The year 2008 will forever be linked with 1929 as a time when the fundamental fuel of global economic expansion- confidence - collapsed. Spectacular, heretofore unfathomable, failures dominoed while management, employees, investors, governments, and the public watched. Lehman Brothers. Bear Sterns. AIG. Countrywide. Merrill Lynch. Banks. Airlines. Car companies. Even Bank of America, the most important and arguably one of the best run financial institutions in the world, has seen its stock plummet from $45 to $7 in less than a year.
In contrast, the art market so far has largely weathered the storm. Sure, certain areas of the art market such as Contemporary Art, where hype and an atmosphere of pretentious subjectivism can frequently drive prices, have been noticeably affected. Along with modern and Impressionist artwork, contemporary art prices have so far tumbled 30% or more according to the Wall Street Journal. But what of antiquities? Ancient art is often regarded -- or disregarded, as the case may be -- as a cerebral, sleepy backwater of the market.
On December 9th and 10th in New York, the epicenter of the global financial meltdown, two of the major antiquities auctions were held. The results? The best objects were fought over fiercely and realized "absolutely astounding prices" according to long-time international art market journalist Souren Melikian. Christies sold nearly 70% of its 331 catalogeded antiquities for a total of more than $4 million, while Sothebys on the next day more than doubled that with $8.9 million achieved with a mere 124 lots -- an astonishing average of $71,775 per lot!
What's more remarkable is that this occurred over the same two-day period that the government was debating a $15 billion bailout of the automakers, and the parent company of the Chicago Times, LA Times, Baltimore Sun, and Chicago Cubs declared bankruptcy.
So what does this augur for the antiquities market?
It could be that antiquities will remain a strong hedge against the current global financial morass. I am no economist, but I'd like to offer 6 reasons:
1) Lack of Froth. Like old masters, the value of ancient objects has largely been driven by the eyes of the connoisseur rather than by the checkbook of the speculator. There has been some, but not much froth in the market over the past decade. Any correction in the antiquities market will expose those who overpaid for the wrong objects. Successful long-term collectors know there is no substitute for diligent research and breadth of market knowledge.
2) Dwindling Supply. Again like Old Masters, supply is not just fixed, but dwindling. Important (and this does not always translate into the most expensive) objects continue to make their way into museums, or increasingly the private collections of wealthy dealers as a way-station to their eventual bequest to an institution. These items are effectively permanently siphoned off the market driving demand for what remains in circulation with quality provenance. The double whammy of dwindling supply and increased focus on pedigree provenance creates a dynamic that is very different than other areas of the art market.
3) History Lesson I.The crash of the US stock market in 1929 had very little initial impact on the global antiquities market, which was primarily centered in London. In 1929, the Duke of Portland sold his famous blue cameo vase (i.e. The Porland Vase) which brought £30,450 at auction (2859% increase in value) and in 1930 the Marquess of Lansdowne sold a collection of marbles acquired 80 years earlier for £10,680 for a total of £68,502 (541% increase in value). There was little weakness in the fine art market until the autumn of 1931 when the crisis of the British Pound set in.
4) History Lesson II. In his epic 3-volume treatise entitled The Economics of Taste in which he evaluated the prices of art from the 1700s to the 1960s, Gerald Reitlinger drew this conclusion from his analysis of fine art prices in the period following the Great Depression:
"When the important pieces advance in price, the poorest things in the same category move with them in the end, but they are a great deal less likely to fall back when the very important pieces slump. As you get more down to earth, there is a measure of protection."
5) Global Currency. The market for classical antiquities is truly international, with important buyers and museums in every corner of the globe. In a crude sense, the objects themselves represent a fungible worldwide asset class that empowers the owner with options on where and when to redeem them. (Unless carelessly treated, these objects are destined to survive outlive their owners so 'redemption' is a way of thinking about the act of passing these on to the next generation of stewards.) The strength of your local currency and your macro-economic climate, may favor selling in the USA or selling in Europe or Asia under different circumstances. Few collectors may engage in this type of international arbitrage, but this is one of the hidden benefits of working with seasoned dealers. In a sense, they provide an underpinning of stability and rational prices within the global market. The best dealers are unconstrained by local borders. They are constantly studying the international markets and legally purchasing the very best objects wherever the economics are most favorable while managing the logistics of selling to an international client base.
6) Local Currency. While it is difficult to predict currency fluctuations, the strength of the US dollar is creating a buying opportunity for American collectors. Today only $1.45 is required to purchase the same British Pound that cost $2.00 in March of 2008, or about a 27% discount. A Euro can be purchased for about $1.32 today versus more than $1.55 during five months of 2008. American dealers are once again buying more aggressively, albeit more prudently, in Europe which means an increasing quantity and quality of selection for American collectors.
No market iswithout risk. However, the relative obscurity of the antiquities market may be its biggest blessing. Any collector whose portfolio includes Bank of America stock will tell you that their 18th Dynasty Egyptian limestone inscription from Amarna or their Greek 5th Century BC red-figure amphoraby the Meidias Painter have retained far more value through this crisis. And the dividends offered by ancient objects -- both aesthetic and intellectual -- remain far more secure than the quarterly dividends of many stocks, including Bank of American which last week slashed its quarterly divided from $.32 per share to $.01 per share this past week.
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