I'm worried about hyperinflation and the entire banking system collapsing.
I'm worried about stock markets falling, rumours that gold has peaked and that the whole economy is going to crash on a scale beyond anything the general public is remotely aware of at the moment.
So where do I put my money?
I'm going for blue chip wines, specifically first growth Bordeaux.
I'm going to buy two cases of Chateau Margaux 2005 at £6,700 per case and two cases of the 2000 vintage at £6,500 a case.
Although the 2005 vintage has fallen back from a ridiculous high of almost £10,000 a case, it is seen as the better of the two vintages and the 2000's price has been solid in growth, although it has seen a dip since hitting heady heights in 2007:
2000 vintage (case of 12 x 75cl):
4 years ago: £2800
3 years ago: £3780
2 years ago: £7200
1 year ago: £7750
2005 Vintage (case of 12 x 75cl):
en primeur (when released) c £2500
1 year ago: £9500
The 2000 vintage has long been seen as a magnificent vintage in Bordeaux, possibly better than 1982 and 1990, certainly the best since 1990.
The 2005 is singular, with many declaring it to be the greatest vintage ever - everything that could go right did. It is already universally accepted as being at least on a par with the legendary 1961 and 1945 vintages.
There are a number of reasons why I am ready to invest:
1) Historic growth: The 2005 and 2000 vintages prices are now almost identical, which is where they should be given the relative merits of each vintage. I think the prices have found their level after the incredible interest in the 2005 (which drove buyers towards the cheaper 2000), and they won't be dropping much more. Over the past fifty years, blue chip wines from great vintages have grown year on year by 15%. A bottle of 1982 Mouton Rothschild would have cost £20 in 1983 - a bottle in mint condition today will cost around £1000 retail. Pick any wine from vintages such as 1961 and compare en primeur (release) prices with today and the growth is 15% compound.
Even if the price slumps again in the next year, at least it won't be pure capital loss (which will probably happen if I invest in property today). If, as it looks, we are in for bad times for the foreseeable future economically, I would be happy to just forget the wine for 10-15 years and let it grow, and take any loss in the next year as the price for peace of mind. The super rich around the world will always want a glass of wine with their dinner.
2) There is always demand for first growth wines. The very greatest half dozen wines from Bordeaux are always in demand, but the demand increases as the years go by and the wines become more interesting as they age.
3) World supply decreases as demand grows. Every time a bottle is opened, there's one less in the world, thus increasing the value of your investment. And bottles are opened all the time, every day, by the curious, the trade and the wine press.
4) Bordeaux has seen three mediocre vintages since the 2005. A splurge of great vintages would affect prices for the 2000 and 2005 - that hasn't happened, another couple of less than great vintages would be even better. Bordeaux is wobbling on the cusp of climate change - as a region it makes such fabulous wines because it is right on the limits of what is possible given its micro-climate. If things heat up as they have been the wines will lose their famous character in vintages to come, making the 2000s and 2005s even more desirable. Sammy Wilson could learn a thing or two by talking to the Bordelais.
5) Even if all else collapses and I end up living in a tent, at least I can get P1ssed on some extremely fine claret!
So I'm going to buy from a good broker (Fine and Rare, Farr, Bibendum etc), make sure I've got the paperwork saying the wine is mine, and then I'm going to lock it away in dedicated cellars (Octavian) and forget about it.
Edited by rconti479, 21 February 2009 - 12:14 PM.