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The highs and lows of art at auction

A comparison of art versus gold

Monet's La Plage a Trouville

We have taken a selection of works that have appeared at auction more than once to appraise their value, taking inflation into account (but excluding transaction costs). We then measured what the equivalent return would have been for gold.

Claude Monet

While Artprice states that a $100 investment in Monet in 1988 would equal $215 by June 2010, the market is varied. La Plage à Trouville, 1870, was offered at Sotheby’s London in June 2000, selling for £11m. But, in Sotheby’s New York in July 2006 it failed to sell against an estimate of $16m-$20m. It sold at Sotheby’s London in June 2008 with a reduced estimate of £7m-£10m for £7.66m. “While it’s a very appealing image from Monet’s early period, the market has moved towards later works, in particular the series paintings,” said dealer Nicholas Maclean, adding: “It was a full price paid for the work in 2000.” The original sum of £11m would now be £13.8m, allowing for inflation, and the 2008 price would be £10.9m—a loss of £2.9m. £11m invested in gold in 2000 would have been worth £28.2m in 2008.

J.M.W. Turner

Although Turner painted around 600 works, only around 90 of these are still in private hands, so demand for them can be fierce. 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.

Pieter Brueghel the Younger

Brueghel the Younger bears testament to the caprice of the market. “Unappreciated for a long time,” according to George Gordon, co-chairman of old master paintings, Sotheby’s Worldwide, the artist is now “almost regarded as currency”, said Richard Knight, co-international head of old masters and 19th-century art at Christie’s. A good example is The Kermesse of St. George, 1628, which sold at Sotheby’s London in April 1981 for £275,000. It came to the block again at Sotheby’s London in July 2005, selling for £2.2m. With inflation, the original sum of £275,000 would be £785,847—showing the huge growth in value. £275,000 spent on gold in 1981 would have been worth £297,000 in 2005.

Auguste Rodin

In a year when sculpture by modern masters rose to the fore, Rodin’s bronze Le Penseur, Taille de la Porte dit Moyen Modèle, 1880-81, saw an astonishing return this year. It sold in June 2009 for E2.5m in France at Baron Ribeyre & Associés (£2.25m). By the time it came to Sotheby’s New York in May 2010, its stock had soared and the work sold for $11.8m (£7.3m). £2.25m invested in gold in June 2009 would have been worth £3.2m in May 2010.

Jean-Michel Basquiat

There are potential high-yields for works by Basquiat. On average, $100 invested in 1998 in a work by the artist would have a value of $655 in June 2010. Paintings from the early 1980s are particularly popular. Warrior, 1982, sold at Sotheby’s New York in November 2005 for $1.8m (£1m). Two years later at Sotheby’s London in June 2007, it fetched £2.8m. The original £954,000 would be £1.06m today, allowing for inflation, while the 2007 price equates to £2.9m. £954,000 invested in gold in 2005 would have been worth £1.3m in 2007.

Joan Mitchell

There has definitely been an upwards momentum in the female American Abstract Expressionist’s market. According to Artprice, $100 invested in 1998 would now have an average value of $664. Mitchell’s Sunflower V, 1969, sold at Sotheby’s New York in May 1999 for $266,500 (£165,230), but soared to $1.53m in November 2005 at Christie’s New York (£904,020). “It’s certainly an area we would recommend clients to seriously consider,” said Michael Plummer. The original sum of £160,966 would now be £207,960, after inflation, while the 2005 price would be £937,089. Meanwhile, £160,966 invested in gold in 1999 would have been worth £228,572 in November 2005.

Inflation rates are based on Bank of England statistics, which are published up to 2009. Gold prices are according to the London Bullion Market Association. All prices are quoted in sterling.

Jan Lievens

A Tronie, around 1629, sold in July 2004 at Sotheby's London for £1.85m, and then four years later in July 2010 for £2.5m, making it the second most expensive price for the artist at auction. Lievens was, for a brief period in the 1620s, vying for supremacy with Rembrandt, which means works from this period are more sought after than his later works (particularly as supply for Rembrandt’s paintings from the same period dries up).

However, with inflation, £1.85m would now be equivalent to £2.1m—meaning that the vendor would only have made a modest return, particularly when transaction costs are taken into account. Meanwhile, £1.85m invested in gold in 2004 would have been worth £6.5m by July 2010.

The brief period between the two sales might explain the relatively modest rise. While the 2004 price was a considerable record (likely because the work had not been seen at auction since it was sold by the Marquis of Cholmondeley in 1886 at Christie’s for £21—or £2,035 at today's rate), trade sources say it had been offered around after the sale—proving that market freshness matters.

Sir Peter Paul Rubens

Rubens’ A Portrait of a Man as the God Mars, around 1620-25, sold in July 2000 for $8.3m (£4.98m) at Sotheby’s New York. Back on the block again with Sotheby’s London a mere two years later in July 2002, the work sold for £4.4m, making a loss of £580,000 excluding transaction costs—almost certainly because it came back on the market again so soon.

If £4.98m had been invested in gold in 2000, it would have been worth £5.58m by 2002.

Pablo Picasso

Picasso is “the golden boy of the commercial art world,” said Michael Plummer of art finance advisory firm, Artvest Partners. “Different generations have entered the market and validated the views of previous generations—the book about where he stands in history has been written.” Portrait d'Angel Fernández de Soto, 1903, sold at Christie’s London in July 2010 for £34.8m, beating the previous auction record of $29.2m when the work appeared at Sotheby’s in May 1995 (£18.7m). The vendor, Andrew Lloyd Webber, would have made £16.1m (barring transaction costs)—which he is using to fund upcoming musical theatre stars.

If £18.7m had been spent on gold in 1995, it would have been worth £60m by July 2010.

“Picasso slightly outperforms the market by a percent or so,” says Michael Moses, co-founder of Beautiful Assets Advisors and the Mei Moses All Art index. “He has a large body of work, but he’s been famous for a long time—which means people have been paying for his work for a long time, so on a repeat sale basis there are less profits to be made.” According to data on Artprice, an investment of $100 in a work by Picasso in 1998 would fetch $194 in June 2010.

In a market driven by supply and demand, collectors might turn to works that had previously been less sought-after. “Some art investors began to specifically target Picasso works from the 1950s in around 2004, and a lot started to look at sculpture as being undervalued,” said Plummer. Indeed, the much-lauded exhibition “Picasso: The Mediterranean Years (1945-1962)”, at Gagosian gallery this summer, indicates an increased focus on this area of the market. But, as Plummer adds: “You had to be forward-thinking and get in at the beginning, rather than the end of the curve.”

Damien Hirst

This most prolific of artists epitomised the boom, culminating in his solo auction of 223 works at Sotheby’s "Beautiful Inside My Head Forever" sale on 15-16 September 2008. All but five of the lots sold over the two-day auction, which totalled a staggering £111.4m—despite coinciding with the collapse of Lehman Brothers and the 500-point drop of the Dow Jones.

Hirst responded to the demand for his work as the market moved towards it peak in 2007 by increasing production. His auction turnover increased year on year: in 2006, 167 of his works were offered at auction, by 2008 the number had risen to 624. In total, Artnet found that Hirst has appeared at auction a whopping 2,165 times since 1996.

I Miss You, 1997-8, offers an insight into how prices have adjusted. The lime-green butterfly painting has been at auction four times in five years. First sold at Sotheby’s "Pharmacy" sale in October 2004 for £263,200 (est £120,000-£150,000), it failed to sell in February 2008 against an increased £700,000-£900,000 estimate. It was again re-offered—unsuccessfully—in October 2008, with a reduced estimate of £500,000-£700,000. The work found a buyer at Christie's London in October 2009 against the new estimate of £200,000-£300,000, selling for £337,250.

The initial £263,200 investment would have been equivalent to £301,259 by 2009, if inflation is taken into account. Given that the vendor would only have received the £280,000 hammer price—and would have had to pay transaction costs on top of this—the investment value looks less than healthy. Meanwhile, an investment of £263,200 in gold in 2004 would have been worth £821,184 by 2009.

However, timing is key: when you bought, and when you sell. While Artprice calculate that $100 invested in 1998 in a work by Hirst would now have an average value of $452, the site also shows that his buy-in rate increased by a whopping 103% last year. “Hirst is an excellent hedge—if one bought in the 1990s. But, if one bought in the last five years, maybe not,” said Todd Levin.

Even for Hirst, rarity pulls more punches in the market place. Nine of his top ten sales are the less-readily-available installation works.

Damien Hirst's I Miss You (detail)
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