs of the amateur (such as Rocks & Minerals Magazine) further contributed to the explosion in popularity of the hobby during this period. By the 1970’s, mineral collecting was no longer the domain of an exclusive, elite few, it was a broadly popular and accessible hobby which had reached the masses. In turn, this growing hobby supported a small but sustainable economy of mineral dealers, rock shops, equipment manufacturers, and trade shows. Mining, the source of the vast majority of mineral specimens, was also booming worldwide during the first half of the 20th century, and helped ensure a steady supply of attractive, affordable, and available mineral specimens for collectors of all means.
During these “boom times” for mineral collecting in the mid 20th century, the seeds of what would prove to be a revolution in the hobby were already being planted. A new breed of mineral connoisseur who rejected purely scientific and intellectual criteria for mineral specimen desirability and instead placed aesthetics and financial ‘upside’ at the fore was developing. This new group of mineral intelligentsia included curators such as Paul Desautels (Smithsonian), dealers such as David Wilbur and Keith Proctor, and authors including Peter Bancroft and John Sinkankas. These men acknowledged what was already known by many collectors but was considered taboo to voice publicly- that is, that minerals, in addition to their scientific and cultural value, had a subjective, aesthetic value that could greatly influence their performance as financial assets, and, perhaps most importantly, did not require advanced specialization to appreciate. This tacit acknowledgment opened two doors in mineral collecting which had previously been largely closed- the first being the entry of a new class of collectors whose significant wealth and whose enjoyment of minerals in purely aesthetics terms allowed them to bypass the “gatekeeper” and quickly ascend within the hobby. The second was the creation of a new class of mineral dealer- the “mineral advisor”: a full-time, highly-competitive, highly ‘customer-oriented’ (as opposed to the ‘absent-minded professors’ of yesteryear) type of salesman, who ate or went hungry based on the whims of a small number of well-heeled collectors. This new class of dealer may have lacked (and indeed eschewed) the deep technical knowledge of minerals deemed necessary to gain prestige in the mineral business in the past, yet they were ahead of their time in their understanding of the importance of aesthetics, as well as their ability to gain trust among their very rich (and often not scientifically inclined) clientele. To quote S.N. Behrman in his biography of great American art dealer Sir Joseph Duveen, “Duveen’s knowledge of art was conspicuously exceeded by his enthusiasm for it, [however] he was regarded by most of his wealthy American clients as little less than omniscient.” Or, to quote Hajj the beggar in Edward Knoblock’s “Kismet”, “To the Caliph I may be dirt, but to the dirt I am the Caliph!”
Interestingly, the beginnings of this seismic shift in the mineral collecting hobby mirrored larger macroeconomic trends at the time (particularly in the United States) and was also not without precedent. Half a century earlier, the American “Gilded Age” had brought a small number of similarly competitive, fabulously wealthy collectors onto the scene- names such as J.P. Morgan, Andrew Carnegie, and Washington Roebling. Similar to the change happening in the 1970’s, a small attendant class of dealers and advisors profited from having the “ear of the king” during this time… dealers such as George F. Kunz, Lazard Cahn, and A.E. Foote. Across the nation, income inequality reached an apex during the American “Gilded Age”, and the extravagant lifestyles of these millionaires and their accomplices during this era became legendary. Their greed and shortsighted disregard for their fellow citizens helped usher in the Great Depression, and not until the post-World War II decade would the American middle class start to truly rebound from this loss. The progressive social and economic policies of the 1940’s, 50’s, and 60’s coupled with a strong American manufacturing (and labor rights) base built the “American Dream” and the prosperity and convenience associated with the post-war American economy. By the late 1970’s, however, America began to see a sustained erosion of these progressive policies which had ushered in the explosion of the middle class and the attainment of the “American Dream” for millions following the War. The rise of deregulation and a focus on individual rights versus collective benefit (e.g. the decimation of organized labor) in the United States meant that income inequality once again began to rise, after a sustained, nearly 40-year period of decline. Concurrent with this trend in income and wealth disparity was a nascent class of Americans whose wealth and demand for the trappings of social prestige (similar to their Gilded Age predecessors) made them the perfect audience for the burgeoning “minerals as investment” movement. Just as Gilded Age art dealer par-excellence Joseph Duveen understood the power of harnessing his client’s precarious sense of social status amidst their newfound wealth, the emerging “mineral advisors” of the late 1970’s and early 1980’s laid the foundation for what today we would recognize as the “high-end mineral market.”
Fast-forward 40 years and while much has changed in the mineral specimen world (largely thanks to the technological innovations that have transformed all aspects of our lives: namely, the internet and mobile phones), the seeds of this change can be understood to have been planted long before. The macroscopic changes which have rendered the mineral hobby largely unrecognizable to many “old-timers” are both novel as well as part of century-scale economic cycles which have repeated themselves several times in the past two hundred years. Within the past year (2021), I have witnessed a number of disturbing incidents including the culmination of a major Ponzi-like scheme involving gems and minerals as “investments”, the sale of hundreds of thousands of dollars of fake or artificially-enhanced minerals, and the complete lack of major media coverage of mineral collecting that does not somehow relate it to the ‘crystal healing’ movement. These negative outcomes must of course be balanced against the many positive developments in the hobby- these include an increased interest in minerals among young people (thanks largely to the internet, and social media in particular), the establishment of world-class new (and renovated) museums (e.g. the University of Arizona Alfie Norville Mineral Museum, or the new Mignone Hall of Gems and Minerals at the American Museum of Natural History), and the symbiosis of the amateur and professional mineralogical communities (witness the birth of “mineral evolution” by Dr. Robert Hazen and colleagues, a field of research that would not be possible without the “big data” of Mindat.org). So, not all is doom and gloom as we reflect on the state of mineral collecting at the close of the year 2021, yet the earth is still rumbling from the “aftershocks” of the aforementioned shifts in collecting trends and demographics.
I would like to break down several recent trends in mineral collecting which have played an increasing role in the evolution and future of the hobby over the past two decades. The first is the growth in younger (under age ~40) collectors entering the hobby. Due mainly to issues of free time and discretionary income, collecting-based hobbies have always skewed disproportionally towards the >60 age demographic. Also at play is the well-documented trend towards ‘experiential spending’ in Millennial and ‘Gen-Z’ consumers versus accumulation of material assets- e.g., valuing experiences such as travel more than the accumulation of cash or material assets. However, whether through scientific or aesthetic curiosity (or both), some segment of young people have always been captivated by mineral specimens.
In recent decades, an emerging ‘subculture’ within the <40 collector set has becoming increasingly prominent within the mineral community. This group was introduced to minerals through a genre of music known as “Jam Bands.” Within the Jam Band community, attending live concerts is most central to this collective identity, and an important part of the live concert experience is the “Lot”, e.g. the parking lots and outdoor spaces adjacent to concert venues where Jam Band fans can congregate and socialize as well as barter for a range of good and services, so to speak. The evolution of the Jam Band music scene from the “hippy movement” of the 1960’s and 70’s (and the connection of that movement to the earth and to natural objects) is probably responsible for the introduction of mineral specimens and natural crystals into this community. What appears to be more novel however is the use of mineral specimens, particularly gem crystals (e.g. tourmaline-group species, beryl, etc) as a form of currency within the community in recent decades. There has been a lot of speculation about the use of this “mineral currency” as a way to launder money from drug sales, similar to how gems and precious metals have been used to “make clean” ill-gotten cash for centuries. It is not my intention to speculate on this topic, though proponents of this theory point to the strong preference for cash in such transactions, and the known ‘cash market’ for drugs within this subculture. Regardless of how mineral specimens were introduced as a form of currency and liquidity within this community, the result has been an explosion in the popularity of minerals among a demographic which appears to often have significant discretionary income at their disposal. Additionally, members of this subculture exhibit a strong desire to adopt material trends of other members of the group, such as collecting and selling mineral specimens. Hence why most members of this subculture have at least some familiarity with minerals and the concept of mineral collecting. The market for certain gem species, as well as colorful, aesthetic minerals in general has benefitted from this market, and it appears their interest in minerals is serious and is here to stay.
Another emerging demographic of collectors which has played an outsized role in the mineral collecting field over the past several decades is the “trophy collector.” This type of collector, typically but not always male and typically over the age of 50, consists of wealthy to extremely wealthy individuals who tend to skew white and politically conservative. While their motivations for collecting and their knowledge of minerals vary substantially, they tend to appreciate minerals for more aesthetic versus scientific or historical reasons and prefer to work with a small number of trusted dealers and confidantes in making purchases for their collection. Their typically busy professional lives as well as their general view of mineral specimens as aesthetic trophies and stores of wealth means that they are highly receptive to the input and guidance of a vetted confidante, and thus competition for access to these collectors among dealers has become fierce in recent years. Indeed, some dealers joke that there are “no new customers, only other people’s customers’, and sometimes go to great lengths to preserve the anonymity of their clients and maintain sole access to them. When taken in a historical context, this class of collectors is nothing new and can be compared fairly accurately to the “Gilded Age” collectors such as Morgan, Carnegie, and Bement, had neither time not interest in developing a rigorously intellectual relationship with minerals, and who worked with a trusted few confidantes to assemble the magnificent collections of that era.
A tangential yet related class of collectors to the aforementioned “trophy collector” is the “connoisseur collector”, a small but important group of collectors who balance a competitive urge and ample financial resources with a deep intellectual curiosity about minerals and mineralogy. While unfortunately too few in number to have a truly macroscopic effect on the mineral specimen marketplace, these collectors play an important role in the preservation of scientifically-important mineral specimens, due to their appreciation of more than just the “top 40” aesthetic mineral species in favor with most wealthy collectors. The most prominent of these “connoisseur collectors” today is a French-Lebanese businessman, Mr. Salim Edde, who has build a magnificent public museum in his home city of Beirut. He is the premier buyer of world-class ‘rare minerals’, and as his predecessors sadly disappear from the hobby (such as systematic collector par excellence Dr. Mark Feingloss†), he plays an outsized role in the fate of true “hen’s teeth” mineral specimens. The mission of such collectors must be lauded, as they are the link between museums (which in the earth sciences field, increasingly have to ‘justify their existence’ to sometimes hostile bureaucracies) and private individuals with the capacity to preserve important mineral specimens. While it would be disingenuous not to acknowledge the role of ego and competition among this group of collectors, their broader and frankly more enlightened view of minerals and collecting negates much of the negative influence of these attributes which sometimes affect the aforementioned “trophy collectors.”
If, in an economic allegory, the previous two groups of collectors are segments of the “1%”, then the next group of collectors, if not the “99%” certainly represents the vast majority of collectors. While making general statements about such a large and diverse group of mineral enthusiasts is pointless, they do share an economic commonality in that they not only have a limited discretionary income, but have likely seen their real wages (and thus their discretionary spending power) eroded in their lifetimes. This erosion of wages and financial security has unfortunately coincided with a non-linear increase in mineral specimen prices across the spectrum of species, localities and specimen quality levels. Before going further into the plight (and potential salvation) of these “ordinary” collectors, a brief digression into pricing is necessary.
For truly ‘elite-level’ mineral specimens, which connoisseurs can agree are in the top handful for their respective species and/or locality, this sometimes-breathtaking increase in value can be contrasted with a relatively inelastic demand. That is, the scarcity of such specimens coupled with fierce demand for them among the super-rich means that, relative to other “Veblen goods” (named after American economist Thorstein Veblen) such as contemporary art, they may in fact still be relatively under-valued. Veblen goods contradict the laws of supply and demand in that they typically show an increase in demand as prices rise. Indeed, some well-heeled collectors have been ‘trained’ quite effectively (both by dealers and their peers) to have a reflexive disinterest in a mineral below a certain price point, say $50,000 USD. Thus, an incentive for dealers to start pricing for ‘truly fine’ minerals at this ‘imaginary marker’ is already in place. What has devastated the ability of ‘ordinary’ collectors to purchase fine or even average mineral specimens is a phenomenon I will term “dragging up.” Dragging up refers to the tendency for the prices paid for ‘elite level’ minerals to be used a linear price reference point for much lesser pieces, the result being a tendency to over-price inferior specimens because of their perceived similarity to elite-level specimens. This tendency is, in my opinion, the biggest current threat to the long-term stability of the mineral specimen marketplace, and it is due to a variety of reasons.
Before we delve into the reasons for “dragging up” of prices for B-grade minerals, let’s return to the previous topic, the plight of the ‘ordinary’ mineral collector. While impossible to quantify, it is likely that ‘ordinary collectors’ represent >90% of all mineral collectors* (*note: in this context a “mineral collector” is taken to mean an individual with a sincere interest in mineralogy and mineral collecting who has been engaged in the activity of collecting for >1-years’ time. The term “mineral enthusiast” will be used for casual ‘collectors’; e.g. members of the Jam Band subculture with a peripheral interest in minerals, or the casual metaphysical collector). Note that members of the metaphysical or Jam Band subculture communities are not excluded from being ‘real collectors’, indeed many of them are.) As such, the health and vitality of the ‘ordinary collector’ community is vital to the overall health and balance of the mineral collecting hobby, as this is the foundation upon which the mineral community is built. While there are still plenty of high-quality, affordable minerals available to collectors who chose to purchase their specimens, there is also no denying that the exponential increase in the prices of all minerals in recent decades has hurt the ability of the ‘ordinary’ collector to add good specimens to his or her collection. This is especially true for what I would term “serious collectors” (defined here as an individual engaged in mineral collecting for >5 years with the ability to identify >>100 mineral species and localities by sight alone). These collectors, many of whom have been collecting for 30-40 year or more, have been firsthand witnesses to the changing price landscape for minerals, as well as a major paradigm shift away from the scientific and historical value of minerals and towards the aesthetic value alone. Rightfully so, these collectors often feel ‘snubbed’ by what they see as a cliquey, clubby new fraternity of high-end mineral dealers and collectors who often know little about minerals yet feel they have a more refined sense of aesthetic taste. This sense of alienation coupled with both the rising prices of minerals and the ‘aging’ of this community (that is, serious collectors dying faster than new ones enter the scene) means that unfortunately some of these collectors have either stopped collecting minerals altogether or have greatly diminished new mineral acquisitions. Unfortunately, the macroeconomic trends which have led to stagnant middle-class wages (particularly in the United States) and a fixation on aesthetics above all other specimen attributes are unlikely to change anytime soon (short of major public policy and cultural initiatives), so the ‘ordinary collector’ of today is advised to rely of his or her knowledge of minerals and connections in the community (e.g. finding fair, trustworthy dealers and specimen sources) to ‘outsmart’ the system.
Returning to the ‘dragging up’ phenomenon, we can now see how it has had pervasive effects on the mineral hobby, at all levels of the marketplace and among a broad demographic of collectors. In one sense, ‘dragging up’ can be compared to inflation, which is defined as the rate at which the value of a currency is falling, and thus the prices of goods and services are by definition rising. However, when past mineral prices are normalized to inflation, we see that this price increase far surpasses that which can be explained by inflation alone, particularly for the very best specimens, some of which have performed as well or better than the best “blue chip” stocks and other investment instruments have over the past several decades. So what is to blame for this ‘dragging up’ in prices of specimens which fall significantly below the ‘elite’ specimen threshold? Certainly, the ‘pegging’ of prices to the top is to blame: e.g., where if a rhodochrosite from the Sweet Home mine in Colorado with a half-dozen razor-sharp, gemmy, lustrous red 4 cm. crystals on matrix sells for $750,000, then a similar yet damaged, cloudy 4 cm. crystal on the same matrix is priced at $50,000, versus say the $7500 that it would otherwise be valued at, and a “wholesale” specimen which otherwise would be priced at ~$100 is priced at $1000 or more. Greed alone cannot explain this ‘pegging’ of the prices that underly ‘dragging up’, so instead I would attribute some of this to a contemporary collecting trend I call the “cult of aesthetics.” The cult of aesthetics is not only a collecting philosophy which places subjective aesthetic beauty and perfection above all other attributes of a mineral specimen, it is a self-reinforcing community which only promotes and idolizes aesthetics (and the viewer’s perceived aesthetic ‘superiority’ of taste) at the expense of other attributes of a great mineral specimen. It would be disingenuous and indeed foolish to dismiss appreciation of mineral aesthetics as purely superficial or ‘cultish’… the aesthetics qualities of a mineral specimen are extremely important in determining its value, and aesthetic connoisseurship is a skill on par with the scientific appreciation of minerals, which takes years of study and the handling of many thousands of mineral specimens to properly develop. The critique here is not leveled at aesthetics or aesthetic collecting, it is aimed at the cult of aesthetics, which seeks to dismiss other aspects of mineral connoisseurship, idolize a handful of species and localities, and, perhaps most dangerously, posits that the aesthetic judgement of a complete neophyte somehow has equal validity to that of the connoisseur. This last point is not accidental and has been cleverly engineered by high-end dealers to make their clientele, who often lack any real knowledge of minerals (or the patience to acquire such knowledge), feel as if their ‘aesthetic ability’ to choose what they like somehow confers upon them an ‘instant connoisseurship.’
As we look to the future of mineral collecting and the mineral marketplace, it is both a “Golden Era” for mineral collectors as well as a time of great uncertainty and great inequality among all stakeholder in the mineral hobby: collectors, dealers, and museums. We live in a globalized world where minerals move at seemingly lightning-speed from their far-flung places of discovery to glass showcases in Tucson or Munich (or a collector’s home). Never in history has the abundance, variety and quality of mineral specimens currently on the market existed. One might also argue that never before have such fine, attractive, appealing examples of “common” minerals (e.g. Indian zeolites, Chinese fluorite) been available to collectors at such accessible prices. Yet for the collector who demands quality, variety and affordability in their acquisitions, these are trying times indeed. The ‘dragging up’ in prices of lesser specimens, the clubby, self-serving feeling many collectors get from the ‘high-end’ scene, and the lack of financial resources and staff support for many museums and public universities (which might otherwise counter the ‘cult of aesthetics’ message with a more egalitarian way of introducing young people to minerals) have presented a great challenge to the 21st century mineral collector. For dealers who seek to disrupt the ‘dragging up’ price phenomenon, the biggest challenge is obtaining high-quality specimens (both from collections and from contemporary finds) at prices that enable them to simultaneously keep a roof over their head and also provide an honest, fair value to their end customer. One possibility is that the ‘price bubble’ for certain minerals and certain localities will burst in the coming 10-15 years. Most likely, this would be precipitated by too many ‘elite level’ collectors dying or otherwise leaving the hobby at one time, whose buying habits and tolerance for high prices have, arguably, artificially inflated the market for certain minerals and localities. Unlike the art market, which has a fairly broad clientele and receives regular mass media coverage, the market for high-end minerals is small and fairly secretive, with a strong information asymmetry between the dealers and collectors. This makes this market more vulnerable to disruption or instability than the market for, say, contemporary art or vintage automobiles. The disheartening cases of investment fraud in recent years focused on minerals and gems point to a market that may perhaps be overheated or out of equilibrium, just as they may simply point to a few “bad apples” in the collecting community. Time will tell. Ultimately, as hard as many high-end dealers are now working (with some success) to reframe minerals as “nature’s fine art”, minerals lack the human connection which enamors people with art, memorabilia and other ‘human objects’, and thus minerals will continue to have a relatively niche appeal in comparison. This is not to say that the mineral market won’t grow, recent trends suggest a continuously growing and vibrant market with new collectors ranging from casual “live show” online shoppers to the very highest levels of collecting entering the hobby. However, I think we are unlikely to see an explosive growth in popularity in mineral collecting on par with what has happened in the contemporary art world in the past thirty years.
On a more positive note, young people are being drawn to minerals and mineral collecting in increasing numbers, countering the unfortunate decline of the “baby boomer” collector generation which comprises the largest share of collectors, and, thanks to old age, limited financial resources, and some of the aforementioned circumstances, have begun to leave the hobby. While their reasons for being drawn to minerals range from aesthetic beauty to metaphysics to investment to a love for science, these young collectors are united in their sincere awe and appreciation of minerals, as well as their clear-eyed, lucid view of the economic and political paradigms they have inherited in the United States and elsewhere. If there is to be a return to the more egalitarian, inclusive world of mineral collecting that existed in the decades following World War II, it is to be led by these young collectors, dealers and museum curators. They hold the ultimate power to stop the ‘dragging up’ price phenomenon, and perhaps even hit the ‘reset’ button on the mineral market, to re-establish a community where the words ‘hobby’ and ‘passion’ come before ‘business’ and ‘industry.’ Time will tell how the newest collectors will shape the mineral specimen marketplace, but in the meantime, it is truly a “Golden Age” for collecting minerals in so many ways, and the negative aspects of the present market should not discourage new collectors from falling in love with minerals, or dishearten older collectors to the point of leaving the hobby. As the late, great Neal Yedlin would say “buy a good mineral book and use it”, and while you are at it, join a club, volunteer at a museum, attend a show, support a local dealer, and, most importantly, enjoy yourself while doing it!