The smart money, the kind that moves first at the slightest sign of trouble, is on the move again.
In a market I’ve previously reported on. A market I call the “off-the-grid” market.
I can’t say I blame these savvy investors. If I had the kind of money we’re talking about, I’d be doing the same thing. Getting off the grid, to the extent possible these days.
Putting it in alternative investments that can help protect your legacy, your children and grandchildren.
Keeping it out of the banks, where your money is sure to be tracked. Where it’s at risk of being “bailed in” should the bank go under, just like what happened to depositors in Cyprus’ banks in March 2013.
Where it’s subject to negative interest rates, a tax on your cash in the bank, which is prevalent throughout most of Europe.
I’m talking about the red-hot collectibles market, and especially art. A market where Christie’s auction house
tallied up over $1.4 billion in sales in two days last week, smashing its previous single-week high of $975 million last May.
And where competitor Sotheby’s sold works totaling $893 million in sales since May 5 — a record breaking total of $2.6 billion in art sales, a 25 percent surge over last year’s similar auctions.
Eight artist records were set, including those for Lucian Freud, Robert Rauschenberg and Robert Ryman. Eight works sold for more than $20 million.
Pablo Picasso’s painting, “Les Femmes d’Alger,” sold for $179.4 million — in just 11 minutes — becoming the most expensive artwork sold at auction, ever.
Alberto Giacometti’s bronze sculpture of a pointing man was purchased for another record of $141.3 million.
And artist Mark Rothko’s painting “No. 10,” fetched $81.9 million, almost twice what Christie’s had estimated.
One sale I find particularly interesting was English painter Lucian Freud’s 1994 painting of a 280-pound naked civil servant named Sue resting on a couch.
Estimated at $30 million to $50 million, it sold for $56.2 million, setting an auction record for the artist.
Whoever bought that painting sees the same thing I do, and that most of the buyers at the art auction also see:
By the time the sovereign debt crisis that’s just getting started comes to an end, civil servants will indeed be looking for work, perhaps even naked on a sofa — since there won’t be much left in government coffers to keep them employed.
Or perhaps the civil servant was an Emperor, with no clothes — which we will soon also get to see. Our leaders being stripped down for who they really are …
Power hungry ego-maniacs that have destroyed our country by drowning it in patently unpayable debts and IOUs.
By spying on you, by trampling on the Constitution via the Patriot Act, by coming up with one excuse after another for a new tax.
By targeting the rich, which is now officially defined in Washington as anyone who makes more than $250,000.
And it’s not just here in the U.S. It’s actually worse in Europe, where France is about to table a law that will require electronic transactions for any business conducted that amounts to more than 1,000 euros.
Where Greece is already implementing capital controls, so its bondholders can stand a chance at getting repaid, while the average Greek citizen sees their wealth and country go down in flames.
Where Italy, France and yes, even Great Britain are considering similar capital control measures, and even experimenting with cashless, electronic currencies, so they can track and tax their citizens at will.
This is why the big, smart money is moving into alternative markets. Not just art. But also rare coins and diamonds.
Consider Sotheby’s recent sale of a 100.2 ct. emerald-cut perfect diamond, dubbed the “Ultimate Emerald-Cut Diamond”, which sold for almost $22.1 million, making it the highest price for any colorless diamond auctioned in New York.
Or last week’s sale of a Burmese ruby weighing 25.59 carats which sold for a world record 28.25 million Swiss francs — 61 percent over what it was estimated to fetch.
It’s all largely being driven by the worst sovereign debt crisis, ever, which, as I told you last week, is rapidly approaching.
Why then, you ask, is gold still languishing? Or silver, or platinum, or palladium?
They too will have their day in the sun, again. Stay tuned!
Best wishes, as always …
Larry
