Summit Notebook

Exclusive outtakes from industry leaders

That’s rich. I meant the wine.

June 8, 2010

Jeffrey Rubin

What do gold and wine have in common?

Price.

Well, too high of a high price, according to Jeffrey Rubin, director of research at Birinyi Associates, the stock market research and money management firm.

Rubin told the Reuters Investment Outlook Summit on Tuesday that he thought gold prices were “certainly a little frothy” at current levels and that he would rather be a buyer of the gold miners such as Newmont Mining Corp, Barrick Gold Corp, or Freeport-McMoRan Copper and Gold Inc. Gold hit an all-time high¬† above $1,250 an ounce on Tuesday as investors piled in due to fears that European credit contagion could lead to a double-dip recession.

Rubin isn’t expecting a double-dip U.S. recession, saying the chances are slim. He also felt stock prices were likely near a bottom. Not so for the price of a wine? A good year is already priced in, so to speak.

In the spirit of austerity, we asked Rubin what personal spending he might curtail. For a wine collector with a 1,500 bottle collection, the answer was bitter.

“Some of my high-priced wines. I’m big wine collector,” he said, adding that he keeps some at his home but most in a special storage facility.

“There are some wine purchases that I won’t be doing, and also eating out as much. Part of that is because we like to cook a lot,” he said.

“Originally when I started collecting wine, it was one, because I liked to consume wine,” Rubin said.

As his interest deepened he found what he was buying was appreciating in value, “significantly.”

“I thought of it almost as part of a second asset class, another asset class, understanding the risks, the liquidity and storage costs,” he said.

“I built up a pretty significant database tracking some of these wines over a long period of time. Some of the wines now-a-days are so expensive and it is priced into it already.¬† If you look at some of the 2005 Bordeaux that were selling at $3,000 a bottle, and the ’82 Chateau Margaux, I actually did buy it for my mother when it first came out in futures at $56 a bottle. Now it is worth $1900 a bottle, and she drank it a couple of years ago, and there goes my inheritance,” he said.

“I find now that the wines will not appreciate as much because they are already starting at such an obscenely high price.”

Salut.

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