The “Everything Bubble” in One Picture

Can You Believe This? Were you forwarded this email? [Sign-up to The Daily Reckoning here.]( [Unsubscribe]( [Daily Reckoning] The “Everything Bubble” in One Picture - $25.4 million for a painting… - “The urge to destroy is also a creative urge”… - Then Jim Rickards shows you why you should consider adding some fine art to your portfolio… Recommended Link [The Forever Battery: Making Gas Guzzlers Obsolete]( [Read more here...]( Only 2% of cars sold in the U.S. today are electric vehicles… but that’s about to change — FAST. A new battery breakthrough is ready to hit the market. It could revolutionize the $2 trillion automotive industry … and could soon make gas guzzlers obsolete. This technology is predicted to cause a 1,500% surge in electric vehicle sales over the next four years. The company pioneering this new battery could be the investment of a lifetime. [Click Here For More Details]( Annapolis, Maryland October 16, 2021 [Brian Maher]Dear Reader, An artwork — a painting — fetched a record $25.4 million at auction this week. $25.4 million! Was this masterwork a Rembrandt? A Picasso? A Monet? A Biden? No, no, no and no. It was rather the creation of a fellow, Banksy by name. No forename, no surname — merely Banksy. About whom: “Banksy is a pseudonymous England-based street artist, political activist and film director whose real name and identity remain unconfirmed and the subject of speculation.” We must accept Wikipedia at its word. We had no prior awareness of this Banksy’s existence. Yet we harbor crude and barbarian tastes, by our own admission — often abominable tastes. We keep disreputable and uncultured company... ignorant entirely of art. And so we are blind to Banksy’s sublime artistic genius. Here is his $25.4 million “masterpiece”... bearing the soaring title Love Is in the Bin: [IMG 1] What marks this particular work for such remarkable distinction? Why would a bedlamite exchange $25.4 million for this preposterous curio? The tale begins in 2018. It attained culmination Thursday. Here The Washington Post gives the accounting: The auctioneer slammed his gavel, ending a 2018 bidding war at Sotheby’s in London. For $1.4 million, someone had bought one of street artist Banksy’s most iconic works: a silhouetted girl reaching for a red, heart-shaped balloon as it floats away. Right then, the painting started beeping inside the packed auction house, and a secret shredder Banksy had built into the bottom of the picture frame whirred to life. Onlookers watched — eyes widening, mouths dropping — as Girl With Balloon slid down into its blades, slicing the bottom half of the canvas into dangling strips... On Thursday, three years after Banksy’s act of destructive creation, the anonymous buyer put up for auction Girl With Balloon, or rather, its successor — the retitled Love Is in the Bin. After nine bidders battled for 10 minutes, the semi-shredded artwork sold for $25.4 million. That’s more than three times the auction house’s top estimate going into Thursday’s auction and more than 18 times what the spray-paint-on-canvas creation sold for in 2018 when it was intact. And so you have witnessed art history, excelling even Michelangelo’s Sistine Chapel: The prank was “a brilliant comment on the art market,” London art dealer Acoris Andipa told The New York Times in 2018, adding that if he were the buyer, he would leave the painting in semi-shredded condition. “It‘s a part of art history.” BBC News arts editor Will Gompertz called the stunt “brilliant in both conception and execution” in its indictment of the art world, one in which people aren’t disappointed that a piece of art was destroyed but concerned only with how that destruction has changed its value as an “asset.” Just so. What compelled Banksy to venture upon such an outrageousness? “The urge to destroy is also a creative urge,” he claims… citing 19th-century Russian anarchist Mikhail Bakunin. Here you have Joseph Schumpeter’s creative destruction in splendid example, brilliant example. Oscar Wilde famously scolded those “who know the price of everything and the value of nothing.” We are alert to the possibility that we sort into that category. For the sake of its purchaser... we certainly hope we do. Yet we fear we do not, at least in this instance. If the fellow expended $25.4 million for a Hunter Biden artwork, we would greater understand his purchase. He would believe he is purchasing presidential influence. And $25.4 million can purchase him bundles. His purchase would be — in essence — lobbying. But the actual purchase gobsmacks and staggers us. Is not this incident the exquisitely perfect emblem of the “everything bubble” that envelops us? But at least this work is recognized as a jest, a nose-pulling, a sort of April fool’s caper... We recall some years ago reading of a New York grande dame who owned a priceless piece of original art — a Cézanne, if memory serves. It was the pride of her earthly existence… the lovely apple of her eye... the dazzling gem in her forehead. She kept her prize in a temperature-controlled display case. There it remained sealed against the world’s contaminants — and the vulgar gaze. But she invited the dukes and duchesses of the New York art scene to her salon… to ooh and aah over the priceless Cézanne. “Just look at those brushstrokes!” “Would you look at those lines!” “And that use of color!” “Only Cézanne was capable of such brilliance!”... they gushed in breathless admiration. One blue day, the owner of this incalculably costly Cézanne decided to determine its precise age. The masterwork therefore underwent a spectrometer test. The results? This priceless “original” Cézanne was produced in 1958. Cézanne died in 1906... Below, Jim Rickards shows you why fine art — authentic fine art — offers unique benefits traditional investments cannot equal. Read on to learn how you can participate in this highly lucrative market. Regards, [Brian Maher] Brian Maher Managing Editor, The Daily Reckoning Editor’s note: Ever since Thursday afternoon, our offices have been in a complete tizzy. That’s because we went LIVE with our biggest event of the year: [The Six Predictions Summit]( Some of the biggest names in financial publishing went live on Zoom and proceeded to drop bombshell after bombshell (not to mention giving away some of their best picks and predictions completely free). Thousands of people had a chance to attend… And most were completely shocked by what they saw and heard. Needless to say, this is an event you don’t want to miss. If you did for whatever reason, you can still get caught up right away. [CLICK HERE TO ACCESS THE REPLAY]( Remember, all the recommendations and predictions were given away for free. So if you haven’t watched this yet, make sure you take a second and get caught up now. We don’t know how long it will remain up, so please don’t delay. [Go here for immediate access.]( Recommended Link [Strange 2021 Prophecy Rapidly Coming True]( [Read more here...]( America’s #1 Futurist George Gilder is telling American’s to “brace yourself” for the coming $16.8 trillion revolution. This same revolution could redefine millions of jobs and radically transform the way just about every major corporation does business. It could even change the way you get paid, save and invest for retirement. And, says George, it could make you exceedingly rich... [Click Here To See Why]( The Daily Reckoning Presents: How to walk right through a metal detector with an asset worth $500,000 an ounce without setting off alarm bells… ****************************** Fine Art’s Worth More Than Its Weight in Gold By Jim Rickards [Jim Rickards]I believe fine art has a place in investors' portfolios. I do a lot of work for the U.S. intelligence community, trying to thwart terrorist finance and transnational actors, as we call them. This includes money laundering, smuggling and arms dealing. This work has made me very familiar with the weight of different forms of wealth. Assuming you have $100 bills in a briefcase, you’re going to need a 22-pound briefcase if you want to move $1 million of paper in $100 bills. Gold actually weighs more than that. I like gold as an investment, obviously, but as a store of wealth, it’s heavy. Art isn’t. That’s the funny thing about art, if you think of it in terms of weight. If you have a $100 million painting that weighs a couple pounds, and if you take it out of the frame, roll it up and put it in a backpack, it could be worth $500,000 per ounce. And it won’t set off metal detectors. So fine art is a very mobile form of wealth. You get very good weight for value, much more than cash, much more than gold, and it’s easy to move around. Most people don’t like to think about what would happen if they had to pack up and leave their home. But if they did, a valuable, recognizable museum-quality painting is a much easier way to move wealth around than gold or cash. If for whatever reason the banking system shuts down, or if there’s a power grid outage, and you’ve got to get on the move, art is a good way to take a lot of money with you in the palm of your hand. That’s one good reason why I think of art as a good store of wealth. But how do you get into this market given the high valuations? A multimillionaire can go out and spend $135 million on a Picasso, hang it on his wall or put it in a vault. But most people can’t pay $135 million, so what do you do? How can you be in this market at a different price point relative to everyone’s portfolio? You can. But if you want to be a buyer of art, you need to exercise a lot of care, do a lot of diligence, educate yourself and deal with reputable people. But there is another way to do it, which is to invest in an art fund. You could invest a lot of money, say $500,000. (But you can also invest at a retail level with much less money than that.) Like any fund, the sponsors and the manager are going to pool the resources of different investors to go out and buy art. And when they sell the art, you’ll get your share. Now, you’ve got to do due diligence. You might not be diligent on individual pieces, but you must do the due diligence on the fund structure, the manager, what they’re doing with your money, et cetera. Plus, there are good funds and bad funds. And when I say bad, there are conflicts of interest. Some funds are sponsored by dealers. The dealer manages the fund but on the other hand, the dealer probably has artists that he sponsors or has an inventory. So you’re in a situation where your investing dollars are being used to finance the dealer’s inventory. He’s getting first dibs and you’re getting the dregs, so to speak. It’s like those Hollywood film deals. People like to invest in these limited partnerships that finance Hollywood films, but somehow they never get Spider-Man. They always get the one that’s in the DVD rack at Costco. Recommended Link [World’s richest man’s NEW world-changing disruption]( [Read more here...]( In 1997, a relatively unknown man disrupted the retail industry. Today, as the world’s richest man, he is all set to disrupt another $2 trillion industry. If you missed taking advantage of the retail disruption... Don’t miss this! You can get the full story right here packed with aerial images, important dates, and even rare patent pics. See how this NEW disruption, can help you make a small fortune... [Click Here Now]( But there are excellent funds where those conflicts don’t exist, where the sponsor is not a dealer. They have their own money in the fund, and everyone’s interests are aligned. But you need to look for other things. For example, is there a mark to market or fee back provision? What that means is, if it’s a five-year fund and the art goes up in the first year, the appraiser comes in at the end of the first year. He might say, “This art is now more valuable based on my appraisal,” and the manager takes a fee based on that value. But if year four comes and somehow the art’s worth less, they don’t return the fee. That’s a conflict. So you want a fund where the manager doesn’t take any fees until you get paid. That would be a fund where you put your money in and then wait four years until they sell the art. Then the manager gets his fee and you get your share. That’s fair because the manager deserves a fee for the performance, but you want it so that he doesn’t get paid until you get paid. So you have to look for those kinds of features. Those are all design features that are in the offering document. I realize not everybody’s an expert. I don’t want to give legal advice, but those are the kinds of things you need to think about when investing in art. There are funds out there that pass all those tests — where there’s an alignment of interest and where the sponsor’s not a dealer. That way they’re not taking fees until the art’s actually sold and everyone gets their share at the same time. There’s one in particular that I’m aware of. It’s called the Twentieth Century Masters Collection. I’ve discussed it in my newsletter Strategic Intelligence. But those are the kinds of things you want to look for. And the fund I mentioned has an interesting feature. Let’s say you put in, say, $500,000. You’d pool that money with others’. The whole fund might be $40 million, or $50 million or upward of $100 million. They can go out with, say, a $50 million checkbook and buy $1 million, $2 million pieces. They actually have what’s called a rotation where those pieces can be loaned to the investors. They’ll come to your house and install it with expert installers. Then they’ll come back a year later and maybe install another piece. There are some requirements — you can’t smoke, you need an alarm system, etc. But that’s optional. You don’t have to do that. But my point is, for a $500,000 investment, you can have a $1 million or $2 million museum-quality piece on your wall for your enjoyment and the enjoyment of your friends. It’s on loan from the fund, so it goes back into the fund eventually. But it’s an extra little perk that some of these funds have. So there are different ways to participate in fine art. You can buy it directly or you can participate through a fund. It’s important to know that, for the fund, it’s like private equity. When you buy in, your money’s going to be locked up for four or five years. Again, you have to read the offering document carefully. So don’t put any money into it that you’re going to need for the kid’s college education next year. These are not liquid investments, but if you’re looking four or five years ahead, they are good investments in a highly uncertain environment. Regards, Jim Rickards for The Daily Reckoning Ed. note: Ever since Thursday afternoon, our offices have been in a complete tizzy. That’s because we went LIVE with our biggest event of the year: [The Six Predictions Summit]( Some of the biggest names in financial publishing went live on Zoom and proceeded to drop bombshell after bombshell (not to mention giving away some of their best picks and predictions completely free). Thousands of people had a chance to attend… And most were completely shocked by what they saw and heard. Needless to say, this is an event you don’t want to miss. If you did for whatever reason, you can still get caught up right away. [CLICK HERE TO ACCESS THE REPLAY]( Remember, all the recommendations and predictions were given away for free. So if you haven’t watched this yet, make sure you take a second and get caught up now. We don’t know how long it will remain up, so please don’t delay. [Go here for immediate access.]( --------------------------------------------------------------- Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [James Rickards][James G. Rickards]( is the editor of Strategic Intelligence. He is an American lawyer, economist, and investment banker with 35 years of experience working in capital markets on Wall Street. He is the author of The New York Times bestsellers Currency Wars and The Death of Money. Add feedback@dailyreckoning.com to your address book: [Whitelist us]( Additional Articles & Commentary: [Daily Reckoning Website]( Join the conversation! 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