Gold Is Up, But What About Art?

All that glitters is not gold.

Sculpture by Japanese artist Takashi Murakami. Photo via PIERRE VERDY/AFP/Getty Images

Back in early June I wrote a piece for the Art Newspaper in which I predicted that bad news would drive the price of gold, then at $1,500 an ounce, substantially higher.

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Well, the bad news came, with the Standard & Poor’s rating agency’s downgrading our U.S. government debt, precipitating massive fear of a double-dip recession, which in turn has led to the overall perception that the current Obama administration is bungling things. This has driven the stock market into a highly unusual summer spasm, as it reels down 500 points in a day only to bounce up and sink again—the dreaded “dead cat” bounce. The government claims interest rates will stay at close to zero for the foreseeable future—not good news for you cash mavens—so gold skipped to a new record high of $1,740 an ounce.

Given how right I was, did I buy any? No, because I’m against gold, and everything gold stands for. Instead, I continue to buy art, and I won’t be convinced otherwise.

I’ve never been a “gold bug.” In fact, I hate bugs of all types, and so I’d never buy into gold like investment gurus John Paulson and Tom Kaplan did. They were smart: it’s rallied 440% in only six years, which of course makes me dislike it even more. I’ve never bought an ounce of the stuff in my life and I hope I never do. The price of gold is a barometer for our collective anxiety and irrational neuroses. I’m referring to global financial meltdown, famine, nuclear meltdown, tsunami, anarchy in the Middle East and eventually hyperinflation.

But I was already scared, and buying gold will only confirm my innermost “end of the world” fears, which is the very thing I’m trying to suppress. So it makes sense that I don’t like the cold profiteers who buy gold; they’re calculating opportunists who profit from any bad news that hits my TV screen, and there’s been no shortage of it.

What of art you say? Hasn’t it appreciated too? Well, it’s been solid, and no one is letting great works sell at a discount. But art is an investment in culture, whereas gold is an investment in fear.

Now, I’m sure some of those gold bugs have art too, probably the kind of blue-chip treasures that were well researched, well bought and now well hung. The thought of it makes me jealous. They have a nice Picasso, a Twombly, a Matisse and a Fontana, but I can’t imagine their ever taking emotional leaps and making risky bets on emerging or oversize works: gold investors always play it smart and safe.

Collecting contemporary art requires both knowledge and some feel. No matter how many dealers and consultants show you the way, to be good at it requires faith in your own eyes, something gold bugs will never have. They don’t need an eye. When they want to value their cache, all they have to do is weigh it. It trades every minute of every day so there’s no need to bother with an appraisal or an auction estimate. Gold is shiny, mindless and cold, and because every ounce is minted to an identical weight and shape, it has a perfection that art can never equal.

Art has no tangible value. Its only value is cultural, and so it fluctuates wildly with fashion and the art historical mood of the moment. But is gold’s value any more real? As far as I can tell the metal is totally useless, and only a small portion of the world’s production serves a purpose: in the form of jewelry. Though in the past gold was the back-up for paper money currencies, it hasn’t been for decades.

To make matters worse, consider two disturbing facts: as the price per ounce rises the mines start digging up more and more of the stuff, creating horrible pollution (huge quantities of cyanide are used to leach gold ore). Then, most of the gold that has ever been produced is still extant—meaning there are endless amounts of the stuff stored in savings banks everywhere.

Good art, on the other hand, can be hard to find and sometimes hard to get. The bonus is that, when trying to acquire it, you meet lots of interesting people: curators, dealers, collectors, socialites and even a movie star or two. Art also has a real purpose. Though some would claim it is mainly decorative, in fact it is of broad cultural value. It has purpose in the same way that Beethoven’s music, Balanchine’s choreography or Bergman’s films have purpose: they satisfy the mind and the soul, and isn’t that what we’re here for?

Despite their apparent differences, art and gold do share a common thread: they are both pure luxury. Artists throughout history have picked up on this and that’s why Andy Warhol did gold “Jackies,” Damien Hirst did gold pill cabinets and Takashi Murakami made a huge gold Buddha for Versailles. In fact, Marcel Broodthaers once minted gold bars to finance an imaginary museum, and Yves Klein sold checks for an imaginary “zone of immaterial pictorial sensibility” that could be bought only for pieces of gold, half of which he threw into the Seine! (I suppose he pocketed the rest … )

Despite all the talk of art as investment, and the fact that a lot of art has appreciated, I think you would still be much better off with gold. Contrary to popular thinking, selling your art for its theoretical “value” is not as easy as it seems. Quite often nobody wants what you have, or nobody wants to pay you what you think it’s worth. Dealers work hard in trying to sell what’s hanging in their galleries, and auction houses fail to sell a substantial percentage of their lots despite the fact that they select their pieces carefully and invest money and manpower in their catalogs, previews and auctions.

Gold bugs don’t suffer these uncertainties—every ounce is 100% predictable, they go up and down in unison, and you can sell out in a split second any day and anywhere. Another big benefit is that there’s no dealer to hassle you about it and you won’t be insulting any artist’s feelings. Win or lose, your gold won’t talk back, so it’s 100% headache-free.

Larry Gagosian once said to me: “An art investment can also be a bad investment.” I know he’s right, so I buy the art, not the investment. One day, if you have the “great” art that others covet, you’ll make money and win double.

Now I’m hearing the disturbing rumors that gold is on its way to $2,000 an ounce, but still I’m committed to never being a gold bug, because I don’t like to bet on bad news. I’ll stick to art, though maybe this time it won’t be such a great investment. Still, I’m hoping for a better total return.

Gold Is Up, But What About Art?