Or so everyone seems to think as the
auction bubble in rare trophies inflates...
COMPARE and contrast these headlines from the Financial Times' FT.com this week,.
"Office building in London at 7-year
high...
"Chinese billionaire buys $170m
painting...
"Oil glut to swamp demand until
2020..."
Producer prices in today's workshop of
the world sank almost 7% last month from October 2014. Because there's way
too much steel plate, oil, plastics and copper wiring in the world – and way
too much capacity to make more. Thanks of course to the last decade's boom.
Hence the mess at major platinum-miner
Lonmin Plc (LON:LMI). To save itself from the disaster of plunging prices, it
is trying to raise more money from shareholders. But to attract stockbrokers
to underwrite the offer, it's had to offer that new equity at a 94% discount to stock-market prices.
"Good news for the company and
employees is bad news (short term at least) for the price," notes Tom
Kendall at ICBC Standard Bank in an email, "as it defers the point at
which availability of metal will start to tighten."
Meantime in useless stuff however, the
world's other big glut – the glut in money brought about by zero interest rates and QE money printing – is driving a relentless rise in the
price of "rare" trophies.
Yet the assumption – even as the US Fed
pretends it's about to finish the party by daring to raise Dollar rates from
zero – is that those record-high prices are more than justified. They're more
than permanent, too.
Check how the Financial Times'
web-editors presented Monday night's sale of modern art at Christie's in New
York. Chinese collector Liu Yiqian – an "ex-cab driver turned billionaire" – paid $170 million for Modigliani's 1918 work, Nu
Couché ('reclining nude' to you. Or 'naked lying' to my schoolboy
French. American and British newspapers find it all a bit rude either way).
But the FT's headline-link off
its homepage didn't say that. Instead it said Liu "buys $170m
painting"...
...y'know, like he might have bought a
left-hand drive car, or a pair of trousers with a nice flare.
High prices have always helped the world spot fine art when it sees it. But in the FT's throwaway headline
Tuesday morning, the price discovered at Christie's auction pre-dated the
bidding. An adjective like weight or colour, the price of Nu Couché
became as sure as its fabric (oil on canvas) and dimensions (60 centimetres
by just less than a metre), and very much more certain than its artistic
worth.
As it is, Liu didn't actually pay $170m
for the painting. No one else seems to have looked, but working back from Christie's New York buyer's premium table, it seems to us he paid $150m for Nu Couché...and paid another
$20m in buyer's premium to the auction house.
Ker-ching indeed for the middle man. Liu
only recently began to collect Western as well as Chinese art. But I doubt he became a self-made billionaire by paying 13%
transaction fees on any of his business deals.
How long before that "fixed"
adjective of $170m proves a naked lie too?
Gold therefore has no value, the journo
went on...forgetting whose knowledge and opinion the interview was supposed
to be sharing with BBC radio listeners.
But of those three features – rare,
useless, worthless – at least one must be untrue of gold. Because the prices
of rare stuff just keep going higher, no matter how useless. Whereas gold
just made a fresh 6-year low.
Well, 69-month lows in truth. But who's
counting? Besides long-suffering gold owners.
The bubble in rare trophies is creating
its own glut of supply, of course. And not just in middlemen wanting a
cut.
Besides making maybe $20 million off the
$150m sale of Modigliani's Nu Couché this week, Christie's auction
house in New York today stands accused of very nearly auctioning fake Bordeaux wines at 5 sales between 2006 and 2013.
Only an expert can tell the difference.
But how can you tell a fine wines expert from a fraudster?
Gold analysis enjoys more than its fair
share of charlatans, too.
"Gold has been dead since November of 2011," says one "expert" quoted in this hatchet-job
from financial magazine Canadian Business, and missing the top by
two months.
Even the lone "gold bull" whom Canadian
Business bothers to quote is actually backing a scheme trying to promote
gold as a kind of money to go shopping with...an
idea which last came around when gold prices hit
multi-year lows, the metal was hated as an investment, and people thought
they could find a "use" for it beyond holding value.
As for gold itself, it makes no promises.
The stuff does nothing at all, in fact. It can't even rust. And tied to its
reliable rarity (above-ground stocks grow less than 2% per year), that
physical constancy...gold's incorruptibility...has always given it great
economic worth throughout history.
Gold's use isn't industrial, but social.
Because gold has always been used to store value. Sometimes more, sometimes
less...depending on how the world values other, more variable things.
US stock markets, for instance, have more
than doubled since the panic of summer 2011.
Gold has dropped almost 45%
top-to-bottom.
With hindsight, which would you have
rather bought 4 years ago? But which looks the better value today?
Gold does so little, on the other hand,
it can't even default or go bust.
