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)

by Richard Conniff/Takepart.com

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.

A 2007 rhino horn auction catalogue

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.”

They have some faint reason to hope. Earlier this year South Africa ended its ban on the rhino horn trade within its own borders, and Swaziland, a landlocked nation abutting South Africa, proposed to end the international ban on the rhino horn trade. The debate on that proposal will take place next month when the 180-odd member nations of the Convention on International Trade in Endangered Species meet in Johannesburg. Most observers say, however, that the proposal has almost no chance of winning approval.

Gao, born in Fujian province and now a doctoral student at the Yale School of Forestry & Environmental Studies, urged rhino conservationists to pay attention to the investment and collectibles market. Investment involves “a very different group of stakeholders—museums, art galleries, art dealers, and collectors,” he said. “They have not been involved in the campaign” against poaching, and the same articles that tout the investment value of rhino horn never talk about the environmental consequences of the trade. “Conservationists should try to target these people and involve them in saving the rhinos,” he said.

One sure way to reach them: Demonstrate, with the support of the Chinese government, that the air is belatedly seeping out of this investment bubble, just as it did for tulips in 17th-century Holland and real estate in 1920s Florida.

Rhino horn “is really not a good investment,” said Gao.