Portraits as Art Market Currency Pt. 2 – artmarketblog.com

Portraits as Art Market Currency Pt. 2 – artmarketblog.com

Welcome to part 2 of my series on the concept of portraits as an art market currency.  Before I continue, I would like to explain exactly what I mean by an art market currency for those that are perhaps slightly perplexed by the concept. Obviously, fine art is never going to replace paper money as the dominant form of currency.   My research focuses less on the actual use of currency as a medium of exchange, and more on the concept of currency as an indicator and a benchmark.  It is important to understand that my concept of an art market currency is merely a theoretical concept – the analysis of which I believe can provide valuable information and knowledge for investors and collectors.

In the currency world, the US dollar is used as a benchmark (world reserve currency) for all other currencies because of the political and military strength of the US, as well as the very strong gold reserves that the US held when the Bretton Woods system was introduced after World War II. Although the art market doesn’t have an official genre, period or style that acts as a benchmark for the rest of the market, the popularity and visibility of the contemporary art market means that it tends to be used as a de-facto barometer for the state of the art market.  Unfortunately, the contemporary sector of the art market would have to be the worst sector to use as an indicator for the health of the entire art market.  As we all know, the contemporary sector of the art market is a highly volatile and unstable market that is constantly at the mercy of cultural and social trends – and is often assigned a value that has very little to do with the actual art object.  So, if the contemporary art market is not a suitable indicator of the status of the art market, is there a category of art that is?  This is just one of the questions that I hope to answer with this series of posts.

Let me throw a scenario your way that will hopefully help make the reasoning behind the concept of portraits as an art market currency much clearer.  If I were to give someone who knew nothing about art 100 works of art consisting of: 20 cubist paintings, 20 conceptual  works, 20 figurative landscape paintings, 20 religious icons and 20 figurative portrait paintings – and asked that person to look at each category separately and rank the works in each category according to how much they thought each work was worth based purely on the physical characteristics of the art object (without knowing anything about who the artist is, when they were painted, who the portraits are of, the location of the landscapes etc.) – which category do you think they would find the easiest to rank?  I think that conceptual art would be the hardest, because with conceptual art the main component of the work is the concept, not the art object.   Because abstract art is so nonrepresentational, it is extremely difficult to assess unless the purpose or motivation of the artist is known, which rules out the cubist paintings as the easiest to rank.   Religious icons could be compared to portraits – however, the symbolic nature of religious icons means that their value is closely tied to the cultural, religious, social and art historical context in which they were created, which makes valuing such works difficult for experts, and virtually impossible for anyone who does not have a thorough knowledge of the genre.  Figurative landscape paintings would seem like a good candidate for the most easy to rank because of the representational nature of such works, the general familiarity people have with the way nature should be depicted, and also because the skill and talent of the artist are so easy to determine from the way the picture is presented.  What lets the figurative landscape paintings down is the lack of consistency in terms of setting, location, season, angle etc. which means making a comparison between two landscape paintings is likely to be very difficult.  Finally, we come to portraiture.  There are several factors that make the physical characteristics of portraits so easy to compare and rank, including:

– the consistency of the subject (human face)

– the universal nature of the face

– the common goal of figurative portrait painters (to accurately depict the human face)

– the ease with which virtually anyone can determine how skilled or talented the artist is at accurately depicting the human face

In my opinion the physical characteristics of figurative portraiture are the most comparable and easily ranked of all the genres and types of fine art.  I cannot think of another genre or type of fine art that has such consistent characteristics and is so universally decipherable.  The fact that the physical characteristics of figurative portraits are so comparable across the whole genre, and so easy to rank, means that they are also easier to value when compared to other genres.  It is the characteristics of figurative portraiture that I have discussed above which give figurative portraiture an edge over other genres when it comes to the concept of fine art as currency.

Stay tuned for part 3……….

**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

Art Market Hedge Trends – artmarketblog.com

Art Market Hedge Trends – artmarketblog.com

Although investing in fine art is considered to be a hedge more mainstream investment markets, a new trend has emerged that has seen numerous attempts to launch projects that aim to introduce alternative methods of investing in art as a hedge against the traditional method of investing in art – purchasing a work of art and taking physical ownership. One such project is the collaboration between artist Tom Saunders and art collective Idefix Bloc which with an exhibition of Saunders’ work titled SHOP + OFFICE held at murmurART gallery East London. What makes the SHOP + OFFICE exhibition so unique is that Saunders was not offering his work for sale in the traditional sense. Instead of collectors and investors purchasing physical ownership of an art object that Saunders had produced, as would normally be the case, Saunders offered potential clients the opportunity to purchase the right to buy his art in 10 years’ time for £1 for an immediately payable fee of £2000 pounds, the price that Ferguson Solicitors, the UK law firm, believes is the correct price for an “option” contract, which is essentially what Saunders is offering. Basically, you can pay £2000 now for the right to purchase any piece of the artist’s work in 10 years time for only £1. The lure for investors is the potential to earn huge profits if Saunders becomes a highly successful artist whose work sells for large sums of money, or at least significantly more than the £2000 investment. Saunders’ work could, of course, turn out to be worth less than the £2000, but that is the risk investors take. There are, however, contract provisions that cover premature death or non-production.

Over in India, another innovative art investment project has been started by an Indian entrepreneur. Indian investor Arun Rangachari, chairman of venture capital firm DAR Capital, has purchased the rights to the entire life’s work of a reclusive Italian artist by the name of Montanari, who has lived in seclusion for the past 18 years. Rangachari is building up an art collection, of which the work of Montanari will play a significant part, with the intention of setting up an art fund in the future. Before selling any of the paintings, Rangachari plans to increase the value of Montanari’s work by holding exhibitions and building a foundation dedicated to the artist’s work. According to artnewspaper.com ‘His (Rangachari’s) first art investment consists of 40 paintings by the Italian artist Americo Montanari, with the option to buy many more……..When asked why his art fund would succeed when other ventures, including Indian-based funds, had recently failed he said: “Our entry level will be affordable, we’ll be focusing on artists who have not yet built a reputation and we will have no hidden costs, everything will be up front, so we’ll be quite different from everyone else.”’

The Chinese are also getting in on the act with Chinese financial corporation Shenzhen Artvip Cultural Corporation recently going public with China’s first openly traded art portfolio. The portfolio, which comprises of 12 paintings by contemporary artist Yang Peijing, is being traded on the Shenzhen Cultural Assets and Equity Exchange (SZCAEE) in the form of 1000 shares. All 1000 shares sold out on the first day of trading for a total of US$354480 with profits from trading the works of art to be dispersed by Artvip as the works are traded. According to artinfo.com: ‘Established in 2009 by the Chinese government, SZCAEE functions as an alternative platform for the trading of a wide range of cultural assets — including artworks, luxury goods, and films — as part of the Chinese government’s attempt to commercialize, diversify, and regulate the public exchange of such cultural properties. SZCAEE plans to offer a second 1000-share portfolio, featuring 40 works by Yang Peijiang, sometime in the future.’

Interestingly, each of the above projects are focused entirely on the work of a single living artist, which is comparable to investing in a single business. The benefit of focusing on the work of a single living artist is that the future output of the artist can be controlled by a certain degree by those with a vested interest. There is also the potential for a much larger return from the work of a living artist as a result of the progression of the artist’s career. In terms of downsides, the most obvious downside of investing in the future of a living artist is the uncertainty. Whether the rewards are worth the risk is yet to be seen……..

**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