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Gold 'Divine' As Chinese Sell Wine

Tyler Durden's picture





 

It seems the end of cheap money bulging out the Chinese wazoo have put the kibosh on the decade-long rally in the price of fine wine. Confirming what we initially noted back in November, it appears that we have a clear winner in the 'best wealth-preservation investment' game as Gold has gone on to dominate fine-wine (and equities) in the last year. As Bloomberg's chart-of-the-day points out, the rapid rise in wine prices - on the back of Chinese demand for French reds - came to an abrupt halt when the PBOC started to put the inflation brakes on - and as is clear - wine is now tracking the Shanghai Composite almost perfectly (down) as the 'asset grab' phase ends. While ironically, wine is (apparently) illiquid - accoridng to Hao Hong of Bocom, the outperformance of Gold in the short- and long-term reminds us of the Monty Python line as Chinese investors appear to have been promised 'all the gold they could eat', since, of course, man cannot live on iPads alone.

 

Longer-term is it is clear that as China tightened the high correlation between fine-wine and gold started to breakdown - and has snapped now...

 

 

and close-up, the path of fine-wine prices is incredibly correlated to the Shangahi Composite (Chinese stocks) - while Gold and US equities appear to best buddies since the end of LTRO2...

 

Charts: Bloomberg

 


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Mon, 07/16/2012 - 18:10 | Link to Comment slaughterer
slaughterer's picture

Fuck, I was still hoping to offload a few more crates of Lafite-Rothschild to Singapore in order to raise more $$$ to buy GOLD.  

Mon, 07/16/2012 - 18:11 | Link to Comment Temporalist
Temporalist's picture

There is an ancient Chinese saying: Buy physical gold bitchez!

Mon, 07/16/2012 - 18:35 | Link to Comment AldousHuxley
AldousHuxley's picture

New words in China:

" Bangdakuan" means gold diggers.

 

"Baijin Zhuyi" or "Money worshipper"

Diyitongjin is the "first fortune" made by an entrepreneur.

Yizu, or "ant tribes". to describe the hopeless toil of college graduates in China's large cities as they are intelligent and hardworking, yet anonymous and underpaid,

 

Fengkoufei, or "seal mouth fee", to keep prying journalists from exposing.

 

Since government jobs are one seemingly sure route to wealth in modern China, would-be bureaucrats can Maiguan, or "buy a position".

 

WELCOME TO THE NEW WORLD ORDER where college grads are ants, government workers are wealthiest. Sounds like china and US are aligned in this vision.

 

Mon, 07/16/2012 - 19:31 | Link to Comment Bobbyrib
Bobbyrib's picture

Before this depression took hold, I knew government workers were going to be the ones taken care of, while the rest of us worked like dogs to maintain our lifestyles. I know of "conservative" teachers who benefit from the NJEA and don't want to go above what the job demands. Just goes to show, no matter what party you support you demand to be taken care of living off the government.

Mon, 07/16/2012 - 20:25 | Link to Comment LowProfile
LowProfile's picture

Those smug toady fucks will get their comeuppance when their pension's purchasing power implodes in a ponderous, penetrating ctrl-p.

Remember:  He who shrugs first, shrugs best.

Mon, 07/16/2012 - 21:35 | Link to Comment Not For Reuse
Not For Reuse's picture

thank god, I didn't get offered nearly enough RC this year at sane prices. Would love to be able to sell gold at 5:1 or so and get at least a few extra bottles

Mon, 07/16/2012 - 22:58 | Link to Comment Atlas Shrugged
Atlas Shrugged's picture

I'm in China now. Every bank sells gold. It's always in a glass cabinet in the corner of the bank. They usually have about 2kg on display (of various weights) and the managers tell me that they have plenty more behind the counter. They all confirm that many people are buying. Prices are always close to spot.

Mon, 07/16/2012 - 18:12 | Link to Comment JeremyWS
JeremyWS's picture

What is SHCOMP an index of?

 

Sorry if noob question

Mon, 07/16/2012 - 18:13 | Link to Comment Temporalist
Temporalist's picture

I bet if you try realllllly hard and re-read the post looking for only capitalized words you'll figure it out.

Mon, 07/16/2012 - 18:14 | Link to Comment JeremyWS
JeremyWS's picture

Bitch please! I come for the pictures.

Mon, 07/16/2012 - 18:46 | Link to Comment Diogenes
Diogenes's picture

I thought it stood for Shemp Comparator, a rating system for Stooges movies.

Mon, 07/16/2012 - 18:13 | Link to Comment JeremyWS
JeremyWS's picture

Nevermind, figured its shanghai comp.

Mon, 07/16/2012 - 18:25 | Link to Comment oddjob
oddjob's picture

Its also the sound Michelle makes when eating her hourly McRib.

Mon, 07/16/2012 - 18:20 | Link to Comment Eclipse89
Eclipse89's picture

The chinese got screwed big here and there with wines...

They think to have good bottles of Brunello or Bordeaux in their private cellars, but in reality a good part of them are lyophilized wine mixed with sparkling water sold for 60$ p.b.

Cin Cin!

Mon, 07/16/2012 - 18:26 | Link to Comment Muppet Pimp
Muppet Pimp's picture

Oh the irony...wonder where they got that idea for that from.....

Mon, 07/16/2012 - 19:32 | Link to Comment Bobbyrib
Bobbyrib's picture

They got screwed, because no one else can afford fine wines. It was a bad investment.

Mon, 07/16/2012 - 19:40 | Link to Comment Schmuck Raker
Schmuck Raker's picture

"lyophilized"!?

You big show-off.

Mon, 07/16/2012 - 18:21 | Link to Comment buzzsaw99
buzzsaw99's picture

ignore the bear penant, just draw a green arrow to the upside. lol

Mon, 07/16/2012 - 18:39 | Link to Comment FieldingMellish
FieldingMellish's picture

Penants are usually continuations but don't let that color your perceptions.

Mon, 07/16/2012 - 19:09 | Link to Comment buzzsaw99
buzzsaw99's picture

So how long has gold been in an up trend? Color my perceptions? This site is for perma bull gold hawkers only. Anything more than a superficial rah rah gold piece might at least acknowledge the possibility that a convergence might be bearish for gold. However you will never read a single word here that would suggest anything like that. You think I am biased? hahahahahahaha! :SNARK: :COUGH!: :WEASE!:

Mon, 07/16/2012 - 19:29 | Link to Comment FieldingMellish
FieldingMellish's picture

Penants are continuations.. makes no difference how long gold has been in an uptrend and it makes no difference on what ones point of view is. Gold was in a down trend for two decades, it could easily go up for the same. All the factors that brought it to its present price are still in play and in many cases far worse than they were only a few years ago.

Mon, 07/16/2012 - 19:48 | Link to Comment buzzsaw99
buzzsaw99's picture

Bull dookie, gold has been in a down trend for months. Not one bearish word about gold will ever be tolerated on this board because everyone has blinders on. I have time. GLD and USO WILL CONVERGE and that WILL NOT BE BULLISH FOR GOLD. I am through arguing color with people who are blind.

Mon, 07/16/2012 - 20:58 | Link to Comment FieldingMellish
FieldingMellish's picture

No one is arguing, its a discussion. You see it as a downtrend, I see it as consolidation. It did the same thing in 2004, 2006 and 2008. If you want to discuss why you think gold should fall in price that would be great. I think WTIC is vastly mispriced for a number of reasons as well. Regardless, your original point is invalid. The penant is a continuation formation. It continues to be so whether you are bullish or bearish on gold.

Tue, 07/17/2012 - 02:14 | Link to Comment Clowns on Acid
Clowns on Acid's picture

Yo buzzkill - Gold has been in a bear market for months? Y'mean versus a bull market for at least 3 years (perhaps 6 depending on one's definition).

At any point in time....the US (and ECB, and JPY, and....) ponzi scheme could blow. Suer they have been dancing around the land mine for the last few months......but they will hit the landmine....and when they do....PMs renew their bull market with vigor.

If USO does rally...who will sell oil for US or EUR fiat..?

Mon, 07/16/2012 - 18:49 | Link to Comment TrillionDollarBoner
TrillionDollarBoner's picture

Dude. As our chummy bankster friends would say. How informative were the other bear pennants you can see on the same chart, littering the way on gold's inexorable rise?

I'm not saying it won't break down temporarily this time, but the green arrow at least has history on its side.  

Mon, 07/16/2012 - 18:24 | Link to Comment reader2010
reader2010's picture
forget about wine. the best indicator is the price for purchasing those Ukrainian sex slaves working in Beijing and Shanghai. i was told, Chinese dicks are short but need more daily dosage. 
Mon, 07/16/2012 - 19:28 | Link to Comment kato
kato's picture

In the meantime, wealthy Chinese are buying French vineyards. Quite a few lesser properties in Bordeaux - so long as it has a chateau house - and recently a portion of Champs Perdrix, a village level vineyard very near to but uphill from the great, great vineyards in Vosne-Romanée in Burgundy. In Bordeaux the French are pretty pleased about the Chinese buyers - Bordeaux has a lot of wine to sell; in Burgundy, not so much pleased by Chinese vineyard ownership.

Mon, 07/16/2012 - 18:31 | Link to Comment I am Jobe
I am Jobe's picture

Tyler- need to have this story on the site.

 

SEX, PORN, BOOZE, AND GOLF WITH BANKERS: Investigation Reveals All Kinds Of Bad Behavior At Treasury Department

http://www.businessinsider.com/sex-golf-booze-bombshell-investigation-re...

Mon, 07/16/2012 - 18:31 | Link to Comment YesWeKahn
YesWeKahn's picture

Well, one thing you should know, when chineses buy stuff, espetially something that is hard to judge, higher the price, more people would buy. The same thing works for gold as well as wine.

Mon, 07/16/2012 - 18:38 | Link to Comment Quantum Nucleonics
Quantum Nucleonics's picture

Another classic bubble.

Even worse for the poor, wealthy Chinese investor is when they open up that formerly $50K bottle or French red they'll find they bought a bottle of 2 Buck Chuck with a fake label, if they can taste the difference.

At least I can go back to drinking French wine again.  Argentinian malbecs are getting boring.

Mon, 07/16/2012 - 18:42 | Link to Comment WilliamShatner
WilliamShatner's picture

What's about Romulan Ale?

 

Mon, 07/16/2012 - 20:08 | Link to Comment _SILENCER
_SILENCER's picture

That stuff is illegal!

Mon, 07/16/2012 - 21:22 | Link to Comment WilliamShatner
WilliamShatner's picture

Out here in international waters... er... I mean.. deep space... we have certain priveledges.

 

Mon, 07/16/2012 - 19:14 | Link to Comment BigInJapan
BigInJapan's picture

Just throwing this out there, but is nobody else afraid of what happens to gold once the Indian economy shits the bed?

I am also thinking the Chinese won't be too tight fisted once their bubble pops - just as the Japanese before them.

Mon, 07/16/2012 - 19:26 | Link to Comment devo
devo's picture

No.

Tue, 07/17/2012 - 02:06 | Link to Comment Clowns on Acid
Clowns on Acid's picture

The respective CB's will print fiat, or they will end up on the end of sharp chop sticks.

Your scenario is not far away....neither is my response.

Mon, 07/16/2012 - 19:35 | Link to Comment ATM
ATM's picture

If any of the anti-gold people can explain to me why the central banks own gold I'd like to hear the reason.............

Really.

Mon, 07/16/2012 - 19:41 | Link to Comment devo
devo's picture

Bernake explained it as "tradition" lol

Tue, 07/17/2012 - 07:24 | Link to Comment tsuki
tsuki's picture

Bernake as Tevye dancing on the Congressional tables.  Arrggh, begone evil vision.

 

http://www.youtube.com/watch?v=RBHZFYpQ6nc

Mon, 07/16/2012 - 19:56 | Link to Comment Monedas
Monedas's picture

Vella "Delicious Red" 5 ltr boxed wine $8 at San Ysidro duty free .... the empty bag is an inflatable travel pillow for sleeping on park benches !         Monedas        1929           Comedy Jihad Diary Of A Wino

Mon, 07/16/2012 - 20:03 | Link to Comment Monedas
Monedas's picture

"Cheap red wine .... the kind that takes the enamel off your teeth and deposits it at the back of your throat !".... Hemingway, Farewell To Arms        Monedas       1929         The boxed wines are delicious .... cheap, easy and fun !  Stack gold .... drink boxed wine .... right out of the box !

Mon, 07/16/2012 - 21:36 | Link to Comment Divine Wind
Divine Wind's picture

As a passionate yachtsman (multihulls, bitchez), I can tell you that boxed wine is the favorite of the maritime community.

You can take the interior bag out of the box and throw it in the bilge or some other irregularly shaped cubby to save space.

Some also collect the silver Mylar bags and clip them to a messenger line for a larger radar signature.

Mon, 07/16/2012 - 21:08 | Link to Comment robertocarlos
robertocarlos's picture

They could always play "spin the bottle" with that Chateau LaFeet.

Mon, 07/16/2012 - 23:30 | Link to Comment Son of Loki
Son of Loki's picture

What's the good of wine..."You can't eat it."

 

he he he

Mon, 07/16/2012 - 23:47 | Link to Comment silverdragon
silverdragon's picture

Gold and Silver have been a good bet through out history.

Tue, 07/17/2012 - 00:47 | Link to Comment Itch
Itch's picture

There was a bit of a bubble due to the amount of new wine funds that were starting up, everyone was jumping on the bandwagon. It had to slow down, the Chinese demand wasn’t about the wine at all, just people trying to buy into a bit of class; they weren’t even storing it, they were drinking it at the auctions …and mixing it with coke! (so the story goes)

Different supply & demand dynamics too, supply will continually need replenishing with wine; making the remaining bottles even more expensive, as once its gone, its gone for good.

Tue, 07/17/2012 - 01:02 | Link to Comment onebir
onebir's picture

Why oh why does not one ever mention the Tibetan viagra caterpillar fungus bubble:

http://www.gokunming.com/en/blog/item/2749/tibetan_viagra_prices_surging

 

BTW - worth charting Chinese (& HK?) prime real estate alongside those?

Tue, 07/17/2012 - 03:42 | Link to Comment silverdragon
silverdragon's picture

Most wine sold in China is entry level wine, purchased as a gift. It doesn't make for a good story though.

Tue, 07/17/2012 - 04:15 | Link to Comment elvinodiablo
elvinodiablo's picture

The top chateaus in Bordeaux took the piss out of the Chinese and anyone else who went along with it on the launch of the 2009 and 2010 en-primeurs. The wines are very good but the prices absurd. Interestingly they have a lot more in common with new world cabs than traditional claret. The thing is those mobsters need to sell anywhere from 12,000-20,000 cases per year - hence why you can find virtually any classified growth in virtually any decent bottle shop, or increasingly any airport in the world. Still they have banked piles of cash in the past decade so can afford a few bad releases (the 2011's are run of the mill and still the 3rd most expensive wines ever) and the 2012's look like they'll be dilute dribble.

The real interest in China is in Burgundy now. The best Burg's are made in tiny quantities (25-250 cases) and people the world over queue up to buy them regardless of price or the state of the economy, and those things hardly ever appear at auction, which coincidentally is the one point of sale where fakes appear and where amateurs get burned time after time.

Do your diligence and buy from the genuine agent (if you can get an allocation) not the secondary market.

Some fools forgot that wine is made for drinking not investing. But in a world of increasingly worthless fiat it can still be a worthwhile place to store value in physical assets. The global market for wine is tiny compared to even gold and silver but will burn those without specialised knowledge.

If the SHTF then at least you can drink your physical. And it will never have zero value, unlike worthless paper, shares, or ETF certificates.

Tue, 07/17/2012 - 08:40 | Link to Comment shutupnsing
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