Current American Art Auction Commentary
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We think investment value is much too often sacrificed by those purchasing at
auction without professional knowledge. Our purpose here is to  indicate market
direction as suggested to us by  price trends.
 Nine New Reasons to Buy American Art
Prices Are Up
Selected American Art is in demand and prices have firmed (1). Our review of year-end auctions is clear
about this. New highs are advancing, and records are being set. Oscar Bluemner's, Red Farm in New
Jersey,  sold at Christie's in December for $5,346,500--setting a record and adding to overall rising
interest. A number of reasons underlie the favorable trend--which is actually benefiting from the current
economy. First (1) and foremost is relative price stability. When it comes to volatility, American art
relative to Contemporary Art and European Modernism is a low beta asset class. That means its price
swings are comparatively moderate and that it hugs the rising trendline more closely. New collectors are
attracted to this price stability as they exit hedge funds that have been hit hard. And while we are on the
economic causes, do note the persistent yield environment--since conservative yield oriented investors
can't scratch up a penny's worth of interest, many obviously think its better (2) to cut risk, enjoy the
beauty of American art and wait for inflation and rising demand. Increasingly then, American art is
becoming an investment of choice. Finally, from this perspective, with  home sale prices down (3), many
homeowners are staying put and improving their castles, which means greater demand for paintings
overall. Simply put, masterpiece American paintings are much more beautiful than a gold bar.

We were sitting at Sotheby's when, in May (2012), Hopper's The Bridle Path brought $10,386,500. That  is
still a clear indication of rebounding prices. And Christie's latest sales catalogue was heavy with
million-plus works, including a new Hopper estimated at $15-$20 million! And in 2013 Norman Rockwell
went into double-digit millions. But this was nothing compared to Rockwell's Saying Grace topping $46
million, Hopper's East Wind over Weehawken beat $40 million, and we watched O'Keeffe's Jimson Weed
top $44 million.

New Money Signals New Interest
The growing interest in American Art is a signal of new attention for these masterpieces. First and
foremost in raising attention was (4) the opening of the new American wing at New York City's
Metropolitan Museum. The event was eagerly anticipated and advance knowledge of its contents brought
higher prices from dealers speculating on stronger demand. The new room featuring Thomas Hart
Benton's New School murals is a huge draw! This accelerated a trend sparked when Boston's Museum of
Fine Art opened its new American quarters only a year earlier. Indeed scarcity (5) of high quality offerings
is another reason for current higher demand--pickings are slim as one dealer remarked to us. The dealer
community was well aware that one of the central features of the new wing was the giant canvas of
Washington Crossing the Delaware by the history painter Emanuel Gottlieb Leutze--so note that in the just
completed American auction round Leutze set records for three works offered including a sale over a
million. And works by Bierstadt and Cropsey also saw accelerated interest. Overall, collectors appeared to
be responding to (6) a focus on American history.  Even New York's long hibernating Historical Society
Museum got into the act with a once in a century major revamp!

And in March 2012 word came from Boston's famous Skinner Auction that Constantino Brumidi's study
for The Apotheosis of Washington set the world record for the highest price ever paid at auction for a
work by the artist. The study was sold to the Smithsonian's American Art Museum for $539,500, exceeding
its estimated high of $350,000. The fresco, for which this painting is the final study, is found on the
ceiling of the rotunda of the United States Capitol Building and is considered to be the Italian-born
Brumidi's masterpiece. It is widely considered to be the most important fresco in America. The previous
record for a work by Brumidi was $21,000, for, fittingly enough, a portrait of George Washington.

But Collectors Are Risk Averse
Overall the economy is driving new money into the American art market. But the new money is putting
safety first, and doing so as we have seen by moving into the Ameican art collectibles asset class. The new
money is tightly focused--wanting only the best of the best and sticking with the historical track record. In
the just ended auction round, this  was particularly evident in sales of the great American neoclassic realist
Martin Johnson Heade. Buyers were willing to pay more than a million for classic Heade works depicting
orchids and hummingbirds--but his lesser still-lifes of flower arrangements and more mundane landscapes
struggled to reach a hundred thousand.  Collectors are very tightly focused, and they want something
American! Nineteenth-century still life work,  portraits and figure studies are finally taking off--following
gains by narrative studies by Brown, particularly showing historical narrative or scenes showing poverty
urchins in humorous poses. And the new buyers are (7) much less interested in abstract expressionism.
New buyers would rather hire a knowledgeable dealer to bid on classic American art rather than risk
getting stuck with abstraction--in the form of over-priced private visions without universal appeal--media
hype has finally spawned a backlash--no matter how high Basquiat--collectors want to look at beauty.

And Web Galleries Are Making A Big Difference
Slowly the web reshapes all markets. Discount brokers were once unknown in the stock market. Now they
account for most of retail trading by self-directed investors. Finally, the web is having its impact on the
American art auction market. More and more new money is spent on (8) web purchases of American
masterpiece paintings. Our own success as a gallery is a testament to this trend. In the past--now the
ancient past--the major auction houses sold almost exclusively to galleries, and these transactions were
shrouded in high-priest mystery. Collectors from the hinterlands toured brick and mortar palazzo
metropolitan galleries off Madison Ave and paid through the nose for their purchases and the imprimature.
We were once advised by a gallery owner not to purchase at auction--only to find the same gallery owner
bidding against us and taking the work--and then we discovered a mark-up (note recent law suits) that was
shocking to say the least. Those days are dying--particularly as internet transparency makes price
information widely available to collectors. Web galleries (9) can make value-oriented collectors a lot
happier when it comes to future appreciation potential. New demand for American art is being satisfied in
new ways--with shared benefit for all!