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October 02, 2007

The Great Tea Bubble of China

posted by MR WAVETHEORY at 10/02/2007 01:13:00 PM

The Great Tea Bubble of China is promising vast wealth and fortune to tea traders in China. According to the journal, tea farmers in China are making a fortune selling "puer" tea. A cake of tea can fetch $13,000! That's for tea aged 150 years ago and pressed into a discus shape.

Puer is named after the Pu'er county of China in Yunnan, China, where it is cultivated. For normal varieties of puer, the price of one of the hottest varieties of puer soared to nearly $35-a-cake this past April, seven times the $5-a-cake value just three years ago. Today, a cake of puer sells for nearly $16, a 60% backslide from the peak, fueling fears of a crash.

You have to love the speculative nature of the business. Even the guy who owns a ton of this tea is trying to toot his own horn. Mr. Bai (the dude in the picture above) is reluctant to talk about the value of his puer, saying he collects it for its taste, not its monetary value. Still, he estimates his 56 cakes of 100-year-old puer are worth about $640,000. He has two 150-year-old cakes whose value he declines to discuss.

There are even stories of Chinese tourists buying and flipping puer cakes - ie buying that for $13,000 and flipping them for a quick double! The Great Tea Bubble is reminscent of the Great Tulip mania that struck Holland four or five hundred years ago. That particular mania got speculators Europe wide hot and heavy over tulip bulbs where one single tulip bulb sold for several thousand florin. To put that into perspective, one hundred florin could buy 1 ton of butter. Can you believe it?

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