Experts warn for bubble on art market

Not only on the stock market is there danger lurking behind every corner. Investing in art also seems like a less safe investment. According some experts prices on the art market are skyrocketing in such a way that a bubble forming seems more and more likely, especially in the long run.

Prices art market doomed to drop

Tyler Durden from the famous investors’ website Zero Hedge already issued a warning at the end of last year: modern art is a true bubble for investors. The biggest problem, according to him, is that this market lacks a clear frame of reference. This evolution strongly reminds him of the immense dotcom-bubble in 2000.

“In 1987 everyone hit the roof when an Asiatic insurer paid almost 40 million euros for the Sunflowers by Van Gogh. Now the mood at the auction is morose when a modern work doesn’t sell for the expected 100 million dollars”, says Durden. According to him it is an undeniable fact that prices will drop.

Michael Novogratz, CEO at the hedge fund Fortress Investment Group, has also joined the discussion. He agrees that the market is showing all the signs of a bubble, with the parabolic rise in prices. Some of the sold works are, according to him, doomed to take a nosedive. Not gradually, but abruptly and in free fall.

Works of art with diamond: a safe investment

Durable and safe investment in art? That's not entirely impossible. There are, in fact, a lot of works of art created with diamonds. Think of the famous skull by British artist Damien Hirst, which was completely set with diamonds. The production of this work cost about 17.5 euros, and according to the artist himself, this was sold to a group of investors for the staggering sum of 63 million euros

Diamond is always a safe investment in a sustainable growth market, because global demand is increasing and supply stagnates. As super-investor Warren Buffet already expressed: “I've never regretted buying diamonds ... they're a good investment” Do you want to successfully invest in diamond? Ask the experts of BAUNAT for advice without obligation.

Author: Claudine Kuypers