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Collecting Graded Pokemon Cards as an Investment
Collecting graded Pokemon cards has always been a hobby for people who love the game, love Pokemon or love collecting in general. One of the most demanded cards in Pokemon Trading Card Game(TCG) collecting sold for over $18k in April this year on auction on eBay by Pre-War Card Collectors (PWCC), an eBay action house that is famous for auctioning various graded sports cards and sports memorabilia. That’s right, $18,000 ($18,600 to be exact), enough to pay for a deposit on a $360,000 house.
‘Why on earth would people spend $18k on cardboard?’ Well, the short answer is they like it. They like the card so much that they are willing to convert their hard-earned cash into a card slabbed in between plastic cases (pics below).
1st edition Base set Charizard PSA Gem Mint 10, sold for $18.6k in April 2017.
The reality is, collecting graded Pokemon cards has come a long way that people who do it has a passion so strong that they are willing to sacrifice their money for trading cards. When I said ‘sacrifice’, I do not mean that the money spent is gone forever. If you look at the 1st edition base set Charizard PSA 10 example, it sold for $16k before the $18k sale, and was sold for $13k before the $16k sale and $9k before the $13k sale. This all happened in a matter of 6 months. 6 MONTHS! A 100% increase in value over 6 short months. People would think that this is an unusual phenomenon and only happened to one card since the existence of Pokemon cards. Well the truth is, this has happened on ALL high graded, high end, rare Pokemon cards.
Following the footsteps of the 1st edition base set Charizard is what collectors like to call it ‘the second-best thing’, a Shadowless base set Charizard. Recently in June a PSA 10 copy sold for $5.6k, a huge spike from its previous public sale price of $2.6k on eBay, in less than a year (I believe it was Nov 2016). These spikes are sharp due to a few factors: rarity, scarcity and collectability. Rarity of a card means how many of the card exists. Scarcity of a card means how many of the card is available for sale and collectability of a card is how demanded the card is. Cards that fit all these three categories are naturally going to see increase in price point over time. That is where investing, or a more correct term, speculating in graded Pokemon cards come in.
Base Set Shadowless Charizard PSA Gem Mint 10, sold for $5.6k in June 2017.
It really makes no sense that you can put money into something that is low risk and has high returns in the form of capital gain (price increase) but that is the case in Pokemon cards. I am not saying that ALL graded Pokemon cards will see massive returns in the long term but rather I am saying is that if you are buying graded cards that are rare, scarce and collectable then you are in it to see your card go up in value as time goes on.
Knowing what cards to buy requires time and experience. Like what Pokemon trophy card specialist and collector, Scott Pratte said, ‘as long as you are engaged in the hobby, your experience and knowledge of knowing what cards to buy will go up with time’. If you are engaged in the hobby, either by looking at articles, watching YouTube videos, joining forums or browsing the market place(eBay), you will start to see trends and will develop a sense of knowing which cards are undervalue currently. Of course, there will be times when you are wrong and after buying a card, the general price goes down even after months of holding on to it, the important thing is that you learn about what made the price drops; Is the card highly saturated in the market? Is the card a newly released card? Is the card a popular card? These are all lessons that you can learn.
Recently a PSA 10 copy of a 1st edition Fossil Lapras was sold for $270. A very different price compared to the $700 sales price months ago. The card was from Fossil, a 1999 set. It is 1st edition, meaning that the print run is low. It is very hard to grade a 10, given that holographic cards that are fresh out of Fossil booster packs are known to have a lot of silvering. So, what resulted in this card losing its premium that it is earning months ago? This card in PSA 10 has the second lowest population in the 1st edition Fossil holo set, next to the prerelease Aerodactyl, therefore funnelling all the PSA 10 1st edition Fossil set collectors into this one card in order to complete their set. That is the only reason this card had a premium, set collectors needed it. When these collectors completed their set, the Laprases are just like any other PSA 10 1st edition Fossil holo, still earning more than other cards in the set but will eventually stable out and earn a price it deserves, whether it is higher or lower than the current price point of $270 is anybody’s guess. The Lapras used to be scarce, but if you search on eBay right now, you will easily find 5 copies of them up for sale.
1st edition Fossil Lapras earning $270 compared to $700 months ago.
Investing time and money into graded Pokemon cards can be fun if you allow it to be fun. It allows you to make financial decisions on whether to purchase this card with logical reasonings that the value will go up in the future, while doing what you love. However, do not put all of your money into graded Pokemon cards because like any other speculative activities, there is an inherent risk of the value of the card tanking. Collecting Pokemon cards is a hobby after all, the monetary gain is secondary and comes as a bonus. Who knew that an $18,600 card is only worth $700 7 years ago. Maybe a $700 card today will be worth 26.5 times more in 7 years ;)