The boom times, it appears, are back.
Savills, the UK estate agent, recently sold a London house for £40m, Bentley began production on a luxury car worth £220,000, and this week Rembrandt’s “Portrait of a man” sold for £20.2m at Christie’s, smashing the existing auction record for a painting by the artist.
The return of such conspicuous consumption will be taken by many as condiments to a wider economic recovery.
But rather than representing diamond-encrusted green shoots, such big-ticket purchases could be just another outlet for increasing unease over the long term consequences of loose monetary policy.
When faced with the very real prospect of currency devaluation, and mounting inflation expectations, the safest store of wealth should be tangible assets, such as housing, commodities and land, or claims on these assets.
As Aviate Global argue, surplus liquidity will chase supply-constrained assets.
A Rembrandt is one of the rarest assets possible to buy; one that should keep its value regardless of the fate of major world currencies.
Far from being a sign the wealthy are again willing to splash their cash, the bustle over at Christie’s could instead be signalling the pain still to come.
Related links:
The rich are back buying Bentleys, Rembrandts and pink diamonds – Times
[Wilmot on AV] False idols: are US consumers really over leveraged?