Making a profit

Published in the Herald Sun, January 2008 by Kate Adamson

Fine art, gold and antiques, once the exclusive domain of the rich and famous, are stacking up as blue-chip investments for mum and dad investors seeking refuge from share market tumbles.

With a market roller-coaster ride tipped for the year ahead as fallout from a possible US recession looms, shareholders have begun looking elsewhere.

Buying a taxi licence and investing in emerging economies, including India, China and Latin America via managed funds were other potential investment havens, advisers said.

Record high international gold prices have sparked a gold rush.

Sales at Australia's gold bank, the Perth Mint, have jumped by 50 per cent in the past six months, with the price peaking at $US914 an ounce last week.

Australian Bullion Company spokeswoman Jane Simpson said that pouring savings into gold, one of the oldest forms of investment, was comforting in times of volatility.

"People look to an asset that holds its value or appreciates instead of watching their money disappear in shares," Ms Simpson said.

Buyers were paying $150,000 on average for gold bullion, ingots and coins, which start at $500.

Investors could take the gold with them or open a metal account, like a bank account, to trade.

"Silver, platinum and palladium are all travelling well," she said.

On the back of a record bumper year, premium art was set to continue its boom in the first quarter of 2008.

Rod Menzies, chairman of Australia's biggest art auction house, Menzies Art Brands, said national art auction sales jumped from $106 million in 2006 to $171 million last year.

"Demand in the first quarter to the end of March is going to remain very strong," Mr Menzies said.

Art investment adviser Barry Pang, from Artpreciation, said the trick to buying art was going for blue chip works.

"In property you say location, location, location. In art we say artist, artist, artist," Mr Pang said.

"Your Brett Whiteleys, your Sidney Nolans - the big name famous artists.

"You can buy an original Nolan for under $5000 that will go up in the same proportion as the million-dollar Nolan."

Art can easily be transported and sold in any market to get the best return.

"You might sell in Melbourne and not get your price, then try Perth with the mining boom and get your price there," Mr Pang said.

Returns for big names could be huge as known artists were snapped up by galleries, leaving fewer pieces on the market, he said.

A Brett Whiteley sold in 1977 for $22,500, then sold in 1999 for $1.98 million, boasting a 400 per cent rise each year, Mr Pang said.

"Quality art outperforms everything," he said.

But art, along with antiques, fine wine and rare collectables were often an emotional investment, according to Tony Negline, principal of financial services company

"It's part emotion and part logic," Mr Negline said.

"If you want a positive return, you are betting that, when you go to sell, it has gone up in value," he said.

"You really want to get it right."

Paying $100,000-$200,000 for a taxi licence to operate a cab was a "less sexy way" investors could go.

"Either the licence increases in value or you get payments by leasing it out to a cab company," Mr Negline said.

Taxi licences were issued by the Victorian Government and could be traded on the Bendigo Stock Exchange, but the value was often linked to the general economy.

"If times are good we'll spend money and hop in a cab. When times are tight we get a tram, train or bike," Mr Negline said.

Investors could also look overseas and buy into companies in booming economies such as China, India and Latin America via managed funds, with some reporting more than a 50 per cent increase.

"Some funds have been quite stellar but when those markets correct, they correct big as well," Mr Negline said.

Analyst Dale Gillham, from Wealth Within, recommends sticking with the local stockmarket, despite its volatility.

"Pick the top 10 stocks," Mr Gillham said.

"In the last 10 years, the top 10 shares have produced eight winning years and two losing ones."

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