History
Fine Art traces its origins back to the Acheulean period of prehistoric art to sculptures like the Venus of Berekhat Ram, which is a ballistic figurine of 230,000 to 700,000 BCE, and the Venus of Tan-Tan, which is a quartzite figurine dating back to 200,000 to 500,000 BCE.
Cave paintings also form part of the history of fine art such as those found in the Chauvet Cave, c.30,000 BCE, Lascaux, Altamira, Pech-Merle, and Cosquer.
It should be noted that during the era of ancient Mediterranean civilizations such as those of later Greek, Roman, and Byzantine culture, medieval Carolingian, Ottonian, Romanesque as well as Gothic art, artists practising fine art were considered only as skilled workers.
They were regarded much like skilled interior decorators and carvers, and nothing more. It was not until the Renaissance that artist as a profession was taken to an entirely new level. This reflected the importance of the ‘design’ element of art, otherwise known as ‘disegno’.
Fine Art definition and Meaning
Plainly defined, fine art refers to an art form which is practised predominantly for its aesthetic value along with its beauty, which is also referred to as ‘art for art’s sake’, rather than the functional value that it holds.
Fine art finds its roots in drawing along with design-based works such as painting, printmaking, and sculpturing. Fine art is quite often contrasted with applied art as well as crafts. Both of these are traditionally considered as utilitarian activities.
There are also non-design-based activities which can be considered as fine arts including photography and architecture, with the latter being understood more clearly as an applied art.
Fine art’s definition is constantly seeing extension to incorporate new activities which arise either due to new technology or artistic invention. The former in this can be exemplified by acrylic painting, silkscreen printing, and giclee prints.
The later of the invention incorporates mixed-media artworks which specifically employ collage, décollage, photomontage, or what is known as ‘found art’. It is for these reasons that it is challenging to define fine art or fix a meaning.
The difference between Fine Art and other Decorative Arts and Crafts
It was only until the English ‘Arts and Crafts Movement’ during the late 19th century that a rigid distinction could be made between fine art, which is purely aesthetic, and decorative art, which is functional.
With the introduction of the category focused on visual art during the 20th century, the arbitrary distinction became significantly blurred. This resulted in certain crafts and decorative arts, more notably ceramics, being considered as fine art.
Which arts are considered Fine Art?
The definition of Fine Art is subjected to change but currently consists of the following:
- Drawing – including that done with charcoal, chalk, pastel, pencils, pen and ink, book illustrations, and caricature.
- Paintings – which includes a variety such as encaustic, tempera, ink and wash, oil, watercolour, gouache, and acrylics.
- Sculptures – which include bronze, sone, and woodcarvings.
- Printmaking which consists of woodcuts, engraving, etching, lithography, and silkscreen-printing, and
- Other fine arts such as photography, architecture, manuscript illustration, calligraphy, and animation.
An Introduction into Hard Assets
Now that there is a clearer understanding of fine art in its history, definition, and categories which are considered fine art, it is imperative to consider where fine art and investment meet. For this reason, it is necessary to look at hard assets, as fine art is, after all, a physical asset.
In this, we can define what hard assets are, they are tangible assets which can be physically held. This includes, but is not limited to real estate, bullion coins, collectible coins, jewellery, and, as previously noted, fine art.
Fine art may look fantastic in a home, an office, or any other area where it can be appreciated and it, thus, provides people with appreciation for their money. Most hard assets retain their value over time.
A great example to explain this concept is by considering gold coins. They are a popular and common means for investors to protect themselves should the dollar depreciate. When considering that the US Dollar has lost around 95% of its purchasing power since 1913, it makes sense that investors seek other ways to protect their investments.
However, despite this depreciation, the Federal Reserve exported the majority of the monetary inflation to other jurisdictions through the dollar becoming the premier reserve currency in the world.
Transactions on global markets for commodities, for instance, all receive settlement in US Dollars. As result of this, nations that want to trade these commodities must maintain the reserve of the US Dollar to be able to trade internationally.
In the same way that gold is used as a safe-haven for investment, other hard assets are also used, including fine art. But whether it has the same potential to retain, and even increase, in value over time in order to be considered a viable long-term investment, will be explored further in this article.
What are Speculation Assets?
When considering hard assets, there are several classes which offer investments a store of value for their money. Others offer the opportunity of profits based on the value of the asset at the time that it is sold.
Gold coins cannot be an example of a speculative asset as they do not increase by a certain amount of money. However, gold coins provide investors with a hedge against inflation and while such a hedge is important in maintaining wealth, it will not return a great amount of profit.
One of the most common forms of speculative investing is the investment in stocks. Stocks are purchased at a certain price based on the information that the broker provides. Those who buy the right stocks then stand the chance of making a profit which could exceed the initial investment amount.
However, stocks are an extremely risky asset class to investment and the potential for financial reward that it is associated with comes with a certain level of risk. The markets could crash at any moment and stocks that were purchased could end up below the price at which they were originally bought, making it fundamentally useless to try and sell them.
Speculative Assets and Fair Market Value
When considering the risks which come with investing in stocks, investors will be happy to know that there are other speculative hard assets which are not as prone to violent market movements. This is where collectible coins, and more especially, fine art come in as examples of such assets.
Fine art pieces are purchased and sold around the globe by a variety of high-level wealthy investors. Due to the demand, which is experienced in this market, it retains its value. Demand continues to soar due to more billionaires being minted over the world every year.
This shows that the elite class of substantially wealthy individuals continues to expand despite the rest of the world’s population slipping deeper into poverty.
Statistics show that:
- 1% of the world population currently has control over more than 60% of the world’s assets, with this figure continuously rising.
- By 2019, there were over 2,200 billionaires originating from countries worldwide.
- There was a substantial rise of other 150+ billionaires from the previous count of approximately 2,050, recorded in 2017, with a continuous rise in this figure.
Wealthy individuals do not like the idea of losing any of their money and while they prefer to keep a substantial part around and invest in businesses, real estate, stocks, and other assets, they prefer to have a fair percentage of their portfolios dedicated to fine art.
As result of this, there is a high demand for fine artworks, with prices on some pieces going for outrageous sums of money.
How do Art Investments work?
Fine art can increase in value over time, much like stocks and bonds. Art is a long-term investment as profits from it will not be earned overnight. Investors who are looking to stretch their investment over 10-years or more are often advised to invest in fine art.
There are also numerous investors who include paintings in their estate planning. This is so that these assets can be passed along to their descendants. Fine art is often passed from one generation to the next, which greatly increases its value over time.
One thing that must be noted is that the market for fine art has rules of its own. It is a separate market and thus not susceptible to the rise and fall of other markets.
Investors who have stocks in their portfolio along with fine art will notice that even when their stocks do not perform well, their art investment is doing much better.
However, the market for art also experiences fluctuations and it is impossible to determine the true value of an artwork as a lot depends on the reputation of the artist, the art market, the global economy, and several other factors.
Reasons to invest in Fine Art in the Long-Term
1. The fine art market has grown exponentially
During the past 10 years, the fine art market has experienced growth of 113%. This, and numerous other reasons, is why investors have become more interested in fine art investment.
The Knight Frank Luxury Investment Index, or KFLII, tracks the movement and performance of a variety of assets including fine art, classic cars, and fine wine. The index shows that all three classes have substantially outperformed shares in the last decade.
2. The Fine Art market is cyclical over long-term
Stock market pundits are mirrored quite often in the debate which exists between fine art bulls as well as bears. There have been contractions identified in the art market and not all genres or styles of art perform as well as others.
There have been losses observed in one whereas another may be experiencing substantial growth and returns. There is a specific risk/reward ration which allows investors to tailor the purchases that they make to suit their unique needs.
3. Investing in fine art translates to investing in the artist and the art itself
Art does not always have to be bought at an auction. There are numerous unknown, early emerging artists which are a vital part of the art world, with their works on sale at galleries.
It is a risky financial investment when purchasing work by new artists who are not established yet, but it encourages the artist to innovate and find new ways of expressing themselves. It also supports emerging galleries and contributes to fine art as a whole, inspiring greater movements which may occur in the fine art market.
4. Opportunities in collecting fine art
Another advantage of investing in fine art is that investment increases the social value thereof. Social aspects are often a key driver behind purchases by art collectors.
How to start investing in Fine Art
The first step is to decide on the amount of capital that you are willing to invest. It should be an easily-affordable amount, preferably disposable, in case the artwork depreciates. There are also possible storage and maintenance costs involved that should not be overlooked.
The next step is to become more educated about the art world. This can be done by visiting galleries, museums, talking to curators, and other figures who will be able to teach you more.
Browse websites where artworks are showcased and where there are auctions. This is so that you can gain improved insight into how the market operates.
Once you have found an artwork that you wish to invest in, you can narrow down your research to focus on the artwork itself. This includes determining its price, its value, and other factors.
By taking a photo of the artwork, or emailing an image to an appraiser, you can have the quality of the artwork appraised by a professional. Next, you can either purchase the artwork, which is a costly option, or you can purchase shares through an online marketplace.
When purchasing artworks via the internet, ensure that it is done through a legitimate gallery, dealer, or an investment firm to avoid falling prey to elaborate internet scams.
For enquiries about art auctions or art valuations, contact Cape Town +27 21 418 0765 / ct@aspireart.net or Johannesburg on +27 11 243 5243. Or visit Aspire Art Auctions’ website: https://aspireart.net/.
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