Investing in Liquid Gold

Gold is a popular asset class throughout the world, and while there are many reasons for its popularity, it probably helps that you can wear your investment if you so choose.  Liquid gold, otherwise known as rare whisky, is rather more of a niche market and arguably stands somewhere between an investment and a gamble, but for those interested in whisky, it can also be good fun and if your investment does not increase in value as you had hoped – you can always console yourself by drinking it!  With this in mind here is a brief guide to investing in liquid gold.

Educate yourself

When it comes to whisky, there are two parts to a useful education.  One part is what you might call “book learning”, or academic learning and the other part is what you might call “hands-on learning”.  Whisky tastings are one obvious example of the latter, a less obvious example, is learning from other people in the whisky community, who can advise you not only on what you need to know about investment whisky but also potentially fill you in with the relevant facts themselves, or at least point you in the right direction.  For example, if you are interested in investing in a particular limited-edition whisky, then knowing how many bottles of it are believed to have been consumed is clearly very useful information.

Always read the label

Although the packaging for whisky, including the labels, is often used for marketing purposes, it’s also highly practical and, in some cases, such as the labels, also very informative.  This is particularly true when looking at bottles from smaller/independent distilleries, which may use less additional packaging (such as boxes) and hence put everything you need to know on the label itself.

Diversify

Even though you’re focusing on one, very specific, asset class, you can still diversify.  In fact,  you can diversify even if you only want to invest in Scottish single malts.  Remember that Scotland currently has around 120 distilleries, plus about 40 “ghost” distilleries, which are distilleries which have ceased active production, but are still releasing whisky as it matures.  These numbers can, of course, vary and, in particular, it’s always worth staying on the alert for new distilleries opening, since it may present the opportunity for you to bag an early bottle at a very reasonable price.  After all, the big names in whisky (and every other industry) were once up-and-coming young businesses.

Remember whisky is produced in batches

Whisky is produced in casks and the choice of cask will influence the maturation process, which means that each individual cask of whisky is considered to be its own batch and that fact can be very important for a number of reasons, most of which revolve around the fact that you can put the exact same base mixture into casks at the exact same time and wind up with each batch having its own individual taste.  From an investment perspective, it may even be worthwhile buying an entire cask and then, if you wish, bottling it yourself either to keep or to sell on (or a mixture of both).  Opportunities to purchase casks tend to be few and far between so it’s advisable to consider them seriously if they do present themselves and to be prepared for the level of competition you are likely to encounter, especially if the cask is rare in some way.

Ask yourself what “special edition” actually means

Special edition is a marketing term and some uses of it have more validity than others.  Even when the term “special edition” is reasonable, you may want to think carefully before investing on that basis alone.  For example, there is a special edition whisky for Game of Thrones, which was presented for sale before the last season aired.  It will be interesting to see how well this whisky holds its value given the controversy over the ending.