Are Whiskey and Cognac Money?

Cognac Meets the Test for Money.

Are Brandies, Whiskey, Wines & Beer Good Forms of Money?

Can whiskey and cognac be used as currencies?

What about other commodities, drugs and consumables?

If they can be used as money why aren’t they?

Would $1,000 worth of whisky or cognac bought five years ago, be worth more or less than $1000 or silver or gold?

The Lowest Cost. Period.


Not a Smaulgld subscriber? Sign up here.

Please consider making a small donation to Smaulgld.com. Thanks!





Cognac as Money

It would seem that distilled spirits, like Cognac (a specific type of brandy) whiskey, vodka and other liquors could be used a money and currencies.

Let’s put cognac to the test that gold passes with flying colors. We ask is it durable, divisible, portable, fungible, store of value and unit of account. I add two further questions to the test – does the putative money have intrinsic value and relative scarcity?

Durable

Cognac and other spirits, like whiskey have extremely long shelf lives, far longer than beer or wine and is not generally subject to spoilage. While cognac is durable in the sense that it lasts, it is not durable once it is put to use, i.e. consumed. Gold on the other hand can be used and reused an infinite number of times.

Divisible

Cognac can be divided by the barrel, gallon, liter or drop.

Portable

Cognac can be exchanged easily in small bottles (plastic) (at the higher value per ounce of cognac to wine or beer, small amount can function At some point, the smaller the size, the larger the premium on the product as a portion of the value price to cover the packaging. This, however, is no different than the mintage of smaller coins which cost more than larger sized coins.

Compare a small 50ml (1.6 ounce) bottle of cognac worth about $4 to a 475ml (16) ounce can of beer at $3 a bottle. A small wallet can easily carry $40 worth of cognac (ten small bottles). The same dollar amount of beer would require someone to lug around a case of brew to transact business. Early cognac makers had an advantage when shipping their product vs wine growers when the tax was per barrel as they could ship a greater value in product and get taxed a lesser percentage of their overall shipments than wine sellers. Bottle and barrels may break, but plastic and other more durable container can largely eliminate durability issues.

Fungible

Cognac is generally fungible by either the designations based on aging (VS, VSOP & XO etc), or by brand. Certain brands are more coveted than others. But cognac entirely fungible unless such distinctions are made. A 750ml bottle of Salignac cognac might set the buyer back about $15-$20 while a same size bottle of Rémy Martin’s Louis III will cost well over $3,000.

Store of value

Cognac has been a desired product since it was first created in France in the 16th century. A bottle of cognac tends to hold its value as its supply is limited (The Bureau National Interprofessionnel du Cognac (BNIC) requirements include, among other things, that the product must originate and be made in a specific are of France).

The price of cognac tends to hold its value subject to supply and demand. The vagaries of taste for alcohol, however and other reasons, perhaps health/religious (prohibition) concerns may make cognac and other alcoholic beverages less valuable over time. Or such prohibitions may increase its value

Unit of account

A unit of account can value goods and services because it is divisible, fungible and countable. As such, one ounce of cognac can be valued the same as ten ounces of cognac, unlike one acre of land vs another acre.

I add Intrinsic Value to the test- Does someone want it? Cognac, whiskey and other spirits are highly coveted. Even if half to three quarters of the population does not drink alcohol, there are enough people who do that provide the demand for it. When the Nazi’s invaded France, they confiscated the gold AND the fine wines and cognacs of the country.

I also add Relative Scarcity– while many may prefer beer or water to cognac, these beverages are more easily obtained and thus less valuable. The process of making cognac is painstaking as grapes have to be picked, wine made and then distilled. The distilled wine has to be blended and aged in oak barrels for years before bottling. This process requires expertise and cooperation from mother nature. In addition in order for brandies made in the fashion, called cognac, they have to be made in the Cognac region of France, create is scarcity. That scarcity does add to it value when coupled with demand.

Report Card: Gold A+, Cognac B, Beer D

Why aren’t gold and cognac and other commodities used as money?

Cognac is not used as currency for some of the same reasons as gold. Not many people use them so they are illiquid mainly because of legal tender laws. Capital gains taxes on sales of commodities like gold or cognac, also hinders hinders their use further, as well as the book-keeping that would be required to keep track of one’s gains and losses each time gold or cognac were used to make a transaction.

Try the test with other items that might be used as money like cigarettes, marijuana (too plentiful after all it is a weed) and other legal and illegal drugs (capsules are perhaps more fungible than cognac and lighter than gold), shells, furs, oil, stamps, diamonds and other items of value.

Compare American Silver Eagles for sale at:

Golden Eagle Coins
SD Bullion
Money Metals Exchange

Compare Pricing and Shipping on American Gold Eagle Coins

You can compare pricing and shipping charges on American Gold Eagles coins of all sizes at these web sites:

Golden Eagle Coins
SD Bullion
Money Metals Exchange

Please consider making a small donation to Smaulgld.com. Thanks!





If you have enjoyed this report, please consider buying your precious metals through the Smaulgld affiliates linked to on this site* and subscribing (for free) to Smaulgld.com.

Get Free Updates From Smaulgld.com

Subscribe to Smaulgld.com and get the free In Case You Missed Itweekly email as well as updates and analysis on gold, silver, real estate and the economy.

Also get the free report “Twelve Key Differences Between Gold and Silver” when you subscribe.






Subscribe to Smaulgld.com to receive free gold and silver updates, news and analysis.

The Lowest Cost. Period.

Browse Collectible Coins on Amazon

Browse Silver Coins on Amazon

Further Reading:

Gold as Insurance

GOLD AND REAL ESTATE ARE ASSETS, NOT INVESTMENTS

Please visit the Smaulgld Store for a large selection of recommended Kindles, books, music, movies and other items.


You can support Smaulgld.com by making all your Amazon purchases through the search widget below and by ordering your gold and silver by clicking on the BGASC, Goldbroker, Golden Eagle Coin, Money Metals Exchange, SD Bullion and Royal Canadian Mint ads on the site.

DISCLOSURE: Smaulgld provides the content on this site free of charge. If you purchase items though the links on this site, Smaulgld LLC. will be paid a commission. The prices charged are the same as they would be if you were to visit the sites directly. Please do your own research regarding the suitability of making purchases from the merchants featured on this site.

Chart Disclaimer: Information presented here has been obtained from a third party and is presented for information purposes only. Smaulgld can not and does not guarantee the accuracy or timeliness of the data displayed on this site and therefor the data provided should not be used to make actual investment decisions. You should always consult a professional investment adviser before investing in precious metals or any type of investment. You acknowledge that Smaulgld assumes no responsibility for the integrity of data on this site.

The content provided here is for informational purposes only. Making investment decisions based on information published by Smaulgld (SG), or any Internet site, is not a good idea. Accordingly, users agree to hold SG, its owner and affiliates, harmless for all information presented on the site. SG presents no warranties. SG is not responsible for any loss of data, financial loss, interruption in services, claims of libel, damages or loss from the use or inability to access SG, any linked content, or the reliance on any information on the site.

The information contained herein does not constitute investment advice and may be subject to correction, completion and amendment without notice. SG assumes no duty to make any such corrections or updates. As with all investments, there are associated risks and you could lose money investing. Prior to making any investment, a prospective investor should consult with its own investment, accounting, legal and tax advisers to evaluate independently the risks, consequences and suitability of that investment. SG disclaims any and all liability relating to any investor reliance on the accuracy of the information contained herein or relating to any omissions or errors and as such disclaims any and all losses that may result.

Comments are closed.

Post Navigation