With the news that Sothebys had guaranteed 78% of the value of its November Contemporary art sale versus just 35% of the same sale last year, many art market observers opined that the auction house was in danger of getting caught up in the euphoria of recent sales results. It’s easy after all, even for experienced players in the art market, to assign an element of infinity to the ever-escalating auction prices.However, the fact that the smart money’s betting on a continuation of the market’s acceleration should come as no surprise. The auction players witness firsthand, in auction after auction, the frenzy of demand from new categories of collectors. Not only that , but at these auctions they are witness to multiple new auction records being established for artists from around the world. Not to mention the fact that these auction houses’ annual sales are now routinely surpassing their pre-sale estimates.The auctioneers’ optimism is being driven by a heretofore unseen broadening of their buyer base beyond the hedge fund players. Sotheybys pegs sixty percent of their buyers as new within the last ten years. With the expansion of the ranks of the newly wealthy in Russia, The Middle East and Asia, buyers from these parts of the world have become an increasing presence at auction. Rather than being limited to the financial markets, their buying is funded by diverse sources of wealth including shipping, telecommunications, oil and gas, and commodities. This new class of collectors is determined to build impressive collections of art from their home countries while making equally impressive investments.Art’s intrinsic value has, throughout history, made it a reliable store of value. With oil prices at an all time high, the exchange rate of the dollar at an all time low, additional cuts in the interest rate more likely than not, and inflation that no one talks about, the appeal of tangible, portable assets such as art is clear.There really is no question then about the advisability of higher guarantees as the confluence of the factors supporting this art market has never before been witnessed.

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