More Signs the Art Market is Peaking

I'm no market timer, and I tend to laugh at people who try to call a top – or a bottom, for that matter – to any market. Many observers have been predicting a nasty crash in the frothy contemporary art market for years now, and have been proved stunningly wrong, as it has continued to soar. But I'm finally coming round to their way of thinking, and not just because Richard Prince's new paintings are going for $7 million apiece.

I do think that the Prince datapoint is important, however, because it shows a degree of capitulation to the market on the part of blue-chip galleries such as Barbara Gladstone. Up until now, galleries have sold their biggest artists' work only to the most copper-bottomed collectors, often at prices well below market. The high prices that works received at auction were often a function of low supply rather than high demand: most collectors simply had no direct access to a lot of artists they wanted to buy, whch meant that they had to pay through the nose in the rare cases that works were available to the general public.

Now, however, the market has literally got out of control – out of the control of the galleries, that is. Here's Damien Hirst, explaining why he simply has to price his diamond skull at $100 million:

"You have to get the price right, or it will come back into the market," said Hirst today in an interview at London's White Cube gallery, where the skull was shown to reporters. "A lot of people buy things and flip them," making a quick profit if the work has been underpriced, he said.

What this means is that galleries aren't underpricing their art any more. (As if you couldn't tell that from the $7 million Princes alone.) In turn, that means that a major driver of auction prices and frothiness has now been removed from the market. It also means that galleries are behaving very much as though they want to extract every last dollar of juice from the market now, rather than playing the long game like they normally do. This is understandable when, according to ArtTactic, "The ArtTactic Market Confidence Indicator is still standing at an all time high, where market optimists outweigh pessimists in a ratio of 16 to 1." Confidence indicators, of course, are the classic contrarian indicator.

As are websites like www.artforprofits.com (I kid you not), run by a self-proclaimed "art market guru" in his mid-20s who makes for some inadvertently hilariously reading. (Try this blog entry, for starters.) It's bad enough that some people are now buying art in the hope of making money; needless to say, people with such hopes nearly always see them dashed. But when the number of people looking to make money by investing in art is large enough to spawn a whole other industry of people trying to make money from people trying to make money from investing in art... that, I think, is a good sign of the beginning of the end.