With the price of gold, diamonds and jewelry continually changing, seeking professional advice relating to your specific requirement is extremely important. An item retailing for £100,000 one month could lose significant value six months later, so knowing what to insure it for correctly or, possibly even, when to think about selling it, are becoming increasingly critical issues.
At The Fine Art Group our team of jewelry specialists monitor prices and trends in the international market to make sure that you can be properly informed and looked after.
The jewelry market over the past few years has been unusually volatile for several reasons – some directly due to the general ‘woes of the world’ and some caused by some quite dramatic fluctuations in commodity, material and gem prices.
THE GOLD MARKET
In 2007, the price per ounce of gold was around the $750 mark – it peaked late in 2012 at $1,890 – and fell back to just over $1,000 in recent months although it’s edging up to the $1,200 mark today.
However, in pieces of gem set jewelry the gold value factor is not huge – the gem prices, manufacturing costs and retail profits are larger factors.
THE DIAMOND MARKET
Diamonds, despite what De Beers say in their advertisements, are not rare. Huge deposits of good quality stones are regularly being found in mid-Africa and now Botswana has pretty well become the diamond centre of the world, with De Beers moving their headquarters there from London.
Mining techniques are better and more efficient, so there are more than enough stones to go around. Slackening demand from the Middle and Far East for many of the slightly lower grade stones and sizes have seen noticeable drops in market prices. De Beers and their fellow core suppliers have had to do a lot of juggling and adjustment to try and keep things on an even keel.
However, if the stone is exceptional in all of the three main quality criteria i.e. size, colour and clarity, it will still be very expensive. The trade price of a one carat flawless D colour (the best) stone, is well over twice the price of a one carat H colour and VVS2 clarity (both acceptable commercial qualities) stone.
There have been some exceptional auction prices recently for coloured diamonds, specifically for pink and blue stones with prices approaching $1 million dollars per carat. There is a very rare red diamond coming up for sale in the Spring, which could break records despite being only just over one carat, i.e. 6.5 mm diameter.
There’s a slight, but increasing, threat to the stability of the diamond markets with the arrival of man-made diamonds. They have been around for a few years and are ‘genuine’ stones i.e. made from of carbon, but have up until now been a rather unattractive bright orange/yellow color and they were costing more to make than the price for a natural one.
However, techniques have improved and costs have dropped and they are now producing acceptably ‘white’ stones at commercially viable prices.
RUBIES, SAPPHIRES & EMERALDS
The biggest movement in the gem market has been the huge increase in auction prices of good rubies, sapphires and to a slightly lesser degree emeralds – with the big proviso that they are ‘natural and untreated’ stones and have a laboratory certificate to prove it. Nearly all the colored stone modern jewelry that you see in shops today will have stones treated with heat and highly technical processes to improve their color and clarity and therefore retail value. So it is important to ensure you have certificates and an up to date valuation.
Thailand, Vietnam, Ceylon and India are the centers for this stone enhancement. The market is awash with these stones and trade prices are very low, plus with modest manufacturing costs over there, there is plenty of scope for retailers to put a pretty punchy profit mark up on the pieces. So, it’s the good colored stones from the 1920’s and 1930’s, before this enhancement became so wide spread, that are the ones that hit the headlines. A good color and clarity natural ruby can be worth more than a diamond of comparable size, but a recognized laboratory certificate is a must.
There have been two other ‘spikes’ in the market over recent years, both driven by Middle and Far Eastern buying. First came amber, but it has to be a butter scotch brown/red color and as big as possible and unfacetted. Amber has always been associated with good fortune in the Buddhist world and has medicinal properties also. About a year ago, good amber was selling for more per ounce than gold, but there is recent auction evidence to suggest that the amber boom is over.
THE PEARL MARKET
The other spike has been in the pearl market, specifically the natural saltwater pearl market. Cultured pearls are natural beads ‘farmed’ in seawater by introducing man made beads in to the soft tissue of an oyster. The oyster’s reaction to these ‘irritations’ is to cover them in ‘nacre’, which is the lustrous shell like covering that we see on the pearl necklaces in most shops. The beads can be 4 or 5 mm in diameter so the thickness of the nacre coating can be pretty thin and lacking in lustre depth. In a natural seawater pearl the oyster takes in the occasional tiny grain of sand around which it builds up the layers of nacre, so in an 8 mm diameter natural pearl you may have 7 mm depth of nacre rather than 3 or 4 mm in a cultured pearl. If you put one of each of these pearls together the wonderful depth of lustre of the natural pearl is very apparent.
Again a laboratory certificate and an up to date valuation is a must. But the main problem for the pearl market is the arrival of freshwater pearls from China. These are farmed in rivers and lakes and not in oysters but in mussels. A mussel can produce more pearls, more often, but they can be of poor lustre and are prone to being misshapen. They are however very cheap and can be seen up to 15 mm in diameter.
Whilst auction prices for fairly modern ‘ordinary’ jewelry can very modest indeed – and a small fraction of its retail replacement price – the market for ‘big name’ pieces with good style and quality is as strong as ever. Cartier, early Tiffany, Boucheron, Bulgari, Buccellati, and Lalique all sell strongly. From the previous century there is a strong collectors’ market for work by Castellani and Giuliano and anything with an interesting historical or royal background will generally fare well.
So, with the price of gold, diamonds and jewelry continually changing, seeking professional advice and having your jewelry reviewed annually is extremely important.
At The Fine Art Group our team of jewelry specialists monitor prices and trends in the international market to make sure that you can be properly informed when choosing to sell your piece. We can also provide you with an accurate valuation for insurance purposes, reducing the prospect of any issues arising out of loss. Accurate valuations can also play a vital role in successful estate planning.
OUR SERVICES
Offering expert Advisory across sectors, our dedicated Advisory and Sales Agency teams combine strategic insight with transparent advice to guide our clients seamlessly through the market. We always welcome the opportunity to discuss our strategies and services in depth.
When we think of the term ‘home invasion’ we tend to associate it with red-faced commentators on Fox-News. It is tempting to dismiss the tales of armed assailants waiting to smash into our homes to hold us hostage and to plunder our belongings as something that happens to other people in other countries (perhaps Mexico or Honduras).
Sadly however, this is not the case and the UK saw 1287 ‘home invasions’, or aggravated burglaries as they are known in the UK, occurring between 2014 and 2015. January 18th 2016 saw one such attack occurring in Birmingham where machete armed burglars broke into a house and stole £8000 of jewellery from a terrified family[1]. Another attack on a home in the Surrey area on the 19th January led to a family being attacked with crowbars whilst the burglars made off with a stash of gold[2].
Ten to fifteen years ago crimes such as the above would have more commonly taken place in locations such as Mayfair and Belgravia. These areas were once favoured hunting grounds for professional criminals due to the wealth of the residents, but this is now no longer the case, mostly due to vastly increased security. This does not mean that the rich of London are immune from crime. December 2015 saw an aggravated burglary at the home of Geraldine Winner (the wife of late film director Michael Winner). The widow was beaten, threatened and gagged while the attacker made off with jewellery and fine art[3]. Despite this, aggravated burglaries on the wealthy of London have become more infrequent and as the ultra-rich begin to slip out of criminals’ reach, new targets and locations begin to be selected.
In the present day, the most common targets of aggravated burglary tend to be individuals who live in the Home Counties or just inside the M25 commuter belt living in homes that range between £1million & £6million. They tend to be professionals such as lawyers, doctors or business owners who have two cars, two children and do their shopping at Waitrose. As these individuals have never been under any specific threat, they assume criminals will never target them.
Unfortunately it is this optimistic attitude towards security that unfortunately makes them ideal targets, as they will be unaware of the threats against them and will seldom (if ever) take security precautions.
WHAT DEFINES AGGRAVATED BURGLARY?
What defines an aggravated burglary (as opposed to the regular kind) is that the homeowner is present when the burglary takes place as well as the usage of a “firearm, imitation firearm, weapon of offence, or any explosive” used (or threatened to be used) during the course of a normal burglary.
THE CRIMINAL
Criminals that specialize in committing aggravated burglary tend not to be opportunists. Instead they tend to be professionals who work in groups and for whom crime is a way of life. There are several reasons for this: the first is that the use of violence results in much longer jail sentences, making the business of aggravated burglary a high risk one; the second is that for any group to be successful not just once, but several times without getting caught, requires care, patience and planning. Finally the increased media and police attention that comes from committing aggravated burglaries means that for a criminal group to be successful they need to be surprisingly disciplined to avoid capture.
THE TARGETING PHASE
Due to the greater risks for the criminals involved in committing aggravated burglaries, a significant amount of planning and research has to go in to every single crime as it only takes a single mistake for law enforcement to be given crucial clues that lead to an arrest. As well as this, criminals want to ensure that they select the ‘right’ target, one that has the highest reward for the lowest possible risk. After all, if one is going to face a significant jail sentence it should be for a suitable reward.
For a successful aggravated burglary to be carried out, a group must first pick a selection of targets, assess the risks involved and begin the planning process, all of which initially starts online.
The all-pervasive nature of cyberspace and the Internet has meant that criminals have never had greater access into the lives of their potential targets than they do presently. By using websites like 192.com[4] criminals can, in many instances, check who is living at an address. A small fee to the Land Registry or even a browse through websites such as Zoopla can bring up floor plans and information on the value of the house. Once names have been linked to addresses, a quick search of Companies House can reveal the names of related business directors and the potential value of their companies and assets. Finally, Google Maps and Google Street View can put you at the gates of a target’s house or view it from the air, allowing in some instances for security features to be mapped without having to visit the area in person.
All of the above techniques are (in part) similar to the methods that security and intelligence companies use to help their clients, but it would be naïve to suggest that they are the only ones.
Without leaving their desk, a skilled individual (legitimate or not) can often find the following about an individual all from the comfort of their home or office:
- Their place of address (192.com and the Land Registry)
- The value and floor-plan of their place of residence (Zoopla, Rightmove and the Land Registry)
- Any companies they might have and the estimated value of such companies via accounting information (Companies House)
- Places of work (Google and Companies House)
- Patterns of movement (Instagram, Facebook, online social and conventional media)
It is for reasons like the above that make publications such as Hello Magazine and Okay Magazine two of the most popular subscriptions in the British prison system! This is not due to inmates’ interest in Angelina Jolie’s latest adoption (though I’m sure they find her devotion to the less fortunate touching), but because it gives insight and information into the homes of the wealthy, all of which is very valuable to those criminals beginning the targeting phase of a job.
Once the criminals have a rough idea of the areas that they might be targeting or alternatively have a specific individual (or group of individuals) in mind, criminals can begin to establish what is known as a pattern of life. Our pattern of life is the ‘rhythm’ that governs our daily existence; when we get up, when we go to work and when we go out to socialize. Modern life forces us into easily predictable routines, where criminals rely on a predictable pattern of life to be able to effectively target potential victims. Using the information gathered during the target phase as well as observing their potential targets and their homes, criminals can build up ‘dossiers’ on multiple targets and then pick the ones that indicate the greatest chance for reward with the lowest possible risk.
GAINING ENTRY
Once criminals have established a pattern of life, they can work out the best moment to strike. For aggravated burglars this is not during the night or the early hours, instead mornings and afternoons are much more favoured. This is because at night, the roads are clearer and police more active. But, during rush hour in the morning and evening, response times are longer, police are busier and the shifts between their morning and evening at their station may be changing.
When attacking a property, speed and shock are crucial, criminals will often force entry when the homeowner is opening the door to go inside. Once access has been gained, the criminals will use violence or the threat of violence to gain access to valuables before making a swift exit. Valuables will often be buried and hidden nearby to be recovered weeks (or even months) after a burglary has taken place. This is to ensure the chances of the group being caught with stolen property are lowered and that when the group retrieves the valuables, the heat will have died down.
PREVENTION
It may seem that there is little defence against such groups who are both intelligent and well equipped, but this in truth is not the case. Individuals can take numerous steps to help safeguard themselves online and off and a simple place to start is to remove yourself from 192.com, this can be done by filling out a CO1 form.
Minimizing one’s online exposure is also a simple but effective tactic, though abdicating from social media is a touch extreme. One should be careful to ensure that the only information that exists online is information that is necessary for maintaining one’s social and business life.
It is also possible for vigilant homeowners to disrupt the targeting phase of a criminal group. Although there is little one can do regarding the online stage of the targeting phase (barring the removal of information from the web) there is a great deal that can be done to prevent or disrupt the physical targeting phase. This can include everything from increasing the security of one’s home to make it more of an unappealing target to spotting potential observers and informing the police. Most criminals will break off an attempted burglary or aggravated burglary if they feel that their targets have become aware of them as it increases the risk to unacceptable levels.
Although anonymity is an excellent form of defence, physical deterrent is often just as effective. When planning to commit a crime, criminals (using all the tools described above) will create a risk-profile of their prospective targets.
This means that the best way to keep one’s property safe to raise the risk above what a criminal group would likely deem to be acceptable. Though this will not likely stop a crime from taking place, it displaces the criminal threat to others around you. Though you may not be able to stop an aggravated burglary from taking place, you can take steps to ensure you are not the target. This tactic, though perhaps slightly cold-blooded is one of the most effective ways to keep one’s property safe.
THE IMPORTANCE OF INSURANCE
For many victims, though the police will doubtless try their best and security precautions such as the use of DNA marking on belongings will help recover stolen items, in reality often the only way of recovering the value of the lost assets is insurance. Just as important as the value of anything taken is the psychological trauma that an event such as an aggravated burglary causes. The event is an extremely traumatic experience for the victims and can leave them distressed for months afterwards. In some instances, this can lead to post-traumatic stress disorders as well as the physical effects. Counselling can help provide effective coping strategies. In some cases, even a child who wasn’t present during the attack can be affected afterwards. Failure to seek professional help could lead to longer-term issues.
Numerous specialist insurers have begun to recognize that the effects of crimes like aggravated burglary extend far beyond the financial impact and have taken a more holistic approach. Many brokers now have specific cover for aggravated burglary in their home policies. Expenses for psychiatric counselling, lost salaries, temporary relocations and for additional security to be installed in the affected home can all be provided.
Yet despite the financial and psychological help and security that some insurers can provide, many families do not have insurance that will protect them in the event of aggravated burglary.
The issue of under-insurance is widespread and according to Insurance Group Zurich, 80% of UK commercial properties are under-insured[5]. Though reducing insurance coverage may be seen as a sensible method of cutting costs to a household or business (especially when times are tight) in truth it can lead to catastrophe should the worst occur.
Human beings tend to have a comparatively optimistic outlook on the world in general and will often maintain hope that a situation will improve even when it almost certainly will not. The combination of natural optimism and a tight budget often make it tempting to simply ignore insurance as an unnecessary cost. Our optimism in the world around us is also reflected by the fact that though one in five new homeowners will change their bathroom or kitchen, only one in twelve will invest in additional home security [6].
Aggravated burglary is not an issue that is going to go away and as the UK (and many other nations) becomes more unequal the gulf between those who have and those who have not will only deepen. With combined government cuts steadily eating into police budgets, you are left with a situation ideal for criminal growth. As we stare into a more unequal and unstable future it would seem sensible to build our walls slightly higher and perhaps take another look at our home insurance policy.
[1] http://www.birminghammail.co.uk/news/midlands-news/couple-attacked-machetes-home-jewellery-10619129
[2] http://www.getsurrey.co.uk/news/surrey-news/terrifying-ordeal-sees-masked-men-10755100
[3] http://www.telegraph.co.uk/news/celebritynews/12047381/Michael-Winners-widow-to-make-Crimewatch-appeal-over-traumatic-attack.html
[4] http://www.192.com
[5] http://insider.zurich.co.uk/market-expertise/5-things-you-need-to-know-about-underinsurance/
[6] http://www.aviva.com/media/news/item/uk-homebuyers-spend-10000-doing-up-their-homes-in-the-first-year-17557/
Harry Chenevix-Trench is the Intelligence Manager at Blackstone Consultancy and specializes in open source research and risk analysis.
IS THE UK ART TRADE UNREGULATED?
Last year I was invited to be part of a panel at the Art Business Conference in London to discuss how the art trade can best protect its clients. It turned out that what some of the panel wanted to suggest was that the art trade was largely unregulated and that if the trade did not do more to correct this soon, regulation would be imposed on it from outside. I begged to differ and here is why.
To begin with it is simply not true to say that the trade is unregulated. A recent study by the British Art Market Federation lists 167 laws and regulations currently in force and applicable to the UK art market. Many of these are of wide application such as the Consumer Contracts Regulation, copyright regulations, the export control act or money laundering regulations. But others deal very specifically with the art trade such as the Artist’s Resale Right regulations, the Dealing in Cultural Objects Act, the Auctions Bidding Agreements acts etc. The combination of all these laws and regulations provides a pretty comprehensive framework and the art trade certainly does not feel unregulated from the inside. Rather than calling for still more regulation I think that the critics need to begin by explaining what gap it is we need to fill. We need fewer allegations and more facts.
One fact which seems to me insufficiently recognised is that, taking account of the size of the UK economy, the British art trade is by far the most successful in the world. We have twice as much as trade as the rest of the EU put together, 4 times as much as France, 10 times as much as Germany. We have just under a quarter of world trade, not so far behind the USA which has just over one third and whose GDP is about 8 times the size of ours. This success is something we should celebrate and brings huge benefits to our country. It is good for British artists hoping to sell their work, good for employment – the trade employs about 60,000 directly and a further 60,000 indirectly, good for the exchequer in terms of the tax we pay and good for tourism, encouraging wealthy people to visit this country. It is worth asking ourselves therefore just why our trade has been so successful. I have no doubt that there are a number of contributory factors but I believe that a very important one is that, unlike some others, we are not a country which instinctively feels that more government involvement and more regulation is part of the answer. I am not trying to say that there can never be a place for more regulation. But I would urge caution in rushing to fix something which seems to me very far from broken.
I also feel that too many observers looking at the art trade from the outside allow themselves to get carried away by the enormous prices paid at auction for a small number of exceptional works. Here therefore is another fact. The top 1530 lots sold at auction in 2014 accounted for 48% of the value of sales, but less than 0.5% of the number of transactions. 91% of the lots sold at auction went for less than €50,000. Still a lot of money, but not the sort of figure that the press loves to write about.
Looking from the dealer perspective however, I do worry about the number of dealers in the UK who do not belong to any trade association. About 1,000 dealers belong to the three main trade associations, SLAD, BADA and LAPADA, leaving about 7,000 who do not. Of course some of these 7,000 are excellent dealers. But the point about buying from a dealer who belongs to a trade association is that you have an assurance that that dealer meets certain standards of competence and honesty and also have some means of redress if the purchase goes wrong and the dealer declines to settle the matter satisfactorily. If you buy from a dealer who does not belong and things go wrong you are left with the courts and that can be prohibitively expensive. We in SLAD are fairly strict about whom we accept as members but I would like to see more dealers joining one of the three associations. I would also like to find some way of getting it across to the wider public that they should be careful about buying from a dealer who does not belong to any of them.
I am also concerned about the rise of a new group of self-appointed intermediaries who attempt to sell objects they do not own and have no authority to sell. I know that many of our members are becoming more and more concerned about this phenomenon which seems to be on the increase but we are struggling at the moment to find an effective way of dealing with it. I can only urge members of the buying public to question the credentials of those they are dealing with and to check, if in doubt, whether they have the authority to sell what they are advertising.
And my final thought, just as important as regulation, is reputation. Regulations are essential but they are not always easy to enforce. But good dealers will themselves go to considerable lengths to establish and preserve their reputations, often going far beyond what the actual regulations require. Setting standards and helping to maintain reputations is also what the trade associations are all about, which is why I see them as playing such a crucial role in the art trade and would like to encourage all would be customers to keep them in mind when they are buying or selling art.
Christopher Battiscombe CMG is Director General of the Society of London Art Dealers
FURTHER READING
“I paint from remembered landscapes that I carry with me – and remembered feelings of them, which of course become transformed. I could certainly never mirror nature. I would more like to paint what it leaves with me.”
This untitled oil on canvas, executed in 1960 by Joan Mitchell (1925-92), had been acquired by our client at auction in 2006.
Joan Mitchell
Untitled
Oil on canvas
1960
28 1/2 by 28 3/4 in.
Estimate: $400,00-$600,000
Sold: $466,000 (Hammer with Buyer’s Premium)
PROVENANCE
Martha Jackson Gallery, New York
Private Collection, Peru (acquired from the above in April 1967)
Sotheby’s, New York, May 11, 2006, lot 170
Acquired by the present owner from the above sale
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The Collection of Robert & Barbara Safford
In 2013 our team acted for the Safford family in the dispersal of antiques from Vaux Hill, a 20-room country estate with pre-Revolutionary origins in Phoenixville, Pennsylvania.
Upon the advice of The Fine Art Group, the 274 selected lots were consigned to auction in a single-owner sale that was promoted to the international marketplace with previews in both London and New York.
After an international tour and much media fanfare, the auction of the Selected Contents of Vaux Hill: The Collection of Robert & Barbara Safford achieved $3.9 million in sales—more than tripling the auction’s estimate—and set an auction record. Buyers from around the globe packed Freeman’s third floor gallery for a chance to bid on the 274 works spanning two centuries. Decorative arts from royal and continental craftsmen KPM, the Russian Imperial Porcelain Factory, the House of Hanover, and Louis XV were offered in the sale. Freeman’s attracted nearly 400 potential buyers via the phones, online, and in the room. What would have normally been a two and a half hour auction took place over five hours, as the sale drew fierce bidding.
The top lot was a hand-painted Russian urn produced by Nicholas I’s Imperial Porcelain Factory in St. Petersburg, estimated at $150,000-200,000. After brisk competition from within the room, on the phones, and the internet, it went to the highest bidder in the room for $494,000. Urns of this size are unique and few have survived as they were extremely difficult to cast and very delicate. This was one of several large continental vases sold yesterday (lots 7, 64, 107, 126 152), which attracted heavy bidding and successful results.
An auction record was set for a rare gilt bronze mounted porcelain tall case clock by the Berlin Konigliche Porzellan Manufaktur (KPM), circa 1895, which brought $242,500. It is believed to be one of only six in existence produced after a design by Alexander Kips, estimated at $80,000-120,000. One of these six clocks is proudly displayed at Osborne House on the Isle of Wight; it was a gift given to Queen Victoria by her grandson Kaiser Wilhelm II.
Top Lots from Selected Contents of Vaux Hill: The Collection of Robert & Barbara Safford:
- $494,000
Lot 131: Important ormolu mounted Russian imperial hand-painted gilt-decorated porcelain urn. Russian Imperial Porcelain Factory, St. Petersburg, Period of Nicholas I, circa 1836. - $482,500
Lot 107: Rare pair of Russian hand-painted and gilt decorated blue ground vases, 20thcentury. - $254,500
Lot 1: Very fine gilt metal mounted Meissen porcelain and giltwood secretaire cabinet, circa 1880. - $242,500
Lot 39: Important German gilt bronze mounted gilt decorated and hand-painted KPM porcelain tall clock case clock, circa 1895 - $158,500
Lot 84: Large and impressive Sevres style porcelain white ground vase. - $134,500
Lot 154: Fine Continental Louis XVI style gilt-bronze and rhodonite seven-piece desk.
OUR SERVICES
Offering expert Advisory across sectors, our dedicated Advisory and Sales Agency teams combine strategic insight with transparent advice to guide our clients seamlessly through the market. We always welcome the opportunity to discuss our strategies and services in depth.
Alfred C. Breuning of Pennsylvania had acquired Pablo Picasso’s Buste d’Homme, a brush and ink sketch dated 2.8.67, from the Galerie Louise Leiris in Paris in 1969.
Acting for Breuning‘s estate it was consigned for sale at Sotheby’s New York in May 2014 where it sold at for $677,000.
The work was completed in the year Picasso began his famous series of cavaliers and musketeers – believed to be the ailing artist’s recreation of himself as a youthful and sexually potent figure.
Pablo Picasso
Buste d’Homme
Brush and ink and ink wash on paper
29 1/2 by 22 1/8 in.
August 2, 1967.
Estimate: $500,000-$700,000
Sold: $677,000
PROVENANCE
Galerie Louise Leiris, Paris
Acquired from the above circa 1969
EXHIBITED
Paris, Galerie Louise Leiris, Dessins 1966-1967, 1968, no. 55
LITERATURE
Christian Zervos, Pablo Picasso, Oeuvres de 1967 et 1968, vol. XXVII, Paris, 1973, no. 95, illustrated pl. 29
The Picasso Project, ed., Picasso’s Paintings, Watercolors, Drawings and Sculpture, The Sixties II, 1964-1967, San Francisco, 2002, no. 67-322, illustrated p. 377
CATALOGUE NOTE
Buste d’homme is an iconic image that exemplifies both the confrontational style of Picasso’s 1960s art and the iconography of the masculine male that the artist championed in his later years. Executed in 1967, the present work was completed during the very year that Picasso began his series of cavaliers and musketeers. Such works, which are laced with references to masculine virility and sexuality, are believed to be the artist’s recreation of himself, then ailing, as a youthful and sexually potent figure. Here, the misplaced facial features suggest an inner torment, yet the firm, deliberate strokes of ink and frankness of the subject indicate a vigor and masculinity that will come to characterize his series of musketeers and swashbucklers. The work thus references both deterioration and resilience, underscoring the psychological complexity of this transitional period.
Picasso’s exploration of self-image in his art is summarized by Simonetta Fraquelli: “In their seventeenth-century garb, Picasso’s musketeers appear in many guises, some holding swords and some wearing wigs or ornate shoes, others smoking. Some are young, others old, some participate while others are voyeurs. They represent many of the possible ages of the artist, ranging from a child genius to an impotent old man. Like Rembrandt, with whom he now became obsessed, Picasso liked to insert himself into his paintings, in one guise or another. The parallels between the two masters, the Dutchman and the Spaniard, are many: both enjoyed a long and fulfilling career; both felt isolated and misunderstood, if not derided, in their old age; and both obsessively recorded their own decline in their numerous self-portraits” (Simonetta Fraquelli, “Looking at the Past to Defy the Present: Picasso’s Painting, 1946-1973,” in Picasso, Challenging the Past, London, 2009, p. 146).
OUR SERVICES
Offering expert Advisory across sectors, our dedicated Advisory and Sales Agency teams combine strategic insight with transparent advice to guide our clients seamlessly through the market. We always welcome the opportunity to discuss our strategies and services in depth.
In this article, we look at the importance of legal and valuation advice in connection with the acquisition, ownership, and disposal of art and other valuable chattels by sale, gift, or estate tax planning.
THE ART MARKET
Two things are certain about the art market. The first is that art buyers and collectors are increasingly acquiring art and collectibles from an investment viewpoint.
The second is the increasingly heard complaint that the art market is not properly regulated, leading to a lack of transparency and access to authoritative sources of advice.
ART BUYERS & COLLECTORS
The 2015 European Art Fair Report (TEFAF), considered to be the authority on auctions, art fairs, and market trends, recorded the highest ever total value for sales in the art market in 2014. It reckoned the global art market totalled more than €51 billion ($53.9 billion U.S.), surpassing the annual sales figure for the 2007 pre-recession high of €48 billion ($51 billion).
The Report noted that the most popular acquisition in 2014 of the High Net Worth Individual was jewelry, gems and watches (29%), while antiques and collectibles ranked second (21%) with art representing 17% of sales.
The British art market, which accounts for 22% of the global market, is highly regulated, both at an EU and national level.
As at February 2015, it was estimated that there were 167 applicable laws and regulations affecting the market, including the Artist’s Resale Right Regulations, the Dealing in Cultural Objects (Offenses) Act, regulations under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), and the Auctions (Bidding Agreements) Act, to name but a few.
However, there are a number of significant issues that are specific to the art market, which still require addressing:
- no industry regulator
- conflicts of interest giving rise to confusion over commission charges
- lack of transparency over true ownership which can create title issues
- distortion of competition which can arise from auction house guarantees or similar activities and which can amount to insider dealing
- third party valuation and appraisal is not regulated in the UK and many other countries
Other related issues are money laundering, tax evasion, corruption and fraud.
Improvements could be made by more effective enforcement of existing regulations, particularly in the areas of competition and criminal law. An important contribution too can be made by the purchaser, who is always better advised to deal with members of appropriate professional organizations.
The same caveat should apply when seeking professional valuation or sales advice. Advice by an independent third-party professional adviser can provide both assurances as well as help achieve the most satisfactory financial outcome. While membership of a professional body is not an absolute guarantee of competence and honesty, it goes some way to establish credentials and may be helpful if something goes wrong.
THE ROLE OF THE LAWYER
In the context of owning, acquiring or disposing of art, there are three areas where a lawyer may be required to contribute.
REGULATION OF GENERAL APPLICATION
The first is the purchase or sale of a work of art (or jewelry, cars, guns, antique furniture), is subject to the usual range of property transaction legislation, such as that regulating the sale of goods, consumer contract, trade description, intellectual property, etc.
There could be a number of circumstances where it would be advisable for a lawyer to draft or review any contractual arrangements prior to purchase or disposal. It may also be advisable to have other ownership arrangement checked, such as contracts for transport, insurance or agreements for loans to museums or exhibitions.
ART SPECIFIC REGULATION
Secondly, there is a range of art-specific legislation where legal advice would be highly advisable. Examples of this are the already mentioned CITES regulations to prevent international trade from threatening species.
Appropriate exemption certificates may have to be obtained even when the purposes of transport are not for sale. There is a lot of uncertainty in the application of CITES regulations and seeking legal advice may forestall trouble or seizure of valued items.
Another trap for the uninitiated and where legal guidance may be important is in connection with the Artist’s Resale Right known as ‘Droit de Suite’.
‘Droit de Suite’ is a royalty payable to a qualifying artist or the artist’s heirs each time a work is re-sold during the artist’s lifetime and for a period up to 70 years following the artist’s death, sellers need to be aware of this and should seek legal advice if it is an issue.
A new British copyright law comes into effect in 2020, which will restrict design rights on mass-produced items to 25 years. This may threaten the viability of museums, publishers and art-related businesses to work with artists and estates on reproduction rights. The changes are retroactive; meaning some cases where image rights have expired will be revived and the new legislation will make copyright breach a criminal, rather than a civil offense.
TAX RELATED ASPECTS
Artwork has become an important aspect of estate planning and administration because it can affect the estate’s overall value, resulting in substantial estate or inheritance taxes
The freeze of the Nil Rate Band has contributed to a significant rise in the total of IHT revenue for HMRC with rising house prices, asset prices and inflation, pushing more estates into IHT.
Legal advice should be sought on various steps to reduce an unnecessary tax including:
- lifetime gifts
- gifts with reservation of benefit
- Chattel Rental Schemes
- acceptance in lieu of IHT
- The Cultural Gifts Scheme
- Private treaty sales of a heritage item to a national museum or gallery.
Trusts, or alternatives such as a family investment company or family general partnership, often play an important part in preserving chattels from generation to generation and clearly the setting up of such an arrangement is the province of the lawyer. Again continuing legal advice during the lifetime of the trust will be important.
THE ROLE OF THE VALUER
Being aware of the correct and current values of art, jewelry and other valuable objects is of critical importance.
To meet the required criteria, a specialist valuer will be essential in setting out the arguments for the transfer of an object under an acceptance in lieu arrangement, the Cultural Gift Scheme or through sale by private treaty.
The valuer’s knowledge of market values will assist the lawyer in guiding trustees over assessing tax liabilities or on the disposal of assets for diversification purposes or raising income to meet anticipated tax liabilities.
Advice from an experienced, established and independent valuation business can offer confidence in the acquisition of new works or the sale of items.
Such assistance could also include negotiating auction house or gallery commission rates or arranging sale by private treaty.
Valuation and art advice services are the “glue” that connects the professional advice offered by lawyers, accountants, and wealth managers and the art professionals.
OUR SERVICES
Understanding value is the cornerstone to effectively managing a collection – and at The Fine Art Group, it is this understanding that enables us to work as trusted fiduciaries for our clients, and their objects. We are experienced providing appraisals for a wide range of purposes, and are also specialists in unique and complicated appraisal scenarios.
Andrew Wyeth’s ‘The Lobster Man’ sold for $103,000 at Freeman’s of Philadelphia in June 2011. Wyeth produced the watercolour of a fisherman clutching his steaming thermos at the behest of the American Artists in New York, with a view to it being used for a Maxwell House Coffee advert. The painting never made it to the billboards and a descendent of our client had acquired it directly from the artist in the 1940s. The work of Wyeth, one of the most revered US artists of the last century, has consistently achieved good results at auction.
OUR SERVICES
Offering expert Advisory across sectors, our dedicated Advisory and Sales Agency teams combine strategic insight with transparent advice to guide our clients seamlessly through the market. We always welcome the opportunity to discuss our strategies and services in depth.
On our advice, ‘The Skier’ (The Ski Runner) by N.C. Wyeth (1882-1945), was consigned for sale at Sotheby’s New York in November 2014 where it sold for $1,205,000.
This much-exhibited picture – illustrated on the cover of the February 1911 edition of The Popular Magazine – had previously been owned by both the artist’s wife and his daughter. It is thought this painting was based on photographs of the artist’s brother Stimson (known as Babe).
“I have just completed, and shipped, on the same train with Babe,” Wyeth wrote, “a cover for the Popular. The most striking and strongest I have done in a long time. The Ski Runner is its title.” It had been bought by our client from a Pennsylvania family in 1998.
N.C. Wyeth
The Skier
Oil on canvas
41 5/8 by 27 1/8 in.
Estimate: $250,000-$350,000
Sold: $1,205,000
OUR SERVICES
Offering expert Advisory across sectors, our dedicated Advisory and Sales Agency teams combine strategic insight with transparent advice to guide our clients seamlessly through the market. We always welcome the opportunity to discuss our strategies and services in depth.
Sotheby’s sells Les Soleils by Henri Le Sidaner (1862–1939) on behalf of a client on November 5, 2015.
Henry Le Sidaner (1862-1839)
Les Soleils
Signed Le Sidaner (lower left)
Oil on canvas
26 by 31 7/8 in.
1909
Estimate: $300,000-$500,000
Sold: $370,000
PROVENANCE
Sale: Christie’s, London, June 28, 1988, lot 157
Sale: Christie’s, New York, May 9, 2000, lot 159
Private Collection
Acquired from the above
EXHIBITED
Paris, Galeries Georges Petit, Société nouvelle, 1909, no. 81
Estimate $300,000 — 500,000 USD
OUR SERVICES
Offering expert Advisory across sectors, our dedicated Advisory and Sales Agency teams combine strategic insight with transparent advice to guide our clients seamlessly through the market. We always welcome the opportunity to discuss our strategies and services in depth.