The New Currency of the Unconventional Economy

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Created on Tuesday, 30 October 2012 14:20

Published on Tuesday, 30 October 2012 14:20

Written by Andrew Snyder, Editorial Director, Inside Investing Daily

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The art world is on fire. Until now, it's been the realm of the rich elite. But late next month, that's all going to change.

After this, there are no more excuses. On Nov. 20, the realm of unconventional investing opens to everybody. Whether you've got an eight-figure trading account or are "planting your acorn" with a few thousand bucks... the opportunity is the same.

Famed art house Christie's Intl. will hold a luring auction late next month designed to attract collectors searching for affordable art.

The event is a rare one. Christie's typically hosts auctions selling million-dollar works from famed artists. The company has been a leader in the recent art revolution, setting record after record as paintings fetch as much as 10 times more than they did a mere decade ago.

But on Nov. 20, there won't be any record set. Instead, the bidding for some pieces will start at just a couple of hundred bucks. The most expensive piece might go for $30,000 -- perfect for an unconventional investor's self-directed IRA.

Bottom line... it's an "everyman" auction. There won't be Maseratis and Bentleys in the parking lot. Nope... just Fords and maybe a Cadillac or two.

"It's all about an affordable zeitgeist," Francis Outred, Christie's international director of contemporary art told Bloomberg. "We want to accommodate all levels of collector so they pick up the auction bug. Getting new bidders to register is the key."

We can clearly see why Christie's wants fresh bidders... it's good for business. But why am I so excited about this auction?

What's in it for me?

In a monetary sense... nothing. Other than the fact that the collectibles I own will rise in value as more folks enter the realm, the Christie's auction doesn't put anything in my pocket.

But on professional level, oh boy, it's good news. As the editor of our Unconventional Wealth newsletter, my job is to gently guide investors away from the sharks of Wall Street. My mission is to reward readers with actionable advice and insight that hand them outsized returns and diminished risk.

Art plays a leading role in accomplishing that mission. Collectible art has soared in value over the last 15 years.

You may have heard of Eric Clapton's recent success in what I dub the "unconventional economy." The famed guitarist just sold an abstract painting by German artist Gerhard Richter for $34 million -- another fresh record amount for a living artist.

But get this... Clapton bought the painting in 2001 for a 10th of the final sale price.

The action took place this month at the Frieze Art Fair -- the famed contemporary art exhibit and sale held annually in London's Regent's Park. In just its 10th year, the fair has grown to enormous proportions. In fact, during its inaugural year, the sale brought in just $10.4 million. But earlier this month, that figure jumped to over $160 million.

It is proof the art market is one of the hottest -- and safest -- on the planet.

In the latest issue of Unconventional Wealth, I detailed the opportunity that just popped up in the Chinese art market. Here's a bit of what I had to say...

Thanks to an incredible surge over the last decade, Chinese buyers are now responsible for the largest share (41%) of the world's fine art market. When compared with the country's share of global GDP of just 11%, it is an incredible figure that proves the immense opportunity that just landed in our laps.

Last year, more than 700 paintings sold for more than $1 million in China. At the same time, the comparable figure was just 426 in the U.S. and 377 in the U.K. Even more astounding, just 36 months ago, only one Chinese artist was among the world's 10 best-selling artists. Last year, Chinese artists held six of the 10 spots.

It makes sense that the Chinese would flock to the stability of art. If anybody knows about dirty money and full-on economic manipulation, it's these folks. There are more than 1 million millionaires in China. Most of them just gained that title. In fact, money is flowing through the country so quickly that the wealthiest 1,000 Chinese have doubled their wealth since 2008.

But these newly rich have no place to store their money. Property investments are controlled by the government. Interest rates are artificially low. And the Chinese stock market is even riskier than what we're forced to deal with here in the States. Affluent Chinese have few options.

That's why the art market is growing at a pace that nobody ever expected.

What's happening in China, though, is happening everywhere. I've said it over and over... risk is at an all-time high. We've got political risk, monetary risk, interest rate risk, earnings risk... you name it.

But the art world manages to skirt all of that. It offers a safe alternative to conventional markets.

There's no chance your painting has cooked its books. No chance the government will regulate it out of business. And if you play it right, there's no chance they'll steal it from you when you're dead.

Art is the currency of the unconventional economy. And Christie's is about to open the doors to the vault and let everybody peak inside. Take a look... you'll like what you see.

Editor's Note: The coming "Super-Bubble" is very different... Not only is it unpreventable... but once it starts, the government will be helpless to stop the bleeding.

And while the devastation will erase trillions in personal assets... some folks will have the opportunity to turn this financial crisis into astounding wealth.