April 19th, 2007 by admin
April 18, 2007
With all the questions of how they operate, only Sotheby’s and Christie’s (that infamous duopoly) are in the advantageous position of not having to deal with currency swings. It doesn’t make a difference to them if they are paid in pounds, dollars, or euros, or what country they are performing the auction. For a dealer or collector, it can be a big problem. Welcome to the age of $2.00 to £1. There will be no buying trips for me in Europe. When the ratio was reversed back in the glorious 1980′s”, packing a 40′ container with Europe’s finest was a piece of cake. Add to that try buying at auction over there, with the 20% buyer’s premium, shipping (which has also dramatically increased), and resources needed to stay, eat, and travel around. Fresh merchandise, maybe, but I think there is plenty of fresh merchandise here too; I guess that takes a bit off the cache of a European buying trip.
International pricing is another advantage our industry’s duopoly is able to enjoy. There are several smaller auctioneers and some dealers that have multiple country operations, but the scope, size, and number of their transactions is hardly worth any advantage. Only Christie’s and Sotheby’s have a major presence in auctioneering around the world, including Asia and the Middle East. For them, fluctuations of currency between receiving the buyer’s funds and disbursing to the seller, is nothing if in the same currency, or can be hedged if the seller is paid in another currency.
As a dealer, I’m not prepared to be in the currency hedge fund business, but I am in the business of investment in my inventory and that capital is subject to currency fluctuations, a bit of a disadvantage rather than not being subject to any fluctuation. By investing and holding inventory I am subject to the market conditions of not only the value of my dollar investment, but the value I can obtain in the resale market .
Just remember, when you go to an antiques show and you’re quoted a price, make sure it’s the right price; you might think it’s a bargain if they give a number in £s and you think it is $’s!