Rhino horn “is really not a good investment,” said Gao.
From Strange Behaviors:
The War on Rhinos? It’s an Investment Bubble
Carved rhino horn offered at a 2011 Christie’s auction in Hong Kong (Photo: Xinhua/Song Zhenping)
Since the start of the current war on rhinos, in 2006, journalists and wildlife trafficking experts alike have treated the trade as a product of Asia’s new-found wealth combined with old-style traditional medicine: Rich buyers pay astounding sums for rhino horn in the belief that it will cure cancer or a host of other ills.
This reporting often comes with an undertone of bafflement or even thinly veiled condescension. Buyers, mainly in China and Vietnam, appear to be so naive that they ignore the total absence of scientific support for the medicinal value of rhino horn and put their faith instead in a substance that is the biochemical equivalent of a fingernail.
But a new paper in the journal Biological Conservation raises a startling alternative theory. Rhinos are dying by the hundreds for what may be in essence an investment bubble, like tulips in 17th-century Holland or real estate in 1920s Florida
It’s part of a trend over the past decade in China, according to Yufang Gao and his coauthors, of treating art and antiquities as a place for investors “to store value, to hedge inﬂation, and to diversify portfolio allocation.” Rhino horn assets typically take the form of cups, bowls, hairpins, thumb rings, and other ornamental items.
“Rhino horn pieces are portrayed in the Chinese media,” Gao and his coauthors write, “as an excellent investment opportunity whose value is tied more to the rarity of the raw materials rather than the artistic nature of the item. The aggressive media attention has played a signiﬁcant role in the growth of the art market.” Press reporting about outlier items—those sold for astronomically high prices—“drives the perception that collecting rhino horn is highly proﬁtable and inﬂuences black market prices.”
The study looks at articles from more than 300 Chinese newspapers between 2000 and 2014 and reveals that 75 percent focus on investment and collectible value versus just 29 percent focused on medicinal uses. It’s the opposite in the Western press, where the focus is on medicinal uses 84 percent of the time. Gao attributed this gap mainly to the language barrier and the tendency among Western journalists and conservationists to make little use of Chinese newspaper reporting. Chinese reporters also tend not to contribute to the international press.
The study hints that the rhino horn bubble has at least stopped expanding: Chinese press reporting on the investment value of rhino horn peaked in 2011. The following year, China’s government, under pressure from international governments, ended public auctions of rhino horn, ivory, and some other wildlife products. Press reporting on rhino horn collectibles plummeted, and the trade relocated to the internet and the black market. The price increase in rhino horn since then, when adjusted for the inflation rate in China, has not made it a particularly good investment even in purely financial terms, said Gao in an interview.
The killing of rhinos in South Africa, where most of the poaching occurs, declined slightly last year, for the first time in eight years. But the bubble has not burst: “We have been informed by various sources,” Gao and his coauthors write, “that the rhino horn market is ‘You Jia Wu Shi,’ which literally means ‘the price remains high but there is no turnover.’ Collectors, investors, and speculators are holding onto their collections, refusing to sell at a low price and waiting for the policy to change.”...MORE