NY Times Article re Overheated Art Market--Similiarity to Coin market?

Longacre

Did anyone see today's NY Times' front page article about the rare art market and how people are rushing to auction off their items because the market is overheated and seems to have peaked? It was interesting, and I wonder if there are any similarities to the coin market (maybe there are not too many, seeing that works of art are one of a kind, whereas there are relative few coins that are unique) One of the most interesting parts of the article dealt with client's interactions with the two major auction houses--Christie' and Sotheby's. The article stated that "almost all sellers request a hefty financial committment from each house in the form of a guarantee, an undisclosed sum that goes to the seller regardless of the sale's outcome". It also stated, which I found interesting, "it is easy to tell if Sotheby's or Christie's has a financial interest in the art they sell because the New York Department of Consumer Affairs requires that if a guarantee exists, that fact must be noted in the catalogs."

I just found the article interesting. Has anyone else seen it and do you think there are any similarities to the coin market?

roadrunner

This is just a swag, but doesn't the art market tend to lead the coin market in major moves? You would think that the rich and connected would be the first to recognize the shifting winds. And the real rich, as a rule, invest in art, cars, property, etc....but not coins. Witness the recent sale of one of the nine 1971 Plymouth Hemi 'Cuda convertibles at $2 Million. These have far exceeded what they brought in the 1988-1990 market peak. About $250-500K as I recall. Hemi Cuda hardtops have soared from $35K in 1996 to about $90-120K today. But not all collectibles have been so favored. Only the best of the best are receiving the king's treatment. And so it goes with rare coins too. It remains to be seen if the 2nd tier of coins will follow in the footsteps of what has been hot for the past 2 years.

I believe we just experienced wave #1 in the coin market. Stronger sell-off waves are yet to come in 2005/2006. Inflation has not yet reached the heights to which it will eventually trend. Certain parts of the art and coin market have fully recovered from the 1989 peaks and in many cases have far-exceeded those record prices as tastes have dramatically shifted. Just look at early dollars, DMPL's, better date gold, better date seated rarities, 19th and 20th century key dates, pop tops in Lincolns, Indians and Buffs, moderns, monster colored commems and monstercolored Morgans. TDN has helped to raise the bar on MS trade dollars and seated dollars almost single-handedly. And with all this happening many parts of the various collectible markets have barely budged.

The economy of 2005 will have much to say about how much further we have to go in the bull market or if the best is behind us. I thought those Hemi Cuda ragtops were overpriced when they hit $700K and even $1 Million just a few short years ago. Guess I was very wrong.

roadrunner

dragon

Good post roadrunner. 2 million seems outrageous, even for that very rare '71 hemi Cuda, sheeesh!

dragon

morgannut2

Yes the article is interesting, but misleading. In the top tier fine art markets (ie paintings, furniture, etc) there is a great shortage of the finest material because it's in strong collector hands or museums. In the mid level areas, collectors are rushing to sell because the top stuff is dragging up auction prices for everything. The same thing I think is beginning to happen in the coin area with many "extra" auctions jammed into a short time frame. All that is happening in the rare American cars is there is a bubble for special engine/model combos where less than 25 were made. The same thing happened to foreign exotics( ie. Ferrari Daytona 275 Spyders, 36 made) where prices zipped over several million before crashing a year later. In "true classic" rarities like early bust dollars, the prices won't crash, but I'm not so sure about their later cousins like net graded Morgan 1893-s "rarities" that aren't as rare as they seem, and are like the mid level fine art market now.