News-Antique.com - Aug 02,2010 - The definition of an investment, in financial terms, is basically the purchase of a financial product or other item of value with an expectation of favorable future returns. In general terms, investment means the use money in the hope of making more money (definition from investorwords.com). Although gold is often referred to as an investment, it really is not a good investment, especially over the long term. James Turk, founder and chairman of GoldMoney as well as co-author of the investment bestseller ‘The Collapse of the Dollar’, says that “Gold is not an investment. It is money. Gold doesn’t generate a rate of return like investments do. The price of gold is rising against all the world’s currencies because currencies are losing purchasing power, while gold is preserving purchasing power”. Instead of calling this article ‘What Art Investors can Learn from Gold Investors’, I should probably have called it ‘What People who use Art for Wealth Preservation can Learn from People who use Gold for Wealth Preservation’. However, if I had used the more correct title I do not think as many people would have read this series of posts.
The sort of investment I am writing about is an investment in one’s future financial security; an investment in wealth preservation, not wealth creation. I am not suggesting that art is as good a substitute for paper money (currency) as gold is. You may, however, be surprised to learn that fine art IS actually used as a form of currency in the criminal underworld. Stolen paintings are often used as collateral for drug or weapons deals which means that there is a black market for works of art which, interestingly, value works of art at as little as one tenth of their auction price (a great topic for a future post !!!). For a work of art to have value as a form of currency there are certain characteristics that the work of art needs to have. It would make sense that the more people who find a stolen work of art desirable, the more valuable the work of art would be on the black market. The most universally appealing and desirable characteristic that a work of art can have is the sort of instantly gratifying beauty that characterised the work of the old masters, and also the work of the more modern movements such as Romanticism, Realism and Impressionism where beauty and aesthetic satisfaction were still prime motivators. Essentially what I am referring to is the traditional and transcendental definition of beauty that aims to induce pleasure through physical attractiveness. An article that appeared in Forbes magazine in 2001 titled “Old Masters Soothe New Troubles” (by Anna Rohleder) described why the work of the old masters is so widely admired and universally accessible with the following statement: “At times like this, it isn’t fair to tax viewers with the opaqueness or abstraction of more modern works. Old Masters are accessible, their attractions obvious and their effects immediate. Old Masters