How risky is an investment in tangible assets?
Source: Violin Assets , Author: Posted by BI-ME staff
Posted: Thu September 15, 2016 11:02 am

INTERNATIONAL. Since the BaFin (Germany's Federal Financial Supervisory Authority) announced its plan to ban credit-linked notes (CLN), consumer protection authorities have also been targeting various other investments. How risky is an investment in tangible assets?

A valuable red wine, a vintage car, an oil painting, a historical musical instrument – the possibilities for investing in tangible assets are diverse. In view of the persistent low interest rate environment, where traditionally safe investments barely yield a profit, alternative valuable objects are more in demand than ever.

The risk is that ordinary people are only seldom able to assess the value of a piece themselves and may, in extreme cases, even be in danger of falling for a fake.

Jost Thöne, Stradivari expert and co-owner of VIOLIN ASSETS, offers input on this subject. The company makes high-quality historical and modern string instruments accessible as investments.

Q. Mr Thöne, if I use your services to purchase a Stradivarius for several million euros, how sure can I be that the instrument is not a fake?

A. Jost Thöne: It's also not possible to be completely sure in this respect. After all, none of us was there when these instruments were produced. But whoever has worked in this small and very fine market for more than three decades, as I have, can be expected to understand his craft.

Q. What exactly is the "craft"?

A. I use all the modern scientific investigation methods that facilitate attribution: stylistic analyses and certificates from recognised experts; dendrochronological analyses that verify that the object can, due to the condition of the wood, be from the time period in question; as well as documents from archives that make it possible to trace the history of prominent instruments over centuries.

The memories of Dietmar Machold, for a time one of the most prestigious violin dealers worldwide, are still fresh. Not long ago it was found out that he had sold counterfeit instruments for millions. He was put in prison, leaving some of his investors with high losses.

Mr Machold was a unique case which, understandably, received a great deal of media attention. But he should not be deemed a suitable example for drawing conclusions about the overall legitimate musical instrument business. Machold’s customers had often made it very easy for him.

For years he had had many helpers playing his game to their own advantage, although it was known that there were problems. No one is immune to criminal energy on the one hand and greed on the other. It is important to note that Machold had also built his business on the "Stradivari myth" – whereas my business ventures have been aimed for decades at “demythologising” Stradivari and at creating transparency for his brilliant work.

Q. What do you mean by that?

A. For musicians a Stradivarius is still today the "measure of all things". Three hundred-year-old instruments fill our modern concert halls with a sound that could not be more perfect. This has little to do with myth and mystery, however, but rather is due to the experience, discipline, rigour and the masterly craftmanship of this exceptional violin maker – and of course the skill of the soloists who bring his instruments to life!

Q. What is your basis for this opinion?

A. I recently published four more volumes of my Stradivari encyclopedia. For the work, every instrument was scientifically analysed, i.e. dendrochronological analyses were conducted that give information about the age and origin of the wood used. We put each instrument in a computer tomograph to make repairs and corrections visible. For the first time, we have also put sound samples on a DVD to give people an idea of the sound quality of these instruments. For the instruments that we deem suitable for investment, we document – to the extent the sources make it possible – the complete owner and player history. And, where necessary, we call in additional independent and internationally recognised experts.

Q. How valuable is such an instrument as an investment?

A. High-quality string instruments are a very stable investment. "Albert-Fuchs-Taxe", the standard work documenting the performance of string instruments since 1907, shows a continuous increase in value. At the same time, the global demand for these rare goods is increasing because they are limited in number. It should be noted, however, that the investment market is not liquid at all times; therefore, we recommend this investment only to investors looking for long-term opportunities.

Photo Caption: Jost Thöne, Stradivari expert and co-owner of VIOLIN ASSETS
 
About VIOLIN ASSETS
VIOLIN ASSETS GmbH makes high quality stringed instruments available to private investors and foundations as an asset class. The company brings together its unique expertise in the field of high quality stringed instruments with sound, personal, discreet support in investment matters.

For more information, please visit www.violin-assets.com

 

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