{"id":4023,"date":"2013-11-26T12:43:29","date_gmt":"2013-11-26T17:43:29","guid":{"rendered":"http:\/\/greynotgrey.com\/blog\/?p=4023"},"modified":"2019-07-09T09:49:53","modified_gmt":"2019-07-09T13:49:53","slug":"is-the-art-market-about-to-crash-again","status":"publish","type":"post","link":"https:\/\/greynotgrey.com\/blog\/2013\/11\/26\/is-the-art-market-about-to-crash-again\/","title":{"rendered":"Is the Art Market About to Crash Again?"},"content":{"rendered":"

The prices being fetched for fine art at auction these days are, to put it frankly, mind-boggling. According to Artprice<\/a>, a French company that tracks the global art market, the total value of all works sold June 2012 to June 2013 was $1.4 billion USD. To put that in perspective, the 54,000 square foot \u00a0Museum of Arts & Design<\/a> in midtown Manhattan only cost $65 million USD to build.<\/p>\n

There is some worry about overvaluation \u2013 basically, the concern that buyers are picking up pieces based on their value as a commodity rather than their value as art, creating a market based entirely on perceived value rather than underlying or long-term value. Basically, how trendy an artist is on the auction block as opposed to their relevance to art history. Damien Hirst is an artist people often point out whose work sells for millions at a go but is essentially without any kind of craft. Think of his famous cow & calf preserved in formaldehyde, \u201cMother and Child Divided\u201d, or his equally well-known spot paintings.<\/p>\n

\"Damien

Damien Hirst – Mother and Child (Divided)<\/p><\/div>\n

\"Damien

Damien Hirst – Abalone Acetone Powder<\/p><\/div>\n

Hirst is quite frank about what he doesn’t do. He doesn’t paint his triumphantly vacuous spot paintings – the best spot paintings by Damien Hirst are those painted by (his assistant) Rachel Howard. His undeniable genius consists in getting people to buy them. Damien Hirst is a brand, because the art form of the 21st century is marketing. To develop so strong a brand on so conspicuously threadbare a rationale is hugely creative – revolutionary even. The whole stupendous gallimaufrey is a Vanitas, a reminder of futility and entropy. (Robert) Hughes still believes that great art can be guaranteed to survive the ravages of time, because of its intrinsic merit. Hirst knows better. The prices his work fetches are verifications of his main point; they are not the point. No one knows better than Hirst that consumers of his work are incapable of getting that point. His dead cow is a lineal descendant of the Golden Calf. Hughes is sensitive enough to pick up the resonance. “One might as well be in Forest Lawn [the famous LA cemetery] contemplating a loved one,” he shouts at Hirst’s calf with the golden hooves – auctioned for \u00a39.2m – but does not realise it is Hirst who has put that idea into his head. Instead he asserts that there is no resonance in Hirst’s work. Bob dear, the Sotheby’s auction was the work.<\/p>\n

Germaine Greer, The Guardian, Monday 22 September 2008<\/a>
\n<\/a><\/p><\/blockquote>\n

Historical footnote: This is an excerpt from an op-ed by Germaine Greer on the inability of the art critic Robert Hughes to grasp Damien Hirst\u2019s work. It was written shortly before the collapse of the art market in November of 2008, when prices fetched at auction for fine art dropped by as much as 30%. \u00a0While Hirst is seen as a great marketer, as Greer points out, \u00a0if the point of art is marketing, it is subject to the market. In the 2008 crash, stock in Sotheby\u2019s dropped to $9 a share from $50 a share the year previous. To some extent this came as a surprise to art dealers, who had maintained that the art market was more or less immune to the vagaries of the stock market. When the cascading effect of the real estate bubble\u2019s collapse crashed the stock market, the art market turned out to be less invulnerable than previously imagined. Word on the street is that Hirst only maintained his auction prices by buying his own work in tandem with a consortium of like-minded art investors driving up the market. While shill bidders are nothing new in the art world, it was a ballsy move equivalent to a gang of confidence men running a long grift. That aside, the recovery of the art market since the crash has surpassed its former glory \u2013 in spades<\/a>.<\/p>\n

\"Artnet<\/a>

Artnet<\/a> – Collecting Categories Performance 2009-2012<\/p><\/div>\n

On November 12, 2013, Francis Bacon\u2019s 1969 triptych \u201cThree Studies of Lucien Freud\u201d broke the record for the highest price ever fetched at an art auction, sold by Christie\u2019s for $142.2 million USD. In the same auction, Jeff Koons became the highest-grossing living artist, with one of his sculptures, a monumental stainless steel reproduction of a balloon dog, selling for $58.4 million USD. Gerhard Richter<\/a> is right behind Koons \u2013 in May his 1968 painting \u201cDomplatz, Mailand\u201d sold for 37.1 million USD, in 2012 his painting \u201cAbstraktes Bild<\/a>\u201d sold for $34 million USD.<\/p>\n

\"Jeff<\/a>

Jeff Koons – Balloon Dog (Orange) on display at Christie’s<\/p><\/div>\n

A balloon dog! Made of steel! And really big! \u00a0Genius. While Koons has been out-Hirsting Hirst in terms of bringing work to market for decades that has no value other than a sophisticated one-liner “get it?” at the expense of the art market, this takes the cake. It is so obviously and unashamedly a joke that only the most self-involved connoisseur or strictly money-hungry idiot could think this piece is worth $58.4 million USD. The mind boggles, truly.<\/p>\n

Of course, these enormous gains in the art market beg the questions, \u201cWhy now?\u201d and \u201cHow long can this last?\u201d<\/p>\n

First, the why now. There have been a lot of people commenting on exactly who is buying art work for these incredible sums, and what their motivation is. Obviously it\u2019s not just that they \u00a0like art, but that it\u2019s seen as an investment opportunity. It\u2019s also worth noting that when prices at auction are this high it\u2019s like the Dutch Tulip Craze<\/a> \u2013 it doesn\u2019t matter if it\u2019s a volatile market, only if there\u2019s someone willing to pay more \u2013 and with this kind of money changing hands, you\u2019d be a fool not to get in on it, too if you have that kind of dosh to spread around. There\u2019s a bit more to it than that, though \u2013 yes, there are hedge fund managers<\/a> buying trophy pieces, but it\u2019s not just the Wall Street 1% showing off their wealth. For instance,\u00a0drug cartels are buying art to launder their money. Russian oligarchs are fleeing<\/a> before Putin confiscates their money, and sinking that money into contemporary western art. Then of course there\u2019s the fact that while historically auction houses have discouraged flipping, they now allow it \u2013 which not only drives up prices, attracting speculators, but if you roll your sales into a new purchase you don\u2019t have to pay capital gains taxes on the original sale as it’s been re-invested. It’s not just about money to spend, but money to hide. All in all, it sounds pretty wild west out there.<\/p>\n

As far as how long this can last, the short answer is simply that nobody knows, but with prices ramping up this quickly it\u2019s making a lot of analysts nervous.<\/p>\n

With so much talk of an art bubble, whether it\u2019s bursting or about to burst, it\u2019s not surprising that higher-priced pieces and wealthier buyers are turning up at auction. Felix Salmon of the Reuters news agency has a nuanced take on why these soaring prices might indicate that the mythical art bubble will burst soon. Salmon highlights what was once rare: Flipping works \u2014 formerly frowned upon by galleries and auction houses \u2014 is becoming more common. Flipping works can make for a strong season, but it doesn\u2019t necessarily mean these prices will last much longer. As Salmon predicted, there\u2019s another reason for flipping and soaring prices:<\/p>\n

\u201cIf we see another record-breaking season in New York this week, don\u2019t take that as a bullish sign. It could just be that we\u2019re entering a period of feverish selling.\u201d<\/p>\n

Katherine Boyle, the Washington Post, Wednesday November 13 2013<\/a>
\n
\n<\/a><\/p><\/blockquote>\n

Basically, then, what we’re seeing sounds an awful lot like \u00a0prices are going to keep spiralling ever upward until somebody flinches at the reality of \u00a0the Emperor’s new clothes. With a glut of overvalued paintings on the market, prices will inevitably bottom out – \u00a0where they come to rest is anybody’s guess, but at this point the art bubble’s collapse seems to be not so much a question of \u00a0if, but when.<\/p>\n","protected":false},"excerpt":{"rendered":"

The prices being fetched for fine art at auction these days are, to put it frankly, mind-boggling. According to Artprice, a French company that tracks the global art market, the total value of all works sold June 2012 to June…<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[130,169,628,348],"tags":[869,871,426,870,814],"class_list":["post-4023","post","type-post","status-publish","format-standard","hentry","category-art-history","category-art-news","category-commentary","category-contemporary-art-2","tag-art-market","tag-economic-bubble","tag-gerhard-richter","tag-jeff-koons","tag-lucian-freud"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p2JDlZ-12T","_links":{"self":[{"href":"https:\/\/greynotgrey.com\/blog\/wp-json\/wp\/v2\/posts\/4023","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/greynotgrey.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/greynotgrey.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/greynotgrey.com\/blog\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/greynotgrey.com\/blog\/wp-json\/wp\/v2\/comments?post=4023"}],"version-history":[{"count":1,"href":"https:\/\/greynotgrey.com\/blog\/wp-json\/wp\/v2\/posts\/4023\/revisions"}],"predecessor-version":[{"id":4657,"href":"https:\/\/greynotgrey.com\/blog\/wp-json\/wp\/v2\/posts\/4023\/revisions\/4657"}],"wp:attachment":[{"href":"https:\/\/greynotgrey.com\/blog\/wp-json\/wp\/v2\/media?parent=4023"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/greynotgrey.com\/blog\/wp-json\/wp\/v2\/categories?post=4023"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/greynotgrey.com\/blog\/wp-json\/wp\/v2\/tags?post=4023"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}