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14.10.20

The New Gold Standard for Investors

Whisky Overtakes Bitcoin to Become the New Gold Standard for Investors

It’s been a turbulent year for investors as Covid-19 wreaks havoc with markets across the world and formerly safe investments have come tumbling down because they don’t fit in with ‘the new normal’.

This has left people looking for new options that come with less risk of being impacted by local lockdowns and industries being affected by the way we’re all living our lives in the shadow of coronavirus.

One of the safest bets right now seems to be investing in whisky, which could be giving you a better return than gold, Bitcoin or the S&P 500 shares index. This is according to a new data modelling algorithm that has been used to produce the BC20 Whisky Cask Index, based around the values of whisky of various ages produced across a range of Scottish distilleries.

The Index says that if you had invested $100,000 in whisky casks in July 2018, you would have assets worth close to $160,000 by the end of June 2020, which is more than you’d have had if you’d invested in Bitcoin or gold.

Amongst the other insights from the Index is the revelation that since January 2019, the projected average annual capital growth rate for whole casks of Scottish whisky has risen by more than 2 percentage points.

The Index also shows the benefits of investing in older whiskies, because there is a sharp increase in value of casks over the age of 20 years, while casks that are more than 45 years old can go for as much as £600,000.

But if you don’t have the money for that kind of investment there’s also good news regarding newer make spirits, which show a large percentage increase in their younger years.

The average annual capital growth rate for casks is greater than 13%, with some of the most sought after brands approaching 20%. The lowest growth rate was 5%, meaning none of the brands offered negative returns.

Laphroaig offered an average of 19.88% projected annual capital growth, followed closely by Bunnahabhain and Staoisha in the top three distilleries in the Index.

Gordon added: “The report confirms the anecdotal evidence we’ve witnessed over the past few years and it’s reassuring to see not a single distillery index with negative returns throughout our period of study.”

Whisky – A Port in a Storm?

So far there haven’t been signs that even Covid-19 is impacting whisky investments, with the 1,000 most sought after Scottish single malt whisky bottles measured in the Rare Whisky Apex 1000 Index increasing in value by almost 7-fold since 2010 and rising even throughout 2020. Rare whisky values have grown an incredible 582% over the last ten years.

Gordon said: “The whisky cask market is experiencing continued positive and stable growth despite the COVID-19 pandemic that has captivated global markets this year. With the uncertainty in the world today, it’s more important than ever to create a portfolio of wealth that performs independent of outside forces and is safeguarded from the volatility in the global economy.”

Lockdown measures in Scotland did impact production as distilleries closed before gradually reopening with new health and safety measures in place, while uncertainties around trade saw a 30% drop in exports for Scotch whisky in the first half of the year.

However, the future still looks bright, not least for the Macallan, which has doubled its previous production capacity after opening a brand new £140 million distillery. There are currently 22 million casks of whisky maturing in warehouses in Scotland, according to the Scotch Whisky Association.

What the short term future holds for the whisky industry is still unclear for as long as Covid-19 and related restrictions are in place, and there’s talk of distilleries putting up whisky prices by around 20% to help cover additional costs.

However, all of the evidence we have at this point is that there’s nothing safer to put your money in right now than whisky if you want good returns. Bitcoin has been impacted by coronavirus and even gold has seen fluctuations, so it seems like Scotch whisky is what you need for steady nerves in these increasingly turbulent and testing times.