Paulo Pinto: Founding member’s view on real asset liquidity and currency war

by Dec 3, 2019Interviews0 comments

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Alti Wine Exchange launched its platform with a 132 year old Port Wine, so that early adopters of our project understood the meaning of rare wine definition right away. Originally priced at €2.650, this exclusive Port Wine was offered at €3000 just a few months after its IBO term came to a conclusion. Our second IBO of Moscatel from 1918 performed even more interestingly, with a €900 IBO price and same bid amounts, it is offered at €4000 per bottle.

Obviously, with wine investment there’s very little liquidity, but you don’t just invest into a regular bottle of wine — you invest into a true collector’s item, containing history in the bottle. Fine Wine is the only consumer product that allows time travel, and the possibility to taste the world as it was a 100 years ago should come at a price. But there’s another reason that makes fine and rare wine investment opportunity so appealing: currency war.

Most of the countries are trying to weaken their currencies — Europe believes that a weaker euro will help the economy, while President Trump believes the same towards the U.S. dollar, looking for ways to lower the interest rates. With China and Japan prioritising their currencies as well, real assets are the safest way to preserve purchasing power within these currency war conditions. Many people consider gold or silver, but they are not the only valuable real assets as you already know — securely stored fine and rare wines are a good alternative.

One of my friends asked me recently: “Should I invest all of my money into rare wine?”. Of course, I said no — best investment strategy is to allocate a maximum of 3% of net assets to wine investments. However, it should be noted that In the long run fine wine will outperform bonds and stocks.

Since Fine Wine is a consumer product, it also will be positively affected by the monetary inflation that Central Banks are pushing now, because the problem of too much money from debt creation can only be resolved with inflation. Generally, money today is debt, but if there was no debt, there wouldn’t be any money in the first place. And debt is also time, because if there is no limit of time for repayment, then nobody will accept debt. Therefore, accepting negative interest rates means we accept that we can go back in time. The only problem is that it’s impossible.

This is why fine and rare wines are the perfect alternative assets. A Montes Folly from 2011 is not the same as a Montes Folly from 2016 — it is unique in relation to that time. All wine listed at Alti Wine Exchange is a contract between the past and the future because that wine from 2011 cannot be done in the future, it can only reflect the value of the past. For those who would say that fine wine is not an investment, I can say it is certainly an insurance against fiat currencies losing value over time.

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