If you haven't been paying much attention to the weakness in the US dollar and you collect antiquities, you may be in for a case of sticker shock as the dollar's impact begins to be reflected back into the art market.
On Friday, September 21, it took more than two US dollars to purchase one British pound. That's a 40% increase in the strength of the Pound since January 2002. Worse still, the Euro outperformed the Pound, requiring $1.40 to buy just one Euro, compared to the $.80 required just a few short years ago.
The net effect is that it is bargain day for European shoppers and they are sweeping through the US antiquities market snapping up quality antiquities at bargain prices. Every antiquities dealer I have spoken with recently has seen a dramatic increase in European purchasers. European dealers who typically spend most of their time buying and selling in Europe are booking tickets to the US to stock up.
Consider this: an American dealer buys a Greek vase two years ago and offers it for $10,000. Today, to a European collector or dealer, that same appears on sale for a mere $6,000! To the American buyer it is still $10,000!
American dealers typically buy heavily in Europe, but the exchange rates are forcing dealers to be more selective. The result is a shrinking supply of exciting material in the US, and higher demand. Some dealers are expecting a surge in prices as the impact of this trend winds through the antiquities market. To compound the problem, auction houses have recently raised premiums -- the amount a purchaser pays on top of the hammer price -- by 25% as of September 1. And last, but not least, shipping costs have risen across the board in the wake of $80/barrel oil. While US residential mail increased just 2-cents for a first class letter recently, shipping of packages increased dramatically.
The best strategy for US collectors is to give a second look at US dealers' inventory. Objects in inventory bought two or three years ago were purchased with a stronger dollar and it is unlikely the dealer will be able to replace the object at the same price paid in 2002 or 2003. Buying objects now is a hedge of sorts against the inevitable increase as dealers adjust to increased costs. If you do not take advantage of the current window of opportunity, the dealer's inventory will be replenished with a new selection of objects that share one thing in common: the weaker purchasing power of the US dollar. Prices of antiquities five years down the road may make today's prices look like the 'good ole days!" Don't let them pass you by.
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