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Tuesday, 24 December 2019

Interest in the wine market goes up as interest rates go down

Is wine the next safe haven asset? Investors are starting to regain their finer tastes by investing in wine as an asset, even though it doesn’t yield returns, according to The Financial Times. Its potential for capital growth is wine’s redeeming factor and in the recent period, negative interest rates are pushing investors to rethink wine’s ability to be a safe haven asset along with fine art, classic cars, or cryptocurrencies. “In a record-low interest rate environment, people are being forced to look outside their normal sources of return,” said Tom Gearing, co-founder of Cult Wines, a company that trades wine on behalf of private investors. The London-based company has seen the assets it manages surge to GBP 121 mn this year from GBP 33 mn in 2016 as investors flock back to wine (which they always have the option to just drink).

It might not be a bad idea to tie up your wealth in fine wine, says Bordeaux Traders, a fine wine investment brokerage. They explain that wine is a “recession proof investment” as unlike traditional investments, luxury wines are minimally influenced by exchange and interest rate changes (an opinion we take with a pinch Penot Noire).

Fine wine has indices and an online marketplace of its own, including the Liv-ex Fine Wine 50 index, created by Liv-ex Fine Wine Market, which tracks daily price movements of fine wines. They’ve created ane e-commerce platform where global merchants can automatically offer stocks to be globally traded before it Liv-ex send over the physical asset.

And if the investment seems attractive, Wine Enthusiast Magazine offers up a primer on wine futures.

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