Understanding the Mechanics of Art Prices
The investment part is becoming more and more complicated with the rising and falling price of items like silver and gold. We are witnessing selling off of big equities and now after the hint of Ben Bernanke of the US federation may soon start off its reckonable easing campaign. All these are making the investors confused and the question of the future of the art market arises.
With varieties of buyers with different needs and mind sets in this complicated combination of the present day art market, prejudging the trajectory and direction is quite tough. The market is not at all presumable now. This situation is being complimented with the dives of the stock-market. All these sums up to a query whether this world art market will remain protected and unmoved by these progresses!
“Well, there are not any easy answer to this query”, specifies Kathryn Tully, a regular contributor to The Forbes, “Supporters of art as an investment argue that art is not correlated to traditional asset classes”. They say that there are many people who take art as a thing to protect their capital and insulate themselves from inflation. But the statement is not accurate always.
“Art market movements, at least some of the time, can be closely aligned to stock market gyrations. When the latter sold off at the end of 2008, the art market did take a hit. The global sell off of mid-2011 when the euro zone debt crisis was at its peak and the US lost its triple-A credit rating caused jitters across the art market, as well.”
The fact of “the tricky matter” is: The Art-market may get misbalanced. It is totally dependent upon confidence hence may get shocked. Artvest co-founder, Michael Plummer, specified at the last Art Investment Council argument stated clearly that the whole scenario may get carried away very swiftly. Clarifying his views he said ““In the fall of 1990, I was at a contemporary art auction at Sotheby’s. In that one night, the market crashed. Suddenly, half the lots didn’t sell and very important paintings were bought in. The same happened again in the fall of 2008.”
Although, the present indications are quite solid as emphasized by the Impressionist Modern &Contemporary auctions held at London last month. They provided quite decent outcomes.  Now it is all about the quantitative easing campaign for the broader art market. Tully remarks “If art is supposed to be defensive purchase as well a safe haven and the Fed is signalling that the economy is finally doing better, shouldn’t people be selling their Warhols and opting for growth stocks? After all, the gold and silver prices have also plummeted recently and everyone loves to lump Silver, Wine, Art & Gold (SWAG assets) in the same bucket.”
So what will be the trend be like in a long run? Will the stock-market fall and remain to do thrive whereas the art market toughens to serve as an antidote or vice-versa? The market observer feels that there are some customers who consider art as the “safe haven” whereas the others are there who have faith that it results in massive returns.
And more of the inspiration comes clarified in the Contemporary Art-market; the greater it will get tangled with equities. On the opposing part more people will be seen buying art because of their genuine love towards it. They will keep buying until there are nothing left with them to take it to their home, thus they will keep their buying continuous.