I often ask investment and legal professionals, "are you talking with your clients about their investments in antiques, art and collectibles? Are you offering informed advice on the management of a potentially significant portion of their overall net position?"
More often than not, unless the client has pro-actively discussed their alternative assets (better known to the owner as their "collection"), the investment or legal professional is in the dark. It has been interesting and rewarding to help these folks connect with their clients on this issue and begin to make informed decisions on the management of what is sometimes a significant investment.
Most recently, I authored a short article titled "What do Likonomics have to do with the price of Jade in America?" While the article was written for attorneys and wealth managers, it is an interesting and hot topic that may appeal to a larger audience - and illustrates how the art and antiques market is influenced by world events and economies. Since this article was completed, Ukraine has seen a growing unrest and the possibility for conflict for the US is great. We will explore how political (international and domestic) unrest can impact the alternative asset (collecting) market in the near future.
Read on, and as always, we welcome your thoughts and feedback.
What do Likonomics have to do with the price of Jade in America?
More than you would think, actually! First, it may help to understand the concept of "Likonomics". Coined last summer by an economics professor doing some work for Barclays, "Likonomics" was first referenced in a scholarly article explaining the policies of China's newest Prime Minister, Li Keqiand (Click here to read the original article by Huand Yiping). Yiping described Keqiand's policies as:
- interest in de-leveraging the Chinese economy
- slowing economic growth to sustainable levels
- reducing the country's reliance on export markets
Over recent months, major international auction houses, including Garth’s, have seen a slight slowdown in prices for the best jade, porcelain and bronze Chinese relics. For several years, the market for Asian Arts has been driven by a bullish Chinese economy and a growing upper class eager to flash their new found wealth and acquire objects of status. Prices have risen to record - almost ridiculous - prices, with most informed trade professionals expressing a concern for the ramifications of an ever-stretching bubble (we reference the 2008 credit crisis and economic crash in our own country). Although Prime Minister Li Keqiand’s conservative approach to tempering growth has been met with skepticism by other economists since Yiping's article was published, the author stands firm on optimism for the reformation under Likonomics. Click here for a recent article by Yiping revisiting the topic and addressing the shifting and developing policies of Keqiand and his advisers.
In short, although we agree with Yiping's enthusiasm for Keqiand's influence on the Chinese economy, the luxury goods market still holds the long-term potential for a significant slowdown. The question remains: will the slowdown come with a screeching halt of the market or in a more tempered environment with restrained and realistic gains? We do feel confident that prices for the best Asian artifacts will continue to be strong (if a bit more realistic) for the short-term, but we hedge on the long term outlook.
Although most collectors have not built collections based on the investment potential (nor do we suggest that approach), anyone holding collections of significant size or value should be considering how and when (and where) to most advantageously dispose of their items. Gains for most US collectors of Asian art will be robust if realized now, and we recommend seizing the moment to liquidate investment or collection positions that include Asian artifacts.
Adding to the concern for managing an Asian art portfolio is a recent executive order banning the sale of ivory in the United States. Following in the footsteps of the EU, and developing on the heels of an almost complete ban on international shipments of ivory, the policy is unclear at best (click here for a link to a fact sheet issued by the White House on the order). For now, the sale of antique ivory items seems to be permissible, but the level of documentation that will be required may cripple the market for such goods. As the Department of Fish and Wildlife works with the executive office to determine the best policies for implementation and enforcement of the ban, it has never been more important to deal with a reputable and expert representative on the sale of antique ivory goods. This ban, combined with issues surrounding international shipment and ownership, has had a chilling effect on prices for all but the very best items. A review of ivory collections is truly a critical move for collectors and their advisers to undertake as soon as possible.
See below for a number of recent prices realized across several categories of Asian art and collectibles. Of course, if you or your client’s collecting interests include American arts and antiques, precious metals, firearms or other collectibles, we have experts who can help. Call me today for a detailed and discreet discussion.
Amelia Jeffers
President
Garth's Auctions, Inc.
740.362.4771
amelia@garths.com
This nephrite (jade) bowl was consigned by a collector / dealer who expected it to sell for $60,000 or so. It had wonderful carving and was made of a fine material. At auction, multiple bidders from the US and China fought to a selling price of $162,500. It sold to a Hong Kong collector.
Bronze Buddha figures have been in high demand for several years. We have sold several examples for more than $40,000 - with collectors seeking a wonderful patina, fine detail and precious metals and stone adornments. This 18th Century example sold for $70,500.
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Contemporary art is in high demand on the Asian continent,
with savvy buyers scouring the internet for reputable sources. This triptych by Michigan artist (born in China), Chuang Che is an impressive 15 feet long and sold for an even more impressive $45,000.
The sale of ivory has become far more complicated than when this ivory vase sold; but, the intricate carving and signature created high demand. A vase believed to be carved by the same artist sold just prior to this in New York at a well-known auction company for a bit less. Garth's example sold to a dealer with offices in the US and China for $55,000.
This Archaistic cast bell with intricately carved relief patterns remained in a sophisticated Midwestern collection until it sold at Garth's for $9,000. Bidding for the ceremonial item was competitive between New York buyers (present in the room) and internet and phone bidders.
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