The bull market rolls on for stocks. Keen investors will be looking for new growth stories with ties to emerging themes that are cycling into ascension in the mind of the market. Right now, one theme that seems to be ascending into dominance is the precious metals, following gold’s move to test $2,000/oz after moving to new all-time highs earlier this week.
There are many ways to play this because it isn’t just about “gold” per se. It’s about so-called “hard assets”, also known as “stores of value”.
In other words, the real story is the appreciation of assets that people see as a way to transition wealth out of dollar-based cash and cash equivalents because of a fear of debasement of the dollar. This is also known as “inflation” (in·flay·shun) – a word that used to be important many years ago. You might have seen it carved into a cave wall or scribbled in a strange ancient manuscript in a museum. But with the Fed printing full-out and politicians worldwide finally figuring out how to rationalize any notion of fiscal conservatism away for good, the idea is making a comeback for investors.
In other words, get your Bee Gees LP dusted off, folks: inflation is back as a boogie man, and stores of value are back as stylish speculative assets.
In this category, you have the obvious ones – gold and silver. But you also have some interesting alternatives, such as real estate, fine art, fine wine, and luxury watches.
Today, we want to look at this last category because it has a longer time-frame tailwind already at its back. And there’s a new stock that just popped onto our radar that represents a pureplay on this theme: Clikia Corp (OTCMKTS:CLKA), which operates through its wholly owned subsidiary, Maison Luxe, a by-appointment super-high-end rare custom luxury watch and jewelry seller with ties to otherwise inaccessible aftermarket sources and a number of duty-free downstream distributors.
The main reason is simply that Clikia Corp (OTCMKTS:CLKA) is the only stock that we could find that actually specializes in buying and selling watches that qualify as a true store of value asset. According to the company’s release out this morning, the Rolex Submariner line increased in price over 500% from 1957 to 2014 (adjusted for inflation), which is typical in the space. And these price moves are even larger in the secondary market, which is the more important gauge because the most sought-after pieces aren’t accessible at the retail checkout counter at any price.
The company also pointed out that the Rolex Submariner Ref. 116613 soared 8.4% higher from 2019 to 2020. That was on the retail pricing side. But an article in Robb Report notes that the Rolex Daytona Ref. 116500 has been selling at more than a 90% premium to the retail MSRP.
So, these watches are appreciating rapidly right now.
That’s a big deal for CLKA because it is also now engaged in building a strategic inventory of watches like these. The more the company establishes this as a holding, the more its shares stand to become a proxy for watches like these as stores of value. In other words, you can buy shares of CLKA to gain access to this feature, rather than buying a $60K custom Rolex.
“As we have said in the past, and will continue to point out in the future, the products we sell aren’t available without the right relationships,” commented Anil Idnani, Clikia CEO and Founder of Maison Luxe. “For example, the watches we offer have risen in price year in and year out for decades because the supply is chronically extremely tight. The average retail consumer – even those with effectively unlimited resources – may have to wait months or years to gain access to the timepiece they want if pursuing the purchase through standard channels. As a result, prices for these items rise every year. But we have a very well-established network of relationships that grants a consistent market advantage both in terms of access and pricing. And that second factor can be augmented sharply by making volume purchases and carrying a strategic inventory of rare luxury goods.”
On Stones and Birds
However, the advantage of storing up this inventory of super-high-end luxury watches isn’t just because they will likely go up in value over time. That’s actually just an ancillary benefit.
Perhaps even more importantly, the company stands to benefit from gaining and deploying capital in this manner because it will also do two important things.
First, it will open up market share as a wholesaler. In short, if you are a downstream seller, you aren’t going to bother calling up suppliers who don’t consistently have products in stock that you need. Put another way, if you develop a deep inventory, and you let downstream sellers know about it, you’re going to get a lot of calls and develop more powerful relationships with important distribution channels.
Second, building an inventory means buying in volume. When you buy in volume, you get better pricing. Quite simply, you widen your margins on every sale.
Idnani added, “Building a strategic inventory will drive value for our shareholders in several important ways: it will allow us to generate a return through appreciation over time, it will open up more customer relationships on the wholesale side because we will be able to demonstrate we have rare items in stock consistently, and it will amplify our margins because we will build it through volume purchasing at discount pricing.”
Clikia Corp (OTCMKTS:CLKA) is in an interesting position. The stock is just going through price discovery. But the stock is performing, up nearly 400% over the past month. However, these are small numbers. The float is tight, and the company has signaled it is getting ready to post some gargantuan topline growth data when it reveals its calendar Q2 numbers – on a relative basis, going from nothing to strong seven-figure sales in a very short period.
As liquidity grows and the stock picks up more momentum interest, we should see more interest in the story and get a better feel for where this is really headed.
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