The growing view of art as an asset has some of the art press groping for ways to measure the return on art. The Art Newspaper ran a recent feature where the editors tried to quantify and compare art gains. Unfortunately, in their zeal to find an independent measure of value, they compared all prices to a benchmark of inflation and concurrent prices of gold. Here’s an example of how they cast the comparisons for artists ranging from Monet to Brueghel to Rodin, Mitchell, Basquiat, Lievens, Rubens, Picasso and Hirst:
New York dealer Richard Feigen staged a coup in 1982 when he bought the classical landscape, The Temple of Jupiter Panellenius Restored, 1814-16, from Christie’s London for £648,000. When it came to auction at Sotheby’s New York in January 2009, it fetched $12.96m, or £8.3m. The original £648,000 would now be worth £1.7m, allowing for inflation. An investment of £648,000 in gold in 1982 would be worth £2m in 2009.
One of the problems with this comparison is that gold is no reliable measure of value. It’s a pseudo-commodity traded as a proxy for money. So the twelve-fold increase in the value of the Turner painting is greater than the three-fold increase in the value of gold. But the best way to measure art as an asset isn’t against inflation or gold, it would be against a range of other potential investments including bonds, equities and various alternative investments like hedge and private equity funds.
More to the point, absolute return isn’t the best measure of an investment either. And, of course, few advocates of art as an investment would suggest investing in individual works as a way to achieve the asset diversification goals that art funds promote.
The Highs and Lows of Art at Auction (The Art Newspaper)
