People usually asks me why contemporary art pieces are more expensive than those from Old Masters. The reason is simple and also paradoxical and is that there are more Warhols than Titian. In other words, with the thousands of Warhols that are circulating one can manipulate prices in the way they turn but with Rembrandt, for example, that is impossible because there is only one changing hands during a generation so there is no possible especulation.
In fact, it was in Rembrandt’s time when Tulipmania showed us the way a bubble for luxury goods works. In a bubble, there is always initial excitement about the product and prices, consequently, go up. Thus, more and more people buy trusting that the prices will never go down. The agents and speculators work in this direction and strengthen this belief. This is the reason why when I was at a dinner party, a few months ago, with London gallerist Timothy Taylor, he went bonkers when I mentioned that the art world was a bubble. However, towards the end of the Tulipmania, no one could sell at those inflated prices and eventually they had to throw millions to the garbage. That list that Ben Lewis leaked to The Art Newspaper in 2008 containing hundreds of unsold Damien Hirsts is the most concrete proof of this. The art market is officially over but how is it possible that auction houses are still trying to convince us otherwise?
In the art world, there is one illusion which is that the auction market is the REAL market but that is just an illusion because it is manipulated. By this I mean that the big private galleries bid for their artists in order not to allow them to go lower than they should, in the best case scenario, and in the worst case scenario, they aim at increasing the price non stop. This was the case with Damien Hirst and Jeff Koons. This is important because if prices are sustained in the auction room then they can be further inflated in the gallery. An additional strategy in this case for the gallery is to give the impression that everything from that artist is sold and that there is a waiting list. From this point of view, Damien Hirst’s case is interesting because he sold out when he decided to bypass his gallerist to go to auction but, at the same time, his gallerists have hundreds of pieces by him unsold. What is going on?
There is an additional incentive for the buyer or bidder and it is the confidence that if certain players are protecting those artist, one is also protected. This is the case of Mugrabi and Aby Rosen with Warhol. However, one has to be careful because I bought for a client a Warhol privately and their first reaction was to doubt its authenticity. They only tend to favor theirs and the Warhol Foundation ones with the only exception of those that come from the auction houses which have usually been inflated by them. So in NYC and London there is a small group of collectors, gallerists and artists that form, what in other sectors of the economy are called: CARTELS and if you ask me, their activity should be regulated. Just a thought.
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