Inflation cannot be dismissed. Fine wine is a long-term haven

by Jun 10, 2020News, Wine Trading Academy0 comments

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Paulo Pinto

Alti Wine Exchange founding member

Dear reader,

If you remember, I have been writing lately about the need to replace debt by capital with a new Central Bank of Social Security.

Seeing that rents can’t be paid, that mortgages can’t be paid, that New York, Chicago and Los Angeles have been under curfew along with many other cities in the United States due to social unrest, there is no easy way to say it. But this looks just the prelude of something much worse in social and economic terms, even with trillions freshly printed by Central Banks.

I am writing to you after watching a CBS News’ “60 Minutes”. In the program, the chairman of the Federal Reserve, in no ambiguous terms, stated: “There will be consequences to the money printing, but this is not the time to prioritize that concern”.

This in itself is reason enough for the need to re-invent Central Banks – because printing money and going into debt while bailing out a few has proven not to work for most. The other reason, since there seems to be no limit to the amount of money printed, is to believe that this will not have consequences.

Finally, on a personal note, this validates the purpose behind Alti Wine Exchange.

For the last few years, I have been focused on fine and rare wine and invested some of my savings in it, along with other of our founding members.

As some of our readers know, in 2018, a group of people with a long-time finance background, in shock with negative interest rates, decided to create an e-commerce platform to offer fine and rare wine as an alternative asset for investment – or for consumption, depending on the immediate wishes and needs.

The reason is our belief in the likely progression into fiat currency collapse, which will make people transition into real tangible assets. Since then, Alti Wine Exchange is up and running.

Our business model is being increasingly recognized and praised, such as in this recent article by Business Insider that shows just how important it is to build trust and connect producers with investors when it comes to fine wine investment.

* * *

Fine and rare wines are tangible assets and cannot be magically increased at will, unlike fiat currencies.

We started with a Port Wine from 1888, so people understand what it means to have a truly rare wine. And we keep on going with wines considered among the finest in a long-term outlook.

It is normal that people are not familiar with this concept as a wine business for investment. However, these are wines that are collector’s items: they are history in a bottle with intrinsic value and that is why they serve as a good store of value.

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Fine and rare wines are also so appealing as a store of value, simply because inflation is the most dismissed idea right now. I could go for jars of Nescafe also because when a currency is falling, the desire to hold any tangible asset grows to protect purchasing power. But Nescafe would go out of date by the time I would like to resell it, and I would not be able to do it.

Fine and rare wine is different. I can buy it in bond (no consumer taxes), keep it there, have an offer on the platform for anyone willing to buy, and just wait and relax. It won’t go out of date: it will be rarer as time goes by, and it can’t be replicated unless it’s falsified – and with Alti, it can’t be: because it’s there for anyone to see that has come directly from the producers.

Rare wine is the sort of tangible asset that has offered attractive premiums to potential buyers, particularly those willing to own some of those wines they hold.

* * *

It may take a while for inflation to show up – for instance, the UK government just sold bonds with a negative yield for the first time in history. But if inflation returns, which is very likely, fine wine will do extremely well.

If I am right about this, fine wine will probably be one of the safest places to park wealth. If I am wrong, I can get drunk with it.

Until next time.

Paulo

 


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