Perhaps the ultimate guide to liquidity is a liquid itself. Fine wine is an investment which is probably most affected by whether there is a lot of money going around given the incremental buyer is likely to be someone with newly found riches that has a problem finding something to spend it on. Conversely prices are likely to blow up when this money vanishes.
This index rolled over in a big way 1H11 and continued to crash through most of 2012, although has very recently started to show signs of life, with a marked increase at the end of last year.
Is this a sign that confidence is returning? Given the European-centric nature of wine connoisseurs, it may also be a sign that things are improving in the Euro zone. That said, we did see a false start in late 2011 in these data as the Euro crisis intensified.
Wine prices, for a while, followed a similar trend to gold until 2011, when gold shot higher on the sharp drop yields and has been travelling sideways ever since. Cynics may argue that the marginal buyer of gold is similar to that for wine, although at least you can drink your wine and can't do much with your gold. But in some ways this may not be far from the truth, with a rise in marginal money looking for a new home just as positive for gold as it is for wine.
