THE SLEAZE SECRETS OF THE AUCTION HOUSES-IT’S A PLANNED SCAM-THE APOCALYPSE IS COMING

It really takes a lot to surprise me but this information had me floored for the ultimate in greed, misrepresentation, and as close to fraud as one can get.  Absolute SLEAZE that affects all of our lives, you just don’t know the links of this behavior to your credit scores, your debt, your enslavery, your job and the loss of your home if you got caught in the mortgage debacle. I was even blown away that the author’s last name was Paumgarten, one of the famous names in the Duerer Cipher and Duerer Diary.  Must have been karma

THE TRUTH is the following as simple as I can make it:

Art Galleries get to make up what ever prices they want on art they sell, all prices are negotiable, buyer beware. Not much different than a flea market, just in better quarters, usually handing out wine at “openings.” Don’t ever buy from a gallery that starts talking to you about art as an investment. RUN!

Now to the auction houses and of course we’re talking the big two Sotheby’s (public SEC company ticker symbol BID), which is quickly going down the tubes, and Christies (owned by Frenchman Pinault, private company, thus Pinault thinks he can escape the strong arm of the law, but as it turns out that isn’t so.

YOU KNOW THOSE HEADLINES “THE MOST EXPENSIVE XXXX EVER SOLD!” PRE-PLANNED HYPE all set to go when the hammer comes done BECAUSE THE ARTICLE IS ALREADY GUARANTEED TO BE SOLD AT A PRICE THAT WILL STAGGER PEOPLE’S MINDS!  It doesn’t mea it was worth that much except for the idiot who paid the price, IT IS  PLANNED IN ADVANCE.

Here;s how the scam works:

1.  Supposedly to attract those art pieces from Sellers that will make headlines, someone will have to guarantee the Seller a set price, else why should Seller sell?  So either the auction house actually guarantees the sale price, which in effect means they’ve already bought it at enormous inflated prices or they arrange purchases with third party guarantors, which is code word for the likes of Goldman Sachs, which is who Christies is in bed with.  Anyone getting the sense of derivatizing?

The value of Sotheby’s guarantees that were still outstanding on November 7 was $206.4 million, up from $95.4 million in May. Some $54 million of that was funded by third parties, which means that Sotheby’s itself guaranteed the sale of over $150 million-worth of art. AND THEN PRESS RELEASED the “staggering figures” of their sales.

2.  the Seller is thrilled, they are guaranteed a HUGE PROFIT.

3.  the third party guarantor, such as Goldman Sachs, IS ALLOWED to bid on the works they guarantee.  Here’s how it works:

“The auction house permits someone who guaranteed the lot to bid on the lot, so they can raise the price and essentially get a discount for doing so,” said Jonathan Binstock, a senior art advisor at Citi Private Bank. “Say an auction lot is guaranteed it at $20 million, but other people are bidding on it at $22 million or $23 million. The guarantor might bid as well because maybe they’re getting a 50% discount on the upside. So if they win the lot and the hammer price is $30 million, they only pay $25 million.”

4. and to make it worse when you consider that it is the priciest lots that carry financial guarantees that also dominate the headlines when they sell for record amounts, this sleaze ball action misleads the entire public worldwide. However, as auction houses don’t reveal the guarantors or buyers of lots unless they want to be identified, it’s very hard to assess the overall impact this has on results.

Which means the overall amount of financial guarantees that third parties or auction houses are prepared to take on may well drop very quickly if the market heads south.

Art Auctions have become a bloodsport.

http://www.forbes.com/sites/kathryntully/2013/11/27/art-auctions-a

 

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