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Author Topic: Price of contemporary art skyrockets.  (Read 2313 times)
duke1839
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September 23, 2014, 08:23:18 PM
 #1

http://news.yahoo.com/record-breaking-contemporary-art-103321463.html

The proper way to read pieces like this is to understand that the price of art is difficult for governments to manipulate unlike gold, fiat, or even crypto to some extent.  The rich are parking their money in art not as an investment but just as a place to hold value.  When the price of art is rising, understand that the art isn't necessarily getting more valuable but its price in fiat is changing as a hidden sign of inflation.

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September 23, 2014, 10:14:10 PM
 #2

http://news.yahoo.com/record-breaking-contemporary-art-103321463.html

The proper way to read pieces like this is to understand that the price of art is difficult for governments to manipulate unlike gold, fiat, or even crypto to some extent.  The rich are parking their money in art not as an investment but just as a place to hold value.  When the price of art is rising, understand that the art isn't necessarily getting more valuable but its price in fiat is changing as a hidden sign of inflation.

I doubt that art prices are a good general measure of inflation. Inflation has an influence for sure, but speculation is a more important factor, because the magnitude of price increases for this specific investment are too excessive to be explained by inflation alone. I think contemporary art is ultra high risk to invest in, because taste can change easily and the market is very small in terms of potential market actors (buyers).

If you want a good indicator for general inflation look at commodity prices.

ya.ya.yo!
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September 24, 2014, 04:39:33 AM
 #3

http://news.yahoo.com/record-breaking-contemporary-art-103321463.html

The proper way to read pieces like this is to understand that the price of art is difficult for governments to manipulate unlike gold, fiat, or even crypto to some extent.  The rich are parking their money in art not as an investment but just as a place to hold value.  When the price of art is rising, understand that the art isn't necessarily getting more valuable but its price in fiat is changing as a hidden sign of inflation.
As mentioned above the price of art is likely influenced by inflation greatly. Also I don't think people use art as a store of value because it is so illiquid meaning if a lot of it is to be sold at once then they will experience a lot of slippage. 
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September 24, 2014, 04:49:33 AM
 #4

It is better buy gold rather than contemporary art, which is not seen as anti-inflation asset and can be worthless when world slipped into severe recession. The contemporary art is not used as store of value and sustainable.

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September 24, 2014, 04:56:51 AM
 #5

Contemporary art? Pfffft, gimme a break.

Everyone knows the only decent art investment these days is a Dick Branch!

https://bitcointalk.org/index.php?topic=777829.0

 Grin
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September 24, 2014, 05:08:43 AM
 #6

I think this is speculation - maybe buy 20,000 paintings and that lucky one that is a photo of red paint will sell for $4 million..

I've seen enough of those antique and pawn shop shows and it amazes me that these people kept centuries old antique and they're not really worth the effort it took to preserve them.. all these people would had been better off if their ancestors had bought some cheap frontier land in the Americas, acquired silver / gold or diversified into railroad stock (true a lot of them went bankrupt but chances are you would had landed on the ones that survived).


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September 24, 2014, 05:11:49 AM
 #7

http://news.yahoo.com/record-breaking-contemporary-art-103321463.html

The proper way to read pieces like this is to understand that the price of art is difficult for governments to manipulate unlike gold, fiat, or even crypto to some extent.  The rich are parking their money in art not as an investment but just as a place to hold value.  When the price of art is rising, understand that the art isn't necessarily getting more valuable but its price in fiat is changing as a hidden sign of inflation.

http://www.dailymail.co.uk/news/article-145257/Auction-house-Sothebys-fined-12m-EC-art-price-fixing.html

Auction house Sotheby's fined £12m by EC for art price-fixing

Sotheby's was today fined £12 million by the European Commission for rigging the art market in collusion with rival Christie's.

Christie's escaped a fine because it provided the Commission with the crucial evidence to prove the operation of a cartel between the world's two leading fine art houses in a scam which defrauded sellers out of £290 million.

The fine represents 6% of the company's annual turnover.

European Commissioner Mario Monti, in charge of EU competition policy, said: "This case again shows that illegal cartels can appear in any sector, from basic industries to high-profile service markets such as the one at hand."

He said Sotheby's and Christie's had breached EU competition rules, acting illegally to operate a price-fixing cartel to set client charges in a market in which both art houses hold a 90% share between them.

The Commissioner said the purpose of the cartel was to reduce the fierce competition which had built up during the 1980s and early 1990s between the two leading players in the field.

The most important aspect of the illegal agreement involved increasing the commission paid by sellers at auctions - the so-called "vendor's commission".

But the cartel also involved fixing other trading conditions, including advances paid to sellers and guarantees given for auction results.

The Commission said the collusion was set at the highest level in both companies.

Former Sotheby's chairman Alfred Taubman has already been jailed in America for a year after being found guilty of price-fixing. He was fined £4.7 million.

His Christie's counterpart at the time, Sir Anthony Tennant, also named in today's Commission ruling, is now living in Andover, Hants, having refused to go to America to stand trial. He cannot be extradited on the anti-trust charges he faces.

The Commission said these two men "entered into secretive discussions at their respective private residences in London and, or, New York".

The first high level meetings in 1993 were followed by regular gatherings and price-fixing meetings between the companies' chief executives at the time - D.D. Brooks of Sotheby's, and Christopher Davidge of Christie's.

The Commission investigation into the scam began in January 2000 when Christie's first approached the US Department of Justice and the Brussels authorities offering evidence of the cartel.

One motive for spilling the beans was the prospect of leniency in both jurisdictions - which paid off today when no fine at all was imposed on Christie's.

The Commission said today that the company had received "full leniency" under the terms of a 1996 rule offering full or partial immunity from fines for companies providing decisive information on price-fixing or market sharing.

The fine imposed on Sotheby's, meanwhile, includes a 40% reduction in acknowledgement of its co-operation in the investigation.

Read more: http://www.dailymail.co.uk/news/article-145257/Auction-house-Sothebys-fined-12m-EC-art-price-fixing.html#ixzz3ECtQXHME
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September 24, 2014, 09:54:06 AM
 #8

Quote
Thirteen pieces alone fetched more than 10 million euros ($12.8 million) each, compared with four in the previous year.

Now I know why Vincent Van Gogh committed suicide because this is making ME feel suicidal, as somebody who's taking the time to learn to draw in proportion and learn 3D modelling this is pissing me off, I fucking despise contemporary art. Please support artists who actually put in the effort people! >_< at this point a person who draws stick figures has more credibility with me than fucking contemporary artists and they'll appreciate it instead of acting like snobs!
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September 24, 2014, 11:52:39 AM
 #9

imho skyrocketing art prices are a sign of tons of cheap money. it wants to get invested and forms bubbles. shouldn´t hurt our baby... Wink
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September 24, 2014, 01:31:34 PM
 #10

Storing art in any form, is way harder and more volatile than Bitcoin. I would rather put it all on Bitcoin if you are going to gamble with art. Art deteriorates, something like Bitcoin never deteriorates, take this into account. Not existing in the physical world has its benefits, even tho old people will think it has no inherent value.


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arbitrage001
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September 24, 2014, 02:24:29 PM
 #11

imho skyrocketing art prices are a sign of tons of cheap money. it wants to get invested and forms bubbles. shouldn´t hurt our baby... Wink

Also a sign that wealthy individual has too much money on hand than what they know they can do with.
duke1839
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September 24, 2014, 03:01:53 PM
 #12

http://news.yahoo.com/record-breaking-contemporary-art-103321463.html

The proper way to read pieces like this is to understand that the price of art is difficult for governments to manipulate unlike gold, fiat, or even crypto to some extent.  The rich are parking their money in art not as an investment but just as a place to hold value.  When the price of art is rising, understand that the art isn't necessarily getting more valuable but its price in fiat is changing as a hidden sign of inflation.

http://www.dailymail.co.uk/news/article-145257/Auction-house-Sothebys-fined-12m-EC-art-price-fixing.html

Auction house Sotheby's fined £12m by EC for art price-fixing

Sotheby's was today fined £12 million by the European Commission for rigging the art market in collusion with rival Christie's.


Read more: http://www.dailymail.co.uk/news/article-145257/Auction-house-Sothebys-fined-12m-EC-art-price-fixing.html#ixzz3ECtQXHME
Follow us: @MailOnline on Twitter | DailyMail on Facebook


Nice one!  I had almost forgotten about this story.  Although this particular case has nothing to do with the current surge in art prices, I'm glad you brought it up for a different reason.  These two companies had colluded to fix auction prices.  Of course Austrian economists will say that price fixing schemes are inherently unstable as both companies have a bigger incentive to ignore the agreement that to abide by it.  But try explaining that bit of game theory to a jury that already views these companies as being for stuffy rich people.  A jury may not understand game theory but the government does. 

Price fixing cases were extremely difficult to prosecute because they relied on one company defecting to the government and putting themselves at risk for prosecution.  The solution the government devised was to automatically grant immunity to the first company that defects to the government even if they are the more guilty party.  Even if the whole thing was their idea and they convinced the other company to go along with their scheme.  That's exactly what happened here.  Christy's convinced Sotheby's to go along with their scheme and Christy's also defected to the government first about the scheme.  Your government rewards dishonesty from businessmen.

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September 25, 2014, 04:21:50 PM
 #13

imho skyrocketing art prices are a sign of tons of cheap money. it wants to get invested and forms bubbles. shouldn´t hurt our baby... Wink

Also a sign that wealthy individual has too much money on hand than what they know they can do with.

Yes. If owning bitcoins is common place, you wont attract the filthy rich.
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September 26, 2014, 03:35:04 AM
 #14

imho skyrocketing art prices are a sign of tons of cheap money. it wants to get invested and forms bubbles. shouldn´t hurt our baby... Wink
I agree. Increasing prices of art is likely a sign that people with a lot of money do not have any/many places to invest their money so they "invest" in something they can look at and enjoy.

The fact that the art market is especially opaque makes it more likely that someone will not be getting a good deal, bubble or not
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September 26, 2014, 03:30:43 PM
 #15

imho skyrocketing art prices are a sign of tons of cheap money. it wants to get invested and forms bubbles. shouldn´t hurt our baby... Wink
I agree. Increasing prices of art is likely a sign that people with a lot of money do not have any/many places to invest their money so they "invest" in something they can look at and enjoy.

The fact that the art market is especially opaque makes it more likely that someone will not be getting a good deal, bubble or not

While people do buy art pieces as investments, it is also a status symbol to be flaunted.
So the rich would not mind paying a small premium to get their hands on masterpieces. They really don't care whether they are getting a good deal or not.
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September 26, 2014, 03:53:09 PM
 #16

Food is a flawless investment
MichaelBliss
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September 26, 2014, 05:09:33 PM
 #17

Nice one!  I had almost forgotten about this story.  Although this particular case has nothing to do with the current surge in art prices, I'm glad you brought it up for a different reason.  These two companies had colluded to fix auction prices.  Of course Austrian economists will say that price fixing schemes are inherently unstable as both companies have a bigger incentive to ignore the agreement that to abide by it.  But try explaining that bit of game theory to a jury that already views these companies as being for stuffy rich people.  A jury may not understand game theory but the government does. 

Price fixing cases were extremely difficult to prosecute because they relied on one company defecting to the government and putting themselves at risk for prosecution.  The solution the government devised was to automatically grant immunity to the first company that defects to the government even if they are the more guilty party.  Even if the whole thing was their idea and they convinced the other company to go along with their scheme.  That's exactly what happened here.  Christy's convinced Sotheby's to go along with their scheme and Christy's also defected to the government first about the scheme.  Your government rewards dishonesty from businessmen.

Yeah I remembered this when I read your OP.   I'm cynical and just don't see any market that isn't being manipulated.   Seems the prices of art have gone up along with the prices of empty mansions where I live (Vancouver, Canada), coinciding with all the quantitative easing.   As if the 1% were dumping all their money into these assets.  No bubble here though.  Wink
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September 27, 2014, 04:53:05 AM
 #18

Nice one!  I had almost forgotten about this story.  Although this particular case has nothing to do with the current surge in art prices, I'm glad you brought it up for a different reason.  These two companies had colluded to fix auction prices.  Of course Austrian economists will say that price fixing schemes are inherently unstable as both companies have a bigger incentive to ignore the agreement that to abide by it.  But try explaining that bit of game theory to a jury that already views these companies as being for stuffy rich people.  A jury may not understand game theory but the government does. 

Price fixing cases were extremely difficult to prosecute because they relied on one company defecting to the government and putting themselves at risk for prosecution.  The solution the government devised was to automatically grant immunity to the first company that defects to the government even if they are the more guilty party.  Even if the whole thing was their idea and they convinced the other company to go along with their scheme.  That's exactly what happened here.  Christy's convinced Sotheby's to go along with their scheme and Christy's also defected to the government first about the scheme.  Your government rewards dishonesty from businessmen.

Yeah I remembered this when I read your OP.   I'm cynical and just don't see any market that isn't being manipulated.   Seems the prices of art have gone up along with the prices of empty mansions where I live (Vancouver, Canada), coinciding with all the quantitative easing.   As if the 1% were dumping all their money into these assets.  No bubble here though.  Wink

Bitcoin is the only asset which seems to be in a downtrend. With Quantitative Easing almost stopping, I expect the trend to reverse. Smiley


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September 28, 2014, 08:29:14 PM
 #19

QE will never end, or the whole Ponzi scheme falls apart.   Gold isn't doing so well either.  Roll Eyes   I still expect the trends to reverse too.
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September 28, 2014, 09:25:51 PM
 #20

I have to admit that Jim Rickards was the one I got this idea from:

https://www.youtube.com/watch?v=KIp1t06cAyE

Skip to 25:25 to hear his thoughts on fine art.

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