Partially true. But there is more to it! Insurance fraud isn’t as rampant in art as movies might have us believe- but it happens. When your “million dollar” painting is stollen it destroyed... profit. But beyond that- art is a wonderful way to launder money. They’ve put some measures in place to curb it- but for the most part- except where a warrant can be gained- an anonymous bid on expensive art or a private sale doesn’t throw the paper trail that you get through other means. It’s cut and dry- and unlike buying a shitty business or some other thing that is huge and troublesome and has legal stuff and checks up the wazoo... well- it’s really obvious when you buy a $200 stock for a quarter million over market, or pay the “plumber” $300k to plunge a toilet or whatever. But art? Banana on a wall can sell for half a million and people won’t “get it” but- it also isn’t as obvious.
So I owe you a bribe. You buy this shitty painting for $100k, I buy it from you for $1 million.... there you go. All legal. Stuck in a country it’s hard to get cash in or out of? In China- foreign property is a way to keep that money from the government and get it out of the country- or it was. Start a bidding war and pay $200k over asking price for a house. Even if you lose $200k when you sell- that’s likely 100% more than you’d keep otherwise. And you likely will drive up values on property in the area which can make you money. Same works with art.
But here’s another one to consider. Having lots of money had problems most people can’t relate to or don’t realize. What do you do with your money? Not- how to you spend it. What do you do with the money you aren’t spending? You can’t (wisely) just throw even $1 million in a saving account.
Asides just plain being about the most useless your money could be- most countries banks only “insure” accounts to a certain point against loss. Relatively low risk- but large consequences. You generally want to invest- so your money makes you money and isn’t just sitting in a room somewhere waiting to get stollen or destroyed. When you invest you diversify- there’s still risk but it is mitigate and balanced by gains (optimally) so that you either make advancements in wealth or at least don’t lose/minimize loss.
Art is one such place to diversify. Art can be volatile- high risk. But it can also be very lucrative in that regard. “But guest_, you just said you don’t want to have a million dollars sitting in a room on the floor! Stollen... damaged.. remember?” Ah yes anonymous person. You are right. I did. Let’s look at that.
Surprisingly (but not if we think about it..) cash is hard to insure and that ain’t cheap- and there are generally limits. But- say you have a party at your mansion- what is more likely to be stollen- and less likely to be noticed? A painting or sculpture- or a stack of a few hundred dollar bills off a pile of millions? After it is stollen- which is more likely to be recovered and identified as yours when the thief tries to cash in? $20k in bills- or a $2 million dollar Picasso? You can fence high end art sure- but it’s harder to do than to find a place to take bills. Harder to split up than bills, and I’m sure you an think of a way to dump cash- who do you know to go to in order to sell a million dollar modern art piece? It’s not too hard to track that when a one of a kind work of art pops up that was stollen.
Likewise- it’s easier to prove to insurance, and less risk to insurance- that your million dollar painting was destroyed in a fire vs to prove that you had exactly 100,000 $100 bills in your spare bedroom. And on the subject- high end insurance usually requires the owner take certain precautions to guard the item or else they won’t pay. So... unless you built your own vault- well... tough shit. Currency fluctuations can also be a real bear. For most people- there isn’t a lot of money worrying about that.
You go to another country- cash out $1,000 or whatever in your currency for theirs- leave and cash back. You have $100 left unused and the exchange rate changed so maybe you lose a few bucks or gain a few. Oh man. If you have millions in hard currency... you can lose tens or hundreds of thousands of dollars as currencies go up or down. War comes? Some disaster? That money is worth exactly as much as it is worth. Inflation can kill you. Property is often- at least to an extent- influenced by local economies. Stocks to a degree but less so than either. Things like art that are portable- aren’t so beholden to local economies or exchange.
Yep.
One more thing to consider is that the vast majority of art isn't something stupid like a piece of steak. With a lot of paintings, in particular, you can see things you can't see in a print, like the texture created by the brush strokes as they push up paint, or the texture of the canvas itself.
One more thing to consider is that the vast majority of art isn't something stupid like a piece of steak. With a lot of paintings, in particular, you can see things you can't see in a print, like the texture created by the brush strokes as they push up paint, or the texture of the canvas itself.