In my E-Book " Investing In Wine For Profit" on Amazon, at a bargain price, I made comment that the price of oil is related somehow to the price of investment wines. When oil goes down in price so does wine. And low and behold the price of wine has been falling in recent months.
http://www.liv-ex.com/staticPageContent.do?pageKey=Fine_Wine_100
I can't for the life of me think what the connexion would be other than general confidence in the price of commodities.
The Chinese economy seems to be cooling off and the demand for investment wines is falling. Businessmen are now less prone to giving gifts of expensive investment wines to their prospective customers. The price of commercial property is falling.
Across the developing world investors and speculators are indulging in margin borrowing to fund the purchase of high yielding (and of course high risk) bonds and other financial instruments. Margin lending to finance the purchase of stocks was a major contributing factor to the Great Depression in the USA which started with the distress selling of stocks in 1929. Few, in the financial markets, seem capable of learning from history.
Margin lending is used to fund the purchase of assets. When the price of the assets falls the Banks who have lent the money to the purchaser make a margin call in cash to increase the collateral which guarantees the loan. This system of margin lending can catch out both the lender and the borrower. The borrower ends up with junk assets and is not able to repay the loans so the Bank loses too.
This is why in my book I advised that you should not borrow money to purchase wine for investment purposes and should only invest what you can afford to lose.
The world could be heading for another crash if vast quantities of margin lending funds junk assets. As a hedge against fiat money crashing in value it might be wise to invest in some gold in the form of gold chains or sovereigns. If you get into financial difficulties a chunky chain comes in handy as you can sell links as necessary. Keep the gold somewhere very safe such as a safety deposit box but not where jewellers keep their gold as the vault could be the target of robbers.
http://www.bbc.co.uk/news/uk-england-london-32799703
In straitened financial times it is probably best to keep actual gold rather than gold contracts which can be reneged upon. The same applies to fine wine. Happy investing and remember the higher the potential return the higher the risk.
If all else fails you can drink your wine and still enjoy it even if it is worth nothing.
