At a time when continued uncertainty is impacting the money markets and making stocks increasingly volatile, many investors are choosing to look elsewhere for opportunities. Collectibles and commodities have become popular alternative investments in recent years, but knowing how to enter a market and execute a strategy is what matters.
Because it’s easy to get carried away and caught up in the moment, we want to take a step back and show you how the strategies work in these markets.
The Reality Of Commodities
Gold, oil, coffee, and wheat are all examples of commodities, raw materials that are then passed to other industries to make products. There is a belief that while stocks can jump up and down and at times get wiped out, we will always need things like gold and oil to function. While this is true, it doesn’t automatically follow that they are therefore sound investments.
The issue is that the price of commodities is closely aligned with the strength of the major world currencies, with the US dollar being the most closely connected. A strong dollar means the US has high purchasing power, resulting in it buying up more raw materials to power its economy. The converse is true: a weak dollar drops commodity prices due to fewer transactions, meaning that an investment in commodities is heavily influenced by monetary policy.
The Case For Collectibles
Another alternative investment strategy is to collect something that you are passionate about and knowledgeable about in such a way that your holding appreciates over time. Cask whisky investment is a prime example because of the maturity of the market and the returns that investors have been able to achieve over the long term.
While raw materials are often highly uniform, the same is not the case in the world of collectibles. One cask could represent value, while another could have been mishandled, leaving it virtually worthless. The key is to connect with an expert in the field who will be able to guide you through all of the fine details with 100% transparency.
“One of the key questions that would-be investors shouldn’t be afraid to ask any company they’re looking to invest with is ‘Can I meet you? Can I spend some time with you and get to know who you are?’” — Alphie Valentine, Co-founder of Hackstons, specialists who provide opportunities for whisky consumption and investment, highlighting the importance of doing your due diligence when it comes to choosing who you invest with.
Verification Of Collectibles
Hackstons provides every investor with a Delivery Order so that the ownership, location, and contents of each cask can be readily verified, and this is often considered the ultimate proof of cask ownership. They can also supply insights into how the value of similar casks may have changed over time.
And finally, they can arrange tours of their warehouse partner in Fife, Scotland, so that clients can enjoy a more experiential cask ownership journey. Put all of this together, and prospective investors can verify every aspect of the opportunity as they decide whether or not to make an investment. It’s these informed decisions backed by real-world data and expertise that mean collectibles have the potential to outperform commodities, especially over the long term.
The Real Advantage Of Collectibles
Scarcity will rapidly increase value because buyers will look to pay more to secure a collectible that few others have. You could argue that a sudden drop in the world’s oil and wheat supply would push demand through the roof, and it would, but the economic consequences would be completely different. Sudden changes in the availability of commodities would impact every aspect of the global economy, reducing spending power and investor confidence in the process.
A cask of whisky from a prestigious distillery will become rarer and rarer over time as casks from the same batch are gradually opened and consumed. The niche nature of collectibles is very much in their favour because an increase in scarcity will not reduce buying power across the economy. Owners of highly sought-after casks may then find that they have a number of lucrative options to sell the cask back into the market for a potential profit.
The Importance Of Long-Term Strategies
Many people who invest in commodities will take a day trading approach in which they look to place a high volume of trades and benefit from short-term price fluctuations. The cask whisky market, by contrast, requires a much longer-term approach due to the relative stability of the market and the fact that whisky, as a rule of thumb, typically increases in value as it ages. This means that investors who want to invest in a passion project where they can enjoy the journey are able to take a more measured approach, where they liaise with companies like Hackstons when they need to.
The Final Verdict
Investing in collectibles with the support of a trusted company can help you enjoy the process and improve your knowledge of something you are passionate about. Taking a look at Hackstons on YouTube will show you how the process works. This is in contrast to investing in commodities, where you may need to execute a high volume of trades while analysing a very large quantity of economic signals.
