The Financial Times’s Alphaville has an idea for why the van Dyck and Rembrandt pictures sold for large sums. They put it all up to inflation fears–which makes sense:
When faced with the very real prospect of currency devaluation, and mounting inflation expectations, the safest store of wealth should be tangible assets, such as housing, commodities and land, or claims on these assets.
As Aviate Global argue, surplus liquidity will chase supply-constrained assets.
A Rembrandt is one of the rarest assets possible to buy; one that should keep its value regardless of the fate of major world currencies.
Far from being a sign the wealthy are again willing to splash their cash, the bustle over at Christie’s could instead be signalling the pain still to come.
Unfortunately, inflation has become the received wisdom about the future of the world economy even though the present trend has been mostly deflationary. What will happen to these assets in a deflationary environment?
Luxury Purchases: The Rush for Real Assets (FT/Alphaville)
