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Investing in Art.

January 14, 2011

I have always thought that purchasing fine art has  been for the über rich. For people who regularly attend auctions at Sotheby’s and Christie’s. Eating tiny cucumber and watercress sandwiches while sipping their champagne. Their hands ever so casually rise while bidding thousands of dollars for a post card size painting. If I’m bringing you back to the auction scene in The First Wives Club then I have succeeded in my description. Having a fond love of art myself, I have always dreamed of being able to own a masterpiece. Unfortunately since I am not featured in the Fortune 500, I’ll have to settle for museums and free gallery shows. In an article I read in The New York Times, I found that there are options. I may not be able to own a Renoir outright but I can own a part of it. Wall street, after already invading social networking, is now creeping in on the arts. By investing through funds, individuals (with a nice chunk of money) can own art without paying large fees and heavy taxes usually associated with a full ownership.

These art funds are popular in countries like China, India and Russia but there are doubts as to its success in the United States. Overall it has an odd selling point, I mean what part of the painting would I own, Mona Lisa’s eye?  Aside from the shared ownership issue, these types of funds have the potential to provide an easy channel for money laundering or hiding assets. Organized crime alert! Many professionals in the art world plan on making it difficult for financial firms to infiltrate their communities (a critical step when buying and selling paintings). Lucy Mitchell-Innes, the president of the Art Dealers Association of America told The New York Times that she would “Never allow a young artist to sell artwork to a pooled fund, generally we resist seeing art as another financial instrument. None of us go into this market to trade commodities.” That’s what makes this whole idea of art funds just creepy. Does wall street really need something else to take over and potentially ruin? Have they learned nothing from the whole Madoff  disaster. The beauty of the art itself will be taken away and seen as nothing more than dollar signs. Appreciation will become obsolete. Let’s remember they are called starving artists for a reason. The love of their work is why they did what they did, not to make deals with corporate America. I can just hear Frida Kahlo rolling over in her grave. If you want to invest in art, go directly to the art galleries and licensed art dealers themselves. You might be surprised how far your dollar can take you.

At GAI ( we welcome artists and art enthusiasts of all types. We would love to hear your thoughts on this and see your work. Give us a call at 212-979-6830 or stop in and visit.

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