Investing in Oriental Rugs – the Upside

(The following is an edited excerpt from Warp, Weft & Weave: A Life Collecting and Investing in Handmade Oriental Rugs by Sam Ramazani)

We’ve talked about the risks of investing in oriental rugs before and indeed, it seems as though much writing about investing focuses solely on risk. Today, I want to offer some thoughts on another aspect of investing in these treasures – the benefits.

What is an investment?

Anything that is original, unique, authentic and is desired by more than one person is an investment. If you have a painting created by a master artist, it’s an artwork but because of its rarity and authenticity, and it’s also an investment. Johnson & Johnson equities are relatively scarce (there is a limited supply), they produce regular income and are a share in a company and culture that is unique, making it an investment. A waterfront property on St. Bart’s, a ski cottage in Vancouver or a commercial building at a busy intersection are all investments. A 1961 Austin Healey 3000 checks all the investment boxes. Gold. No more – or very few – of any of these things are being made and over time, their value increases.

Enjoyment

When you buy a handmade rug from an original rug weaving country, you know you’re going to be able to enjoy it all your life. Your children are going to enjoy it. When you need to downsize in retirement, you may give the rug to a member of your family, your children, or your grandchildren and what they have will be worth a lot more than what you originally paid for it. That increase in value only comes from rugs made in original weaving countries.

Affordability

This is something that I find fascinating and also exciting.  There is often a huge opportunity when you can buy an authentic handmade “real” Oriental rug for less than a new color reproduction. It’s actually possible to buy a semi-antique Persian rug for the same or less than a brand new or new reproduction rug in whatever color palette is currently fashionable. On top of that, these new reproduction rugs usually only last 15-20 years because they’re made thinly without good pile. A quality authentic rug that is 50 years old will always be a better investment than buying a reproduction. It will last much longer (possibly for hundreds of years) and it will increase in value, guaranteed.

Opportunity For appreciation

In addition to the longevity and automatic increase in value due to aging that a “real” rug offers, it also has the potential to offer even more appreciation. Consider – as the third world grows, Oriental handmade rugs are becoming a thing of the past. As the cost of living goes up for the weavers of these rugs, they will need to charge so much for a rug, nobody will be able to afford them. Tribal pieces are starting to disappear because their weavers are moving into the bigger cities. If things continue as they have there is a very distinct probability that tribal/nomadic pieces could vanish altogether.

But we aren’t there yet. There is still great opportunity to buy these original rugs. We can still put our money in wonderful rugs at good prices, and with some knowledge, there are still deals to be had. We are possibly in one of the best periods of history to acquire and collect these rugs and pass them on to the next generation. If we do this with thought and care, we not only store our own wealth, we also respect and preserve the skill and craft of these vanishing artists.

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