Tobacco as an actual investment

Discussion in 'Money, Investing & Precious Metals' started by Rody, Feb 19, 2010.

  1. Rody

    Rody Active Member

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    Prices on older tobacco tins has increased in recent months. Some of it to the point of being outrageous. I point you to the following auction:

    3 Dunhill Tins

    But not all tobacco that is going for high prices is old. Some is just very hard to get. That one is sold out at most on line shops but normally sells for around $25 for 8 ounces.

    More and more pipe tobaccos are becoming harder to get. There is a new bill in congress that will basically double the price of pipe tobaccos much as it did for cigarettes last year. This will no doubt put some companies out of business the way it did for some rolling tobacco companies. Many of the rolling tobacco companies remained in business only by cheating and relabeling their rolling tobaccos as pipe tobaccos. This new bill will destroy them completely.

    What do you need to know in order to invest in pipe tobacco?

    1. Popularity of the tobacco.
    2. Production limitations.
    3. Tin Designs.
    4. Company History.
    5. Tobacco laws and taxes in your state.
    6. Age of the tobaccos.

    Popularity of the tobacco. Not all companies go out of business because of tax laws. Some tobaccos just plain suck and no one will buy them.

    Production limitations. Some tobaccos that are popular also have a limited production availability. The Penzance listed above is very difficult to come by right now. Thus it brings good prices at auction.

    Tin Designs. Some tobaccos are just 'okay' as far as taste goes but because of fancy tin designs they still bring good money. Tobacco in actual metal tins brings generally much better prices than bulk tobaccos in plastic bags. Most tins are vacuum sealed and this allows the tobacco to actually age much like wines.

    Company History. Some tobacco companies don't survive even when they are fairly popular. Some of them sell out their blends to other companies. Those companies often change the mixture in order to decrease production price and make a better profit. When this happens the actual value of the older tin production can increase considerably.

    Tobacco laws and taxes in your state. Several states are considering banning the mailing of tobacco to insure they get their taxes. Some have gone after people who have bought cigarettes over the internet and hit them with high taxes. It's really only a matter of time before all states do this. If you bought a tin of tobacco today that's worth $10 and in a couple of years the value has gone to $100 you may actually have to break the law in order to sell it. Consider things very carefully before you invest. I am not suggesting you break the law!

    Age of the tobaccos. Generally speaking, the older the tin the greater it's value will become. Aged tins are sought after by pipe smokers. The three tins of Dunhill in the auction above have three things going for it. 1. Popularity of the blend 2. No longer in production by the same company. 3. Age. These three things combine to cause high selling prices.

    That is just a general list of things to consider. Not all tobaccos will increase in value. Some drug store blends for instance will never bring the prices seen above unless there is an outright ban on all tobaccos. The two auctions linked above are extremes but are becoming more and more the rule instead of the exception. Two years ago the auctions above would have brought around a quarter of what they do now.

    Like anything you decide to put your money into you need to first invest time and research. If you don't it's just a crap shoot. Maybe you will make some money or maybe you will lose your butt. What is legal today my not be tomorrow.

    I've been doing this for a little while now. While I could sell my stock today and make decent money I've decided to hold on to it for a few more years to increase my profits even more. At the same time I'm keeping an eye on the laws about tobaccos and will act accordingly.

    Just something to think about.
     
  2. Tobacco

    20 years ago I quit smoking. Not because I wanted to but because my body wouldn't tolerate it. I couldn't speak a sentence without coughing through it. 15 years ago it occurred to me that as addictive as nicotine is, cigarettes might one day become quite valuable as a barter currency. So I vacume-packed away a few hundred cartons just in case. I hope they have remained as fresh as the day I packed them.
     

  3. *Andi

    *Andi Supporting Member

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    Now that is a first! very cool by the way ...:D I would never have thought of it.

    Me ... well ... I grow my own but don't tell anyone :sssh:
     
  4. sailaway

    sailaway Well-Known Member

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    Is it 3 color or just brown?;)
     
  5. TechAdmin

    TechAdmin Administrator Staff Member

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    I quit two years ago but if SHTF you better believe I'm starting up again. I use snuss when I hunt to keep me alert. I would imagine a similar need if you were having to stay awake for long periods, eg. watch or the like.
     
  6. Rody

    Rody Active Member

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    One of the problems currently with this idea is that demand is very high for the popular blends and many places are now sold out. Tobacco companies are having to decide if they should increase production to meet demands or wait and see if the new pipe tobacco tax passes or not.

    If they increase production and the new tax law passes they might get stuck with excess product as the tax will nearly double the current retail prices, all of which they will have to pay the new taxes on.

    On the other hand demand has never been higher and if they increase production they can see profits like never before if the new tax fails to pass. Most of them are not willing to flip a coin and take a chance.

    Even if they all increase production now and the new tax law does not pass the actual value of most tins will increase with the passage of time. I just tripled my money on a tin of 1792 flake because I had it in storage for two years. Can most people say that about their investments these days?:D
     
  7. greaseman

    greaseman Well-Known Member

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    you are a genius sir. There is no doubt in my mind that cigarettes will be as valuable as any other barter item in the future. Those idiots in New York City are trying to ban salt. What's next? Cigarettes are nothing but a legal drug, and everyone knows it. I have used tobbaco products over the years, and the only reson I have stopped using most of them is for the cost of the product, not health reasons.

    I was in a tobacco shop the other day, and a man was buying a fine grade of pipe tobacco. It was expensive 20 years ago, because I used to get it some when I smoked a pipe. Anyway, when the clerk told the man, " that'll be $64 ", I almost fell over. I knew it was expensive, but not that much.

    I could not conceive in my wildest imagination that a can of pipe tobacco would cost $64.

    Back to the cigarettes. You made a great decision to buy the smokes back then. Just think if you hold on to them a little longer. They are as good as gold in my book.

    As time goes on, I think we will be surprised to find what some items will be worth in our "new economy".