Is Investing in Art a Safe Haven for your Money, Is Art the New Gold

Posted on October 13, 2008


Skull, damien hirst

Skull, damien hirst

  • Is Art the new gold, that is the question Sarah Thornton asks in her October the third article published in the Telegraph.

  • Recently as many news articles have pointed out the sale of art has exploded with prices going through the roof.

The Damian Hirst auction at Sotheby’s exceeded all expectations, 200 million. But did it, is the question that Sarah Thornton asks and I would agree. Damien Hirst released a multitude of New Artworks directly from his studio that were then auctioned off at Sotheby’s.

  • The question is “What is a 2008 Hirst really worth”?

Only time will reveal the answer. Thornton raises the question who really bought what or perhaps better said who or what encouraged the buyers.

  • Another question is this, is there a conspiracy behind the sale of art today, is it a true and transparent market.

At the Hirst Auction Francois Pinault the owner of Christy’s, bought the most expensive lot of Damien Hirst’s artwork at Sotheby’s Hirst auction, reported in the Wall Street Journal. Did he see it as a grand opportunity to invest in art or the art sales market. Did his purchase help to sustain value in the system? Then there are the rumors, speculation that behind the scenes deals were made as Sotheby’s negotiated new sale terms with buyers prior to the sale. Switching from full payment within 30 days to six months.

  • Then there were the Russian Capitalists with all of their money, buying Hirst treasures.

I really like the phrase Russian Capitalists, it is just, well a picture of where we have arrived in the global market today.

  • So 200 million dollars changed hands for art at the auction while Wall Street tumbled.

So you have to wonder is this a good investment, is Art a solid place to put your money. As Sarah Thornton points out, if you pay 3 million for a De Kooning it will certainly always be worth something. Maybe more maybe less but it is a good bet it will retain more value than say some of the toxic American Financial Stocks.

  • So what should you as an investor be considering today right now to secure your capital?

In fact should you as just the average Joe be thinking about moving money out of your 401 K or money market account and buying gold or art as a secure source of protected wealth.

  • As my old friend Claude Hamby always said “Hold the Phone”.

Claude was the flamboyant owner of Hamby Movers, his nick name was Cha Cha. Claude never met a women he couldn’t fall in love with, one sparkling glance in his direction and he was in love. But this lead to many a heartbreak even for the charismatic Cha Cha. But when it came to business, money and the way the world works down and dirty; Claude was a gifted sage. He knew where he was positioned in the larger markets of his world. He knew how and where to make money and investments that were within his safety zone. He knew when a deal was good and he knew people and how all that glitters isn’t gold.

  • Except for voluptuous women with radiant smiles.

And that my friends is what the art market is, a voluptuous woman with all the charm and intrigue to lure you in. So now if you have been hooked by the possibility of romance and riches what should you be thinking about with the glare of the bright lights in your eyes and champagne in your glass. Should you buy art as a safe haven for you wealth. What kind of art and at what level can you afford. Can you afford the art markets of the superstars like Damien Hirst, can you buy a Van Gogh?

  • Well frankly if you can, then you have little worries at least for now.

You can afford to lose money or you can wait to liquidate your treasure, you will be just fine. But remember that Art is not a liquid asset, well unless you buy a Formaldehyde submerged Golden Hoofed Cow by Hirst.

  • What you need to think about is where are you positioned in this world of art trading where the top seems to have no ceiling or limits.

You have to know your place and you have to know what the risk is to you and your money.

  • Some time ago, about twenty years or so in the past we had the Great Bronze run up in Western Art, that is Western as in images of the American west.

Cowboys on horse back, Indians and assorted animals like bears and elk. Many of these Artworks were created by very noted artists like Remington, Scriver, and many others. Some of the bronzes were re-strikes of old molds that were owned by dealers. Some where produced in editions of the thousands. All were sold by dealers who pushed the market as high as they could using any tactic, any romantic notion of wealth and fame to get the buyer to purchase the bronze master pieces that were over valued artworks.

  • Then one day the bottom dropped out of this alchemist gold market of Western Bronzes and the owners found themselves in a position of owners of scrap metal.

The bubble burst, the values plummeted and they have never returned to the original sale prices. Bronze is still bronze a mixture of copper, brass and tin. Some investors still love the work, they love their Cowboy on the side table by the bed.

  • But it is still an empty bed where the romance of investing in art has gone cold.

As I have said time and time again research what you are going to buy. And you better love it for it’s aesthetic value because you may own it for a long time. Like Claude it is easy to fall in love with the idea of a hot romance, but the reality can lead to many a heartbreak. So if you can’t afford to get into the superstar art market keep your money in insured accounts and buy art that you truly fall in love with, even if it is for just the moment.

Piggy, damien hirst

Piggy, damien hirst

  • Art Market Update November 2008

Sombre sales at Sotheby’s and Christie’s mark end of art boom

By Deborah Brewster in New York

Sotheby’s yesterday provided evidence that the global financial crisis has ended the six-year boom in art prices, as it reported a third-quarter loss that was double that of last time.

The auction house also lost $42m in guarantees for artworks sold during October and November.

  • Read the whole Article here:

  • Now is the time to buy art that you love!

In fact if you plan to buy gifts for the Holiday’s consider buying original art from local artists. Your Artist neighbor is feeling the pinch of the economy too! By supporting your local artist you help build the value of their work. And who knows it may pay off big in dividends in the end. With your support your neighbor may become the next great super star and you will have made a considerable return on your investment.

  • So buy local and buy often.