This past week saw a record breaking auction at Sotheby's. The gavel went down on $ 491 million worth of paintings. It included a Gauguin that went for $ 40 million and a Klimt at $ 88 million. The month also registered the highest priced transaction ever. Steven A. Cohen, a hedge fund manager, paid $ 137 million for de Kooning's " Woman III". The seller was the equally successful record producer David Geffen.
Why are these paintings selling at exorbitant prices? Is there an intrinsic value? No. The value of the ingredients that de Koonig, Gauguin and Klimt used probably added up to less than a $ 100 dollars . The value-added that propels that $ 100 dollars to close to $ 265 million for the 3 paintings is the painters unique talent multiplied by the expansion of money in circulation since the paintings creation.
The paintings cannot be duplicated. Unlike the world of Cohen and Geffen where monetary transactions are repeated with a margin of profit being produced. The paintings are " one of". Maybe the real value of this uniqueness can better be appreciated by mercantile-types like Cohen and Geffen. Another way of looking at these tranactions is to view them as a place to store production of work a.k.a money. In the future, the Klimt, Gauguin and de Koonig will still be valued in whatever currency is in style but the stock trading and record selling will not be remembered or valued.
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