Whisky, Gold and Chinese Shares


It’s the task of today’s Daily Reckoning to raise a toast to the idea of investing in ‘liquid gold’. I mean that literally. The UK Telegraph reports there has been a jump in the number of single malt Scotches sold at auction. The top seller hit £61,000. That’s a lot of cash on the buy side. Mind you, analysing the merits of Scotland’s finest sure sounds more fun than reading a balance sheet!

It may have been more profitable too, if this line from the article is to be believed:

According to the Rare Whisky Top 1000 index, launched on Thursday, the 1,000 most collectable Scotch whiskies have gained 203pc in value since December 31, 2008, to the end of June this year.

Who would have thought? I’m not much of a whisky drinker. But it does sound like the kind of idea Nick Hubble might include in the monster retirement breakout plan he released recently. Nick works with our friends at Fitzroy Press. If you’re tired of standardised and conventional advice on retirement, Nick’s always on the hunt for creative and profitable solutions.

He’s a hit with readers. And that’s no wonder if you look at how the financial services industry keeps milking the super cash cow whenever it can. The Australian Financial Review rang out this warning on Friday: ‘Savers are still paying up to 2.6 per cent on MySuper retirement products, despite them being promoted as low cost, no-frills investment options.

The Australian Prudential Regulation Authority estimates $77 billion of super assets are still sitting in high fee legacy accounts. This is the gravy train for banks and wealth management companies. If you’re looking to enhance your super returns, the obvious place to start is by cutting the fees.

Getting back to the whisky, or liquid gold… I couldn’t help but compare its performance to the yellow metal. Gold’s not fairing quite so well as Scotch. As you can see below, it’s been selling off since July.

Source: Barchart.com

Over at Cycles, Trends and Forecasts, we spent the last issue analysing gold. The short version is that gold is flirting very close with a key technical level. If it breaks below, it’s going to be a long way back from there to the glory days near $US1900 per ounce.

Things don’t look too flash from the fundamental side, either. According to the Perth Mint, 80% of sales come from Asian buyers. If memory serves, China overtook India as the biggest gold market last year. The news coming out of China won’t help support gold demand.

The head honchos in Beijing seem to be encouraging the Chinese to move their money into shares and making it easier for them to do so. Take this from Bloomberg last month:

The official Xinhua News Agency published at least eight articles this week advocating equity investing after similar stories appeared in the People’s Daily newspaper and on state-run television last month, part of what Everbright Securities Co. says is an increased government push to bolster the market.

Authorities have also cut trading fees, made it cheaper to open new accounts and organized investor presentations by the biggest listed banks in the past two weeks.’

Not only that, over at New Frontier Investor, our Emerging Markets Analyst, Ken Wangdong, says the next major story that matters is China opening stock trading between Shanghai and Hong Kong.

This is part of an initiative from Premier Li Keqiang to open up China’s market to foreign investors. It would allow them to trade shares listed in Shanghai directly for the first time. Conversely, Chinese investors will be able to buy stocks listed in Hong Kong.

As Ken says, this opens up hundreds of shares for Chinese investors. Here’s his take:

This is part of China’s overall plan to expand its capital market in equities, bond, derivatives and other products. You have no doubt heard about all the fear of a credit blowout in China. Well, this is part of the answer to that problem. This will allow Chinese companies and governments to diversify away from banking lending and the primary credit market. It’s going to make capital pricing more efficient, and it will enable better liquidity.

Net result for now: The Shanghai CSI 300 index is moving up. For stock pickers, Ken is on the case for the best shares to own in and around China. In fact, he’s about to leave for Beijing to bring back his best ideas. Stay tuned.


Callum Newman
For The Daily Reckoning Australia

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Callum Newman

Callum Newman

Callum Newman is the editor of The Daily Reckoning and Associate Editor of Cycles, Trends and Forecasts. He also hosts The Daily Reckoning Podcast. Originally graduating with a degree in Communications, Callum decided financial markets were far more fascinating than anything Marshall McLuhan (the ‘medium is the message’) ever came up with. Today Callum spends his day reading and researching why currencies, commodities and stocks move like they do. So far he’s discovered it’s often in a way you least expect. To have Callum’s thoughts and insights on the current state of the currency, commodities and stock markets delivered straight to your inbox, take out a free subscription to The Daily Reckoning here.

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slewie the pi-rat
slewie the pi-rat
2 years 19 days ago
how about marijuana, silver, and cash? i wonder what Nick thinks about ISIS? has he noticed that because of ISIS: 1) Joe & Mary 6-Pak now think it is OK for the US to be operating militarily, in Syria. 2) the “Int’l Law” community heard prez0 and Sec. John “Mr. Ed” Kerry at the UN, last week and, so far, it is “apparently” OK with the Int’l community, also, for the US to be operating militarily in Syria. has Nick seen that those two items of NECESSARY SUPPORT have already been accomplished by this spook-show? and what a coincidence! this… Read more »
Charles Ponzi
Charles Ponzi
2 years 18 days ago

I wonder what Big Brother will think?

We are living in dangerous times. Our thoughts will be used against us.

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