As an alternative investment to gold, art has over years proven to be a real solid investment

 Today’s global economic crisis (GEC) which has hit hardest most developed countries, and whose economic experts are trying hard to rectify it, are results of the sub-prime financial debacle and the near collapse of the United States of America automotive industry.

The governments of most affected countries managed to quickly and decisively avert an immediate global economic meltdown, by using stop-gap measures of huge financial bail-outs to avert an economic slow-down. But this was at the cost of the real effects of the GEC being felt in the near future. In essence, these governments took over the financial responsibilities of temporary funding economic growth.

The question that one should ask is where did the government get the massive funding to plug the black-holes in their economies? The answer is they went to the printing press and printed fresh currency which they used to inject into their economies, in order to fill up the black-holes.

These measures brought some form of short-term relief to these economies by averting massive industry closures, high unemployment and most importantly an economic depression.  But it’s well known in economic circles that such measures always come with a hidden cost, printing currency to stimulate an economy can only bring short-term relief.
Today the results of such measures are just starting to be felt, with a steady rise in unemployment, company closures, credit crunch and property fore-closures. In essence these economies are going through a period of economic slow-downs or stagnation, better known as recession.

These symptoms are just the beginning of what is still come, and that is inflation. At the moment those with a general understanding of economics have started to take precautious measures to ride the tide of tough times that are set to come, by hedging their wealth and or savings against inflation by investing in art or gold.
That should explain why prices of art and gold have been achieving record prices.If one opens up the business section of any newspaper, one will read about record prices that gold is fetching in the markets , what is driving these record prices is the fact that many investors are liquidating their currency holdings and are investing in what has always been a safe-haven against inflation that being gold.

The reason why gold is regarded a safe hedge against inflation, is because of its scarcity, just like true art-works. The only known time that gold prices have been low was during the period when many central banks in developed countries opted to dispose the bulk of their gold reserves.

For one to fully understand the current events occurring in the global economy and to have reliable information to choose investment options in order to ring-fence themselves against the effects of the GEC soon to come, one must understand how the current currency system works.

Historically countries currencies were backed by what was known as “the gold standard,” this meant that the real value of every dollar printed by a central bank was backed by gold reserves held by the central bank. This meant that a central bank could not print currency above the value of gold held in their possession. In 1971 the then United States of America president Richard Nixon ended the international gold standard. The gold standard system is a monetary system where currency backed by gold, that is to say, the currency simply represents the gold that you own and can be converted into fixed quantities of gold freely.

From 1971 up to 1973 the Smithsonian agreement was passed pegging world currencies to the USA dollar rather than gold as a fixed exchange. In 1973 the Basel accord established the current floating exchange of currency rates we use today, called the fiat currency system. In Fiat currency system money is not backed by a physical commodity, instead its value is based on its relative scarcity and faith placed in it by people use it.

However, when people loose faith or confidence in the money, it irreversibly becomes worthless , regardless of its scarcity Initially a rapid growth in availability of credit is often mistaken for economic growth, as spending and business profits grow rapidly, and a rapid growth in equity prices. In essence as there are no real control measures to prevent the over-printing of currency in a Fiat system, a fake illusion of well-being and prosperity is created when in reality people are actually digging themselves a deep hole.

In the long run the economy tends to suffer much more by following contraction than it gained from the expansion in credit. In plain English, the economy starts shrinking. Hence the reason why some economies are now witnessing massive job losses, company closures and property fore-closures. When an economy reaches this stage, the next stage is the terminal effects of printing currency in Fiat system that of hyper-inflation.Hyper-inflation is the terminal stage of any Fiat currency, which occurs when money looses its value practically overnight. It is often the result of increasing regular inflation to the point where all confidence in money is lost, life savings are wiped out overnight and prices rise faster than people’s incomes.

Current financial instability has brought about lots of talk about international financial reform, and even return to the gold standard as proposed by some. The gold standard stands in contrast to Fiat currency which has no intrinsic value, but governments declare it to be legal tender, meaning it must be accepted as a means of exchange. One of the main benefits of the gold standard is that it protects citizens from hyper-inflation and debasing of the currency through excessive government spending. With a fiat currency, a government can print as much new money as it likes spending, which leads to a gradual decline in value of currency and citizens’ savings. Under the gold standard, a free banking system stands as protector of an economy stability and balanced growth.

In the absence of the gold standard there is no way to protect savings from confiscation through inflation. Russia and China have suggested the establishment of a super-sovereign currency, while Brazil and India have suggested substituting other assets for their dollar holdings. Currently the U.S.A and China are embroiled in a currency dispute over the value of the Yuan. The U.S.A is claiming that the Yuan is under-valued, giving China an advantage over the U.S.A in global trade markets, as Chinese exports are deemed to be cheaper than the U.S.A. The currency stand-off between China and the USA seems to have no end in sight as under a Fiat currency system, any powerful economic country can determine the value of their own currency to ensure no set system or measures can determine the value of their currency. What is inevitable is many countries are to go through a phase of hyper-inflation and the Fiat monetary system will eventually die a natural death, and be replaced by the gold standard system.

The question one must ask them self is, if the wealthy investors are hoarding onto gold bullion's and if currencies will be backed by the gold standard in the near future, then how does art come into the equation as a safe hedge against inflation? Firstly before one considers investing in gold they must understand that they need deep pockets, as a kilo bullion bar is currently trading at $45 000. Even after parting with such a huge sum, one must realise they can’t keep a $45 000 gold bullion bar under their bed, so monthly storage charges must be taken into consideration. Historically art has always been the alternative to gold.

During the period of high hyper-inflation in Germany which occurred after the First World War those who had invested in art came through that period better off, as the return on their investment in art-works out-performed investments in options that were available during that period. Most importantly art managed to beat the extremely high inflation rate, which would explain why so many art-works were looted during the Second World War.

As an alternative investment to gold, art has over years proven to be a real solid investment. With these uncertain economic times that we are in, its time to seriously consider your future by taking prudent pre-cautions to ring yourself against the effects of the current economic upheavals and events that are soon to come. In times of economic instabilities you are better off investing in art or gold.
SOURCE

The Ashok Art Gallery is internationally known for one of its most important holdings: more than 2000 major works by the world's most significant Artists.Over the past years, as Ashok Art Gallery has become a major centre for contemporary visual art, the Gallery has built a strong collection of contemporary work of different artists, we became a sponsor of the STANDUP-SPEAKOUT Artshow, Organized by Art Of Living Foundation and United Nations.Organized an International Contenmporary Art Exhibition including artists from USA, The Nederlands, Pakistan and India.We have also participated at Art Expo India 2008, 09 Mumbai and India Art Summit 2008 New Delhi.

This is an art market that’s definitely gotten its swagger back

 Do the high prices fetched at auction always indicate artistic merit? Aren't they often the result of a fraught bidding war between two super-rich collectors? Doesn't the $25 million stumped up for Jeff Koons' giant balloon model say more about the power of hype than the merit of the work itself? What's more, the market itself can easily be rigged. When Damien Hirst's diamond encrusted skull was purportedly sold for £50 million in 2007, rumour had it that Hirst himself was part of the consortium that bought it in order to drum up publicity and raise the market value of his other work.

So does the art market tell us only about fads and fashion and the egos of multimillionaires? Or should we overlook the hype and remember that in the long run the market rights itself and reflects the consensus on what great art really is? If there were just two names to remember from the 20th Century Art market, they would be Pablo Picasso and Andy Warhol who were among the 10 most sought-after and most expensive artists for the seventh year running. In 2007, an unprecedented year for Contemporary Art prices, Warhol’s total even overtook Picasso’s by $100m ($420m for Warhol vs. $319m for Picasso).Since then, the cubist has recovered his first place on the podium, although Warhol is still only $50m behind Picasso. However,in 2010, Warhol was in fact relegated to third position in the annual revenue ranking by the Chinese artist Qi Baishi.The 21st Century Art market has changed. Its extension eastwards has allowed China to impose its artists in an incredibly short timeframe. Qi Baishi, Zhang Daqian, Xu Beihong and Fu Baoshi are now all members of the closed circle of the most expensive and most profitable artists in the world, and their names are worth remembering.

There are more wealthy buyers for modern and contemporary art where the supply is more regular and the investment potential appears to be more attractive.The mood of Art Market is considerably brighter than it was two years ago. Global economic concerns remain, for sure, but recent months have seen spectacular sales not only in modern and contemporary art but also in fields as diverse as Chinese ceramics, antiquities, photographs and Old Masters. This is an art market that’s definitely gotten its swagger back.The emergence of wealthy collectors from Asia, the Middle East and South America in recent years has deepened the pool of buyers, especially for top-end masterpieces, and many of them remained in the market during the recession. Americans, who had largely stopped spending, started to return last year and are now back in full force.
 
The Ashok Art Gallery is internationally known for one of its most important holdings: more than 2000 major works by the world's most significant Artists.Over the past years, as Ashok Art Gallery has become a major centre for contemporary visual art, the Gallery has built a strong collection of contemporary work of different artists, we became a sponsor of the STANDUP-SPEAKOUT Artshow, Organized by Art Of Living Foundation and United Nations.Organized an International Contenmporary Art Exhibition including artists from USA, The Nederlands, Pakistan and India.We have also participated at Art Expo India 2008, 09 Mumbai and India Art Summit 2008 New Delhi.

Nicholas Forrest's prediction is that art investment will continue to gain credibility and new avenues to invest in art will open up

I have been watching the art market very closely over the last year and have to say that I was actually quite pleased with what I saw. The more scholarly and connoisseurial approach to fine art that emerged in 2009 has temporarily re-focused people’s attention on the historical, cultural and artistic value of art as opposed to the social and financial values that dominated the contemporary driven market of the boom period. I say temporarily, because although the glitz and glamour of the contemporary art market has taken a huge hit, and there is no doubt in my mind that the phenomenon that is contemporary art will shortly return to the position of power that has made it a force to be reckoned with in the past. Perhaps sooner than we may think!!

The scholarly and connoisseurial trend of 2009 still has a bit of juice in the tank and should continue to play a major role in the 2010 market. Take for the instance, the work of the rather mysterious Dutch Baroque still life painter Adriaen Coorte, whose work is little known outside the scholarly world and went largely unrecognized until he was rediscovered by a Dutch art historian in the 1950s. Works by Coorte rarely comes to market so when two small paintings came up for auction at Sotheby’s on the 2nd of December of 2009, it was predicted that there would be considerable interest, but not anywhere as much interest as there ended up being. The first painting, a still life of strawberries in an earthenware bowl was fought over by six bidders who pushed the sale price to 1,520,750 Euro which was not only more than ten times the 150,000 euro high estimate but was also a new auction record for the artist. Next on the block was the second work by Coorte which broke the auction record set by the previous painting when it sold for 1,576,750 Euro against the same estimate of 100,000-150,000 Euro. Both paintings were acquired by the same European collector.

Marcus Aurelius Root, Anthony Pritchard, 1850, quarter-plate daguerreotype

Another artist whose work is little known outside the scholarly world is that of Marcus Aurelius Root. An early work by the renowned Philadelphia daguerreotypist of Anthony Pritchard was a feature of the October 8 Miller-Plummer Collection of Photographs sale and reached the astonishing world auction record price for the artist of US$350,500 against an estimate of $20,000 – $30,000. The sale of this work by Root is another example of the current trend that has seen connoisseurs and scholars drive up the demand for works of cultural and historical significance. Root’s photo of Anthony Pritchard is not the only example of antique/vintage photography that has exceeded price expectations; the whole market for antique/vintage photography has experienced a continuing surge of interest as the importance of photography in an art historical context is further realised. 2010 should see a continuation of the interest in antique/vintage photography as collectors and museums vie for the top works in a niche that is still in it’s infancy, and that still presents opportunities for collectors and connoisseurs to acquire works of major cultural and art historical significance at potentially bargain prices.

As a result of the reduction in the demand for contemporary art, emerging markets such as South Africa, Indonesia, Turkey, Poland, Singapore, Iran, Greece, etc. have become a focus of dealers and auction houses in an attempt to generate new revenue streams. A deciding factor in the decision of which emerging market to penetrate has been whether or not there is a strong enough force of wealthy European/Western expats to fuel demand for souvenirs of their temporarily adopted homeland. Former expats of emerging markets are also being targeted by market forces in an attempt to encourage a sense of nostalgia that will result in the purchase of a memento of their time abroad. 2009 saw a concerted new ground being broken with region specific auctions, particularly with those of emerging markets such as Greece and Turkey – a trend that I predict will continue gaining momentum in 2009.

With owners of what are considered to be the most desirable and valuable works of art tending to sit on their assets while the art market bottoms out I predict that 2010 will see the slow return of those modern and contemporary works that tend to send the market into a flurry of excitement. Another prediction I will make is that art investment will continue to gain credibility and new avenues to invest in art will open up. A sign of the continuing acceptance of art as a viable alternative asset is the fact that Israeli billionaire Arnon Milchan recently told Forbes magazine that art is the best investment to own. In his words “If you have triple-A art, I’ve never seen it really go down. Great art is the best thing to own. We’ve seen recently the art market picking up fast. The last Sotheby sale broke records.”

Wishing everyone a great 2010 !!

Nic Forrest

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

The Ashok Art Gallery is internationally known for one of its most important holdings: more than 2000 major works by the world's most significant Artists.Over the past years, as Ashok Art Gallery has become a major centre for contemporary visual art, the Gallery has built a strong collection of contemporary work of different artists, became a sponsor of the STANDUP-SPEAKOUT Artshow, Organized by Art Of Living Foundation and United Nations.Organized an International Contenmporary Art Exhibition including artists from USA, The Nederlands, Pakistan and India.We have also participated at Art Expo India Mumbai and India Art Summit Delhi.

Indian Classical Art Set to Soar – said Art Market Expert Nicholas Forrest

My big tip for 2010 is that Indian classical art will increase in value considerably so my advice is to take advantage of the very low prices that such works are being offered for at the moment.I am really looking forward to seeing the new “Maharaja: the Splendour of India’s Royal Courts” exhibition which will be opening at the Victoria and Albert museum in London on the 10th of October. According to the V&A website “The heyday of the maharajas began in earnest after the collapse of the Mughal empire in the early 18th century. The exhibition will open with this period of chaos and adventure and will close at the end of British rule in 1947, when Indian princes acceded their territories into the modern states of India and Pakistan.”

Although it may not seem that exciting, this exhibition is a very important exhibition in my opinion because of the extent to which historic Indian works of art are undervalued. One of the reasons for this is the lack of cultural sector infrastructure in India which means that there is relatively little scholarly or curatorial attention paid to the works of the 18th and 19th centuries. In particular, the work of 18th century Indian artists is particularly impressive and is very highly valued because of the significant events that happened at this time that were important to the history of India. With so many wealthy people in India who are becoming more interested in fine art and cultural objects, I believe that it is inevitable that the value of classical works of art and other objects that have cultural and historical significant will increase in value very shortly.

Although a number of Indian billionaires have had their wealth decreased by the financial crisis (until last year India had the highest number of billionaires in Asia), there are still 24 Billionaires in India according to Forbes magazine (March 2009), which gives India the 6th highest number of Billionaires – only 4 billionaires behind China and two spots on the list. India was ahead of China in the 2008 rankings when they had 54 billionaires but is now behind them due to the financial crisis but the outlook for Indian’s economy is very good and is even tipped to overtake the Chinese economy.

In relation to the art market, I think that a comparison between China and India is very relevant. Both countries have a rich cultural history, and both countries are experiencing an increase in new wealth which has given more people the means to indulge their passion for fine art and cultural objects. The art market boom showed that a major increase in the number of wealthy people in a certain country usually results in what is essentially a buy back of that countries historic and cultural artefacts from abroad. This happened with Russia, Japan, China and is sure to happen with India.

Althought the market for contemporary Indian art has been hit particularly hard by the financial crisis combined with the lack of patronanage as well as the lack of curatorial and scholarly attention given to India’s contemporary artists, the work of the well known modern Indian masters has faired remarkably well. There is obviously still a considerable amount of wealth in India that is available to be spent but as with other art markets around the world, buyers are being much more discerning and careful with their money in light of recent events. Works of art that are seen to have cultural and historic value have the characteristics (stability and justifiable value) that buyers are looking for at the moment.

My big tip for 2010 is that Indian classical art will increase in value considerably so my advice is to take advantage of the very low prices that such works are being offered for at the moment.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

Indian Classices by Baladev Moharatha @ Ashok Art Gallery


The Ashok Art Gallery is internationally known for one of its most important holdings: more
than 2000 major works by the world's most significant Artists.Over the
past years, as Ashok Art Gallery has become a major centre for
contemporary visual art, the Gallery has built a strong collection of
contemporary work of different artists, we became a sponsor of the
STANDUP-SPEAKOUT Artshow, Organized by Art Of Living Foundation and
United Nations.Organized an International Contenmporary Art Exhibition
including artists from USA, The Nederlands, Pakistan and India.We have
also participated at Art Expo India Mumbai and India Art Summit New
Delhi.

Contemporary Indian art and the relationship it shares with the international art scene, art fair review

If a fair is expected to bring together eminent personalities and experts in a meaningful interaction with the masses, this is exactly what Art Expo India 2009 in Mumbai (Nehru Centre, Mumbai, September 25- 27) achieved. Prominent artists, famous gallerists, high profile buyers, renowned art experts, top curators and eager investors joined in a jovial celebration of contemporary Indian art and its rising global stature.

Considered among the major events on the country’s art calendar, the second edition of AEI served as the most comprehensive congregation of art collectors, museum directors, critics, art historians, art fund managers and corporate decision makers from across the globe. The fair, a showcase of the very best in Modern & Contemporary art, acted as a flash point, to ignite interest in contemporary Indian art. Stung by global recession and economic crisis, AEI could not have come at a better time, playing the role of a catalyst to revive the art scene.

The central theme was emerging contemporary Indian art and the relationship it shares with the international art scene. There’s no doubt about the fact that India’s art scene has acquired center stage globally. Though Indian art has been in existence for centuries, its impact on the larger international canvas has been rather limited. However, things are now fast changing as witnessed at the expo that was a vibrant reflection of the country’s myriad art trends, encompassing sociopolitical, religious and historical developments.

Some of India’s biggest and best-known galleries featured at the expo. These included Apparao Galleries, Chennai; ICIA, Sakshi, Gallery BMB, Gallery Beyond, The Arts Trust, Art Musings, Priyasri Art Gallery, Pink Ginger Arts (all Mumbai); Latitude 28, Marigold Fine Art, Ashok Art Gallery, Ojas Art, Indian Art Ideas, Gurgaon Art Centre, Dhoomimal Gallery, Bajaj Capital Art House, Progressive Art Gallery, Art Inc., Wonderwall (all New Delhi); Ishka, Cochin; Sara Arakkal, Bangalore; and Kalakriti, Hyderabad. Among the international galleries were Jolrong.com (Singapore/Bangladesh); Galerie ArtSeefeld, Switzerland; Gallery Archana, Malaysia, and 1x1 Art Gallery, Dubai.

Renowned curator-collector Mrs. Kay Saatchi inaugurated the event. The keynote address delivered by her dwelt upon the theme of spotting young talent and building up an art collection. In fact, a major highlight of the event was a series of freewheeling conversations with some of the luminaries of the international art world, comprising Mallika Sagar Advani, Anjolie Ela Menon. Dr. Alka Pande, Jitish Kallat, Ranjit Hoskote, Bose Krishnamachari, Shantanu Poredi, Brian Brown, Sharan Apparao, Menaka Kumari-Shah, Abhay Sardesai and Kirsty Ogg. Themes like buying art in recessionary times; ‘Art in Life: the ‘Daily Pleasure of Collecting’; ‘The aesthetics of the erotic’; (X)topia: A Search for Place, A Place for Search’; Everything is Art; and ‘Indian Art in an International Perspective’ were debated, evoking spontaneous responses and a round of rapid fire questions from the engrossed audience.

Mention also must be made of a mini-retrospective at AEI, which was arranged as a small tribute to S. H. Raza and his dedication to art. The legendary artist has remarked: “I have lived fully, and (always) worked with passion and intensity both as a painter and thinker. It needed 30 years for me to master the art of painting before I arrived at a personal style.” The show encapsulated the spirit of his art practice.

Nehru Centre in Mumbai might not be frequented by art connoisseurs but last weekend over 20,000 enthusiasts were visited the venue to view artwork from 30 galleries around the world at Art Expo India. “It’s a forum that allows viewers to look at a collection that is representative,” says Vickram Sethi, chairman of the three-day fair. He adds, “Entering galleries could be intimidating and a forum like this helps initiate new people into the world art.” young participation by Ashok Art Gallery has got a spectacular response on both visitors and sale, it was almost crowded all three days. their collections includes masters like C.S.Rao, seniors like Baladev Moharatha, cutting edge like Pratul Dash and new talent Pradosh Swain, Sajal Patra and Kanta Kishore were hot favorite amongst all.The event spread over three day brought immense sense of satisfaction and achievement to its organizer Vickram Sethi, who has been involved in art for close to two decades and has witnessed the dramatic evolution of Indian art scene. The Arts Trust was set up by him in 1990 with a long-term vision of promoting Indian contemporary art, which was just gaining in prominence at that time. The Institute of Contemporary Indian Art (ICIA) was a logical extension of his vision of becoming the best source for quality work by both the distinguished and emerging Indian artists.

Having had his own art gallery, he had valuable first-hand experience of the difference between the art markets in India and outside. He realized that the three challenges to the Indian art market were an unorganized art market, limited collectors and buyers and international exposure, interlinking and affecting each other. He felt the need for a consolidated resource within India for its art scene hence he launched the Art Expo last year.

Harping on the bright future of Indian art and artists as reflected at AEI, Meenakshi Reddy Madhavan of The National, a leading UAE based publication, wrote: “Walking through the expo, it’s hard to imagine that there’s a global economic crisis. If anything, the canvases were larger and more obviously bright than in previous years, the sculptures and installation pieces held pride of place, and the new generation was holding down the fort.”

Echoing the sentiments, Mr. Sethi expressed confidence about the bright prospects and potential of contemporary Indian art. He added, “The Indian market is in a very nascent stage compared to the international art markets. However, it’s only a matter of time before it grows at a rapid pace.” Art Expo India 2009 was a significant step forward in this highly fulfilling, rewarding and enriching journey, searching for new, meaningful expression of creativity.
Art Expo India this year has showcased artists like Picasso , Ganit Blechnr, Souza, Raza, Ram Kumar, Krishna, Khanna, Nalini Malni, Anjoli Ela Menon, Suryakant Lokhande, Jagannath Mohapatra, Akbar Padamsee, Chirag Patel, Jogen Choudhary, Alok Bal, Kanta Kishore Moharana, Sajal Patra, Baladev Moharatha, Pradosh Swain, Somanath Raut, Pratap Jena, Amna Ilyas, Gadadhar Ojha, Manas Ranjan Jena, items, including pieces by artists of the country to see many masterful art works of both Indian Masters and Younger Artists.

The Ashok Art Gallery is internationally known for one of its most important holdings: more than 2000 major works by the world's most significant Artists.Over the past years, as Ashok Art Gallery has become a major centre for contemporary visual art, the Gallery has built a strong collection of contemporary work of different artists, became a sponsor of the STANDUP-SPEAKOUT Artshow, Organized by Art Of Living Foundation and United Nations.Organized an International Contenmporary Art Exhibition including artists from USA, The Nederlands, Pakistan and India.We have also participated at Art Expo India Mumbai and India Art Summit New Delhi.