What to put your shirt on... a picture of the art of investment

The iconic, red jersey with the distinctive "three lions" logo is expected to fetch up to 8,000 when it goes under the hammer as part of a sale of sporting memorabilia by Bonhams in Chester. This is a lot of money to pay for a football top that wasn't even used, but if England fail to win the World Cup in South Africa its value will quite probably increase as the legendary status of the class of 66 will be safe for at least another four years.

If the victory over rivals Germany 44 years ago remains English football's finest hour, then to many, Sir Winston Churchill remains our finest leader. And at an auction last week one of the largest collections of Churchill memorabilia, including an unsmoked cigar, sold for a staggering 577,063.

The items were sold by US publishing magnate, Steve Forbes, and included a candid letter from the wartime leader. Auctioneer Christie's described the sale as "the most important and comprehensive private collection of letters and books related to Winston Churchill ever assembled". It was certainly a lucrative one. An unsmoked Havana cigar offered was expected to fetch between 1,000-1,500 but went for 2,125, while a collection of Churchill's free trade speeches estimated to reach around 25,000, were bought by a private US collector for 39,650.

These are big sums of money we're talking about, but when it comes to auction sales, art is where the megabucks are. One of Monet's celebrated water-lily paintings is likely to reach 40m when it's sold at auction in London later this month. The painting, which dates back to 1906, was painted in the artist's garden at Giverny and is one of only five which formed part of his famed water-lily display at the Muse de l'Orangerie in Paris in 1909.

But it's not only Monet's paintings that have been getting art collectors excited recently. Last month, a painting by Pablo Picasso of his mistress sold at a New York auction for a world record US$106.5m (70m). The 1932 masterpiece Nude, Green Leaves and Bust, which was sold at Christie's, had expected to fetch about 62m.

The previous record for a work of art at auction was 69m for a sculpture by Alberto Giacometti in February this year. But why, given the fact that the global economy is slowly recovering from the worst downturn since the 1930s, are art prices soaring? Matthew Paton, of Christie's, believes there are several reasons. "Opportunities to buy great works of art don't come along too often and the world now, in terms of art collecting, is a much different place, the market is on a global level with collectors from China, India and Russia."

Not only that but the volatility of the stocks and shares markets in recent years has perhaps made art seem a potentially appealing investment. And you can appreciate why someone might want to wake up every morning to see an original Van Gogh painting hanging on their bedroom wall.

But Paton says hand written letters and speeches have a similar appeal to other collectors. "With the Churchill collection you're able to hold a relic from history in your hands. With a letter you know that the great man once sat down and wrote it himself. So you have something from a particular moment in time and it becomes interwoven with your own personal history."

Dan Davies, sports consultant at Bonhams, says key sporting memorabilia, like Geoff Hurst's England World Cup shirt, has a resonance with fans. "He is the man who scored a hat-trick in a World Cup final and no one has done that before or since. So although it's his spare shirt it is a rare item that will be very popular with football fans."

He says international caps are also increasingly sought after. "They are going to become a lot scarcer in the future because today's Premiership players earn so much money they won't need to sell them."

However, not all memorabilia is worth splashing out on. "Signed cricket bats aren't good investments because the signatures fade over time. But items from famous cricket matches are very popular, so anything from the 'Bodyline' series in 1932 does very well."

Colin Sheaf, chairman of Bonhams UK, says memorabilia is driven by the fascination a few people have with a famous person or event. "Something like Churchill's cigar box and Geoff Hurst's World Cup shirt don't

have wider cultural significance in the way 15th century Chinese porcelain does. I'm sure that 50 years ago there were people who collected Gladstone memorabilia, but where are they today?"