I start 2010 with the anticipation that it will be better than the previous year. After reading Niall Ferguson’s book, The Ascent of Money, the road to riches over time has evolved quite dramatically in form and format.  So as I look ahead, where have antiques and art come from and fit into the future of money.

Perhaps the greatest hope (and tidbit from the book) for an aspiring member of the art and antiques trade is the fact that the great Rothschild family dynasty started in Austria as an antiques dealer. Why didn’t the antiques market evolve like Dutch tulips, real estate, oil, or government bond?  Simple, the Rothschild’s collected, and collecting is personal.  Collecting is not underwritten by a market exchange; that would be too simple, but by a form of physical ownership that enhances the pleasure of possessing the object.  It seems to me that the pleasure of ownership can be competitive and expensive, but pleasure is also relative.

My time of reference for the art and antiques industry starts in the pre-buyer’s premium era, when auctioneers, dealers, collectors, and interior designers had equal footing in their ability to buy and sell.  Values were stable but for a whiff of inflation in the late 1970’s and 80’s however supply to the market was steady.  The ability to speculate in the industry started with the beginning of the buyer’s premium, when the adventurous Sotheby’s and Christie’s auctioneers got so confident with their new innovation. That they were convicted of colluding only meant they had lost the battle but still won the war on how they continue to operate in lockstep.  But with today’s economic convulsions, opportunities lurk for innovation in the industry.

The magic of the auction extravaganza is undeniable; however their manipulation of the buyer and seller is hidden in the fine print and the smoke and mirrors process of chandelier bidding, commission/buyer’s premium conflict of interest, etc, etc, etc.  Those traits which artificially affect market pricing usually at some point come in conflict; the auction market seems to bear out that fact as the Sotheby’s/Christie’s duopoly have been forced to change how they operate (guarantees are now not given out).  This is the first of many cracks in their armor. With nimble competitors attempting to change the rules of auction practices, the market will continue to evolve dynamically.

Just as revolutionary and industry shaping as the effect of the buyer’s premium, so too will market forces potentially alter the landscape of trading art and antiques, hopefully without the collusion caveat.  As with any commodity, possession has advantages, whether in the ground (oil), in a bank vault, or in a warehouse. To control how and where an item is sold requires knowledge of the market and the ability to deliver the goods.  With that, the transparency of negotiation between two parties, including by private treaty relationships offers the next best hope for the dealer model to propagate.

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