Here at Vin-X we’ve written a number of times about the impact your local currencies movements can have on the value of your wines. Over at Liv-ex their thoughts are obviously similar, having just published some interesting data on exactly this topic, showing how well the liv-ex has performed in certain currencies over the last year, particularly Yen and Euro (alas, the data in Roubles isn’t shown, but would be even more dramatic.)
The graph can be seen below and shows how for the Japanese the Liv-Ex 100 is in fact up around 35% since mid 2012.
There are two major ways to take advantage of currency fluctuations like this, the first is arbitrage; the practice of buying something where it’s price is low and selling where the value is high. The physical nature of wine and the 30 day terms that operate with almost ALL suppliers complicate this significantly and make it impractical for even market professionals like Vin-X let alone private investors over the short term. Besides our view is that fine wine as a very stable asset class without the volatility of financial markets, is a medium to long-term investment.
The second way we can take advantage of currency dynamics is by targeting suppliers who trade in ‘stressed’ currencies. Therefore Vin-X have been buying much more wine from Europe this year than previously and right now are buying wine from Chinese and Russian owners (although our clients should rest assured we certainly won’t be buying wines that have left the safe confines of Bordeaux or UK storage), at lower Sterling prices in the knowledge that when they convert the Sterling back to Yuan their losses will be minimised due to the falls in local currency.
For more information on acquiring wine to protect wealth contact the Vin-X team now on 0203 384 2262