I’m no market timer, and I tend to laugh at people who try to call a top –
or a bottom, for that matter – to any market. Many observers have been
predicting a nasty crash in the frothy contemporary art market for years now,
and have been proved stunningly wrong, as it has continued to soar. But I’m
finally coming round to their way of thinking, and not just because Richard
Prince’s new paintings are going for $7
I do think that the Prince datapoint is important, however, because it shows
a degree of capitulation to the market on the part of blue-chip galleries such
as Barbara Gladstone. Up until now, galleries have sold their biggest artists’
work only to the most copper-bottomed collectors, often at prices well below
market. The high prices that works received at auction were often a function
of low supply rather than high demand: most collectors simply had no direct
access to a lot of artists they wanted to buy, whch meant that they had to pay
through the nose in the rare cases that works were available to the general
Now, however, the market has literally got out of control – out of the
control of the galleries, that is. Here’s Damien
Hirst, explaining why he simply has to price his diamond skull at $100 million:
"You have to get the price right, or it will come back into the market,"
said Hirst today in an interview at London’s White Cube gallery, where the
skull was shown to reporters. "A lot of people buy things and flip them,"
making a quick profit if the work has been underpriced, he said.
What this means is that galleries aren’t underpricing their art any more. (As
if you couldn’t tell that from the $7 million Princes alone.) In turn, that
means that a major driver of auction prices and frothiness has now been removed
from the market. It also means that galleries are behaving very much as though
they want to extract every last dollar of juice from the market now, rather
than playing the long game like they normally do. This is understandable when,
according to ArtTactic,
"The ArtTactic Market Confidence Indicator is still standing at an all
time high, where market optimists outweigh pessimists in a ratio of 16 to 1."
Confidence indicators, of course, are the classic contrarian indicator.
As are websites like www.artforprofits.com
(I kid you not), run by a self-proclaimed "art market guru" in his
mid-20s who makes for some inadvertently hilariously reading. (Try this
blog entry, for starters.) It’s bad enough that some people are now buying
art in the hope of making money; needless to say, people with such hopes nearly
always see them dashed. But when the number of people looking to make money
by investing in art is large enough to spawn a whole other industry of people
trying to make money from people trying to make money from investing in art…
that, I think, is a good sign of the beginning of the end.