What Art Investors Can Learn from Gold Investors – artmarketblog.com

What Art Investors Can Learn from Gold Investors – artmarketblog.com

If am sure that everyone who is reading this post will be aware that the price of gold has increased significantly in recent times and is poised to increase even more over the coming months. The long bull run that gold has been able to sustain has made the gold market one of the most watched and analysed markets on the planet, and has given people even more reason to consider acquiring a physical position in gold. As an art market analyst and art investment expert I try and keep an eye on as many different investment markets as I can in an effort to acquire knowledge and skills that I can apply to the art market. Although the art market is a unique market that appears to have very little in common with other investment markets, I often come across small yet very important similarities when comparing the art market to other markets that usually turn out to be very useful. In fact, even analysing small differences between the art market and other markets can prove to be beneficial when assessing the art market as a whole or a particular sector/event. For this reason I always find it interesting and useful to make comparisons between what is happening in the art market, and what is happening with other investment markets.

One investment market that I have paid particularly close attention to recently is the gold market. I am not only keeping an eye on the gold market because of the progress it is making, but also because one can learn a lot about the art market and art investment from what many people consider to be the ultimate safe haven investment. Gold has been used as a store of value/wealth and a form of currency for thousands of years, and continues to remain the ultimate universal representation of wealth and value. To understand what the gold market has to teach us about the art market and art investment one must first know a few important things about gold and the gold market. One of the most significant reasons that gold is such a highly prized metal is that is a very rare and finite resource. In fact, it is estimated that if all the gold that has been mined on earth to date were put together, it would not quite even fill a 20mx20m cube. Add to this the fact that the amount of gold mined every year would only add 12cm to this cube and one can see exactly how rare gold is. Not only is gold rare, but it also has particular physical properties that make it even more desirable and more suitable as an investment. It is partly because gold does not corrode, rust or tarnish, and cannot be counterfeited, that it is such a suitable store of value and such a popular investment. By purchasing physical positions in gold one can feel pretty confident in the knowledge that it is extremely unlikely that their gold will ever be destroyed.

An article in the National Geographic magazine from January 2009 said that: “Gold is not vital to human existence; it has, in fact, relatively few practical uses. Yet its chief virtues—its unusual density and malleability along with its imperishable shine—have made it one of the world’s most coveted commodities, a transcendent symbol of beauty, wealth, and immortality.” Although the physical properties and rarity of gold contribute significantly to the value bestowed upon the precious metal, there is one other extremely important characteristic of gold that makes it so attractive, and that characteristic is beauty. As the National Geographic article says, gold has an imperishable shine as well as a lovely lustre and beautiful gold glow that seems to make most human beings weak at the knees. The website gold.org sums up the attractiveness has this to say about the attractiveness of gold: “Since the beginning of time, the intrinsic beauty, warmth, sensuality and spiritual richness of gold has earned it pride of place as the favourite metal of jewellers. Gold has inspired craftsmen to create objects of desire that unite us with our emotions. In the Middle Ages, alchemists attempted to use their magic to make gold from other metals. They believed that gold was a source of immortality, and so it was used in medicines designed to fight old age and prolong life.”

What does all this have to do with art I hear you ask? Stay tuned for part 2 !!!

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

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12 Responses

  1. My thinking is that everything depend on demand and supply. If there is no demand no investment will make money. And the market for art and gold is very different in the sense that every art piece is unique while gold is homogenrous.

  2. there’s a company in the us and argentina that makes paint with real money so you can measure the exact price of your art. called liquid assets here’s an article from us magazine blackbook

    genius stuff, they are opening stores in new york and los angeles

    http://www.blackbookmag.com/article/paint-company-seeks-to-quell-global-inflation-rates/18347

  3. I don’t know… Gold is gold. Gold is money, as a lot of people would still argue today (especially those of the Austrian school). Gold is what it is.

    Art is, well, very diverse. It’s a bit of a misconception to speak of an art market in the singular. There are lots and lots of art markets that each perform very differently from one another depending on current tastes and how much money collectors and investors have available to spend.

    But I definitely look forward to Part 2!

  4. .I always thought that fine artwork was a good hedge against inflation. Gold has always been the financial standard by which all currency is judged. Art investments on the other hand offer a unique product. Gold and art have very little to do with each other and even less with the financial standards of the bull market and stocks and bonds. There are small differences that cap the bond between art and gold. Bull markets can be helpful in factoring in the investment qualities and potential value of art investments It seems that art is for the wealthy that there is no more potent hedge against financial loss that the acquisition of fine art. Fine art just keeps escalating in profit and increased value. Christies auction and others have kept up a brisk business for buyers and sellers anxious to hedge against the ravages of inflation. Gold has been worshiped by the ancient cultures to the modern man

  5. Hello Nicholas, I think you would do well if you publised a short piece on Jonathan Truss, who is without question the best wildlife artist on earth today. David Shepherd personally told me that was his opinion and Jonathan has just been signed by DeMontford fine art. I had the pleasure of meeting Jonathan in Africa and he is a real charachte and a right laugh. His originals are the best investment on the planet today. View his stuff at http://www.jonthantruss.com

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  7. […] See the article here: What Art Investors Can Learn from Gold Investors – artmarketblog.com […]

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