TOP DOLLAR : In Current Buying Frenzy, the Best Things in Life Are Far, Far From Free

It’s all somewhat baffling to those who see inflation as a 2-cent increase on a pound of ground round. Or who carry their change in a squeeze purse.

Yet the truth of the pricey matter is, while increases in the costs of living hover around 4.4% per annum, the cost of exotic and historic and arty things is surprising Sotheby’s, the Saudis . . . even publisher Malcolm Forbes, the Cadillac Jack of modern collectors.

“Those (prices) are aberrations that have nothing to do with art,” Forbes said Wednesday in a telephone interview from New York. Then what do they have to do with? “They are representative of Japan’s balance of trade and art bought with 50-cent dollars.”

‘Opened Doors’

Anything else? “More people have discovered art and more people can afford it. Making a lot of money from art has opened doors they want to get through. Art will do that in the social world.”

Of late, the value of that art--whether expressed as paintings, cars, watches, guns, Chippendale chairs or Gutenberg Bibles--has been outstripping the price of everything from gold bullion to Beverly Hills real estate.

And to a point where diamonds (the current best-seller is an 85-carat piker that sold last year for a meager $9 million) might now be a girl’s worst investment:

--In 1947, the late Joan Payson bought a painting of some mauve flowers for $80,000 and hung it over the mantel of her New York apartment. Eighteen months ago, her son auctioned this family holding and “Irises” by Vincent Van Gogh sold for a record $53.9 million.

--In 1981, a self-portrait by Picasso was worth a relatively piddling $5.6 million to owner Wendell Cherry, a hospital management millionaire, of Louisville, Ky. This month, he sold “Yo Picasso” for $47.85 million. A Sotheby’s spokesman said Cherry went into ecstasy; then shock.

--Wanna buy a watch? Last month, Patek Phillipe auctioned a new, 18-carat gold pocket watch that charts the galaxies over Geneva. It sold for $3.1 million, almost triple the record price set only three years ago by a 17th-Century watch.

--Interested in a used car? In 1951, a Californian traded two General Electric refrigerators and $20,000 for a 1931 Bugatti Royale. This carthorse of a car now is the center of quiet negotiations in Las Vegas. A spokesman for the seller said dickering is “somewhere between $11 million and $15 million.”

--This week, signatures are drying on the checks and paperwork settling the purchase of a 1968 275 GTB-4 Ferrari racing car. The Los Angeles seller, who asked not to be identified, paid $600,000 for the car two years ago. The Beverly Hills buyer, radio and tv producer Noel Blanc, has just paid $3 million for it.

“It’s the kind of rare, rare automobile where the (appreciation) potential is unlimited,” Blanc said. He also considers he stole the car. “I think $12 million will not be unreasonable for this car. And sooner than I think.”

The first, single-action revolver made by Colt sold for $10,000 five years ago but now is worth $300,000. The value of bottles of wine supposedly from the cellar of Thomas Jefferson has gone from $150,000 to $500,000 in three years.

Even a beat-up piano from the set of “Casablanca” sold for $154,000.

Hockneys are hot. Warhols have gone wacky.

And last year, Forbes paid $220,000 for four messages from Gen. Robert E. Lee to Gen. Ulysses S. Grant asking for a “suspension of hostilities.”

Inflation Hedges

All of which might support the broad belief that in these days of the hesitant dollar and an iffy stock market such purchases are canny hedges against inflation.

Forbes, however, said he buys few things--not his cars, not his Faberge eggs, not his Van Gogh (“of a couple of old ladies in a potato patch”), not his Gaugin (“a portrait of the family he left to go to Tahiti”) and certainly not his antique motor cycles--as investments.

“If you’re going to buy for investment, you should be a dealer,” he commented. “Frankly, I’d have doubts (as an investor) about paying $45 million for a Picasso when there are a million of them. The man was a fantastic factory . . . although prolific might be a more polite word.”

His profit from things, he said, is strictly the emotional return. Forbes says he can hold a priceless egg by Czarist jeweler Peter Carl Faberge and feel “the artistry, the imagination, the fantasy . . . and the fun of knowing the Kremlin has 10 but we have 12. It’s one egg race we won.”

Such sensitivity, he believes, may be a growing entity among big money purchasers.

Bruce Meyer agrees. He is president of Geary’s of Beverly Hills. Meyer also is a 25-year collector of Mercedes, Ferrari and Duesenberg cars and a gatherer of “antiques of little historical consequence, but of considerable beauty in my eyes.”

Elegance and Tradition

And in his store, Meyer says, there has been a noticeable increase in customer interest in the elegant and traditional. That means orders for the solid silver of England and America, instead of silverplate from Asia, and a 20% annual increase in the total of Georgian and Victoria antiques stocked by Geary’s.

“I think a little more substance is coming back into our lives,” Meyer explained. Ralph Lauren’s timeless designs symbolize the gentle movement. So do Levi’s 501 jeans and L. L. Bean’s mail-order business. “Customers used to want something that looked twice what they had paid for it. No longer.

“Now, they’d really give a nice picture frame in sterling for $150 rather than a silver-plated casserole with a warmer for $150.”

On the other hand, Thomas Hoving, New York editor of Connoisseur magazine, sees in the recent purchases less a swing to refinement than a return to vulgarity.

Fine art, he says, has become “a rare form of currency for the incredibly rich on a global level . . . it’s money, it’s a T-bill, it’s a savings bond.”

Lack of Appreciation

These people, Hoving believes, have no appreciation of fine art beyond its resale value. They buy a Picasso because everybody else is buying Picassos and not because “it’s La Celestina, a painting of a gorgeous old lady with one opaque, glaucomic eye staring at you.”

A series of record sales of any commodity, he said, always adds to the feeding frenzy. Then there was the Tax Reform Act of 1986 that narrowed benefits for those once planning to donate their art pieces to nonprofit institutions.

“It (Tax Reform Act) made welshers out of the wealthiest out there,” Hoving added. “So it all has to do with ownership among the super rich who look at their investments the way we look at a pie--there’s a piece (of personal wealth) for art, here’s a piece for real estate.”

Hoving sees no end to it.

“I guess it will (end) with a world depression,” he lamented. “But until then, you will see some work of art going for $100 million.”

Yet whether dealing with a Frank Lloyd Wright table lamp for $750,000 (another recent record) or haggling for a set of garage-sale golf clubs, the basic premises and motives of buying and selling remain intact.

Greed in the Picture

Greed is still the mother of intention. The value of any object is whatever anyone wants to pay. Or as one auctioneer put it: “No matter the price of the chair, there’s a backside for every seat.”

Consider this week’s sale of that $3-million Ferrari.

The seller, despite his love of the marque as an historic sculpture, not as a commodity, sold the car for the world’s oldest reason: “I needed the money. I had a business opportunity and the reason for selling was much greater than the reason for hanging on.”

The buyer, Noel Blanc, son of Mel Blanc, the voice of Bugs Bunny, wasn’t any more sophisticated in his reasoning: “I bought it because it’s terribly underpriced for this car, a vital Ferrari, one of the finest ever made.”

The car is made more vital by a current market statistic: Over the past two years, prices for almost all Ferraris have appreciated approximately 20% a month.

Collection in Storage

Blanc, however, is buff first, businessman second. He extends those priorities to his collection of 400 watches that is valuable enough to be in bank storage.

On this horological front, he says, he has seen $4,500 pocket watches appreciate to $235,000 in six years. What makes watch collectors tick?

“Black Monday, Oct. 19, 1987,” Blanc said. “It really did a lot of people in. It brought back that old money-in-the-mattress feeling and that’s when you saw a tremendous turnaround . . . from the stock market to Ferraris, to watches, to any substantial reminder of a stable economy.”

Blanc is another collector who couples this searching for fiscal security to disillusionment with plastic, planned obsolescence and the disposable. He also enjoys the daily benefit of going first class.

“As a bachelor, I was perfectly satisfied with 20-cent glasses from Thrifty,” he remembered. “Then I got married and my wife bought me some Baccarat goblets. I put my carrot juice in one of these and it really does taste much better.”

Fine wines have long been considered an object of high value and collectability. But wine dealers claim that some of those prices are more fizz than bouquet.

Broke the Bottle

Last month a New York wine dealer accidentally broke a 1787 Chateau Margaux. It was said to have come from the bins of Thomas Jefferson. It was said to be worth $500,000. More impartial enologists have since doubted the price and provenance of this and other Thomas Jefferson wines.

For one thing, they agree, age is no guarantee of a wine’s quality. The taste of 200-year-old wines may best be compared to an overripe plum dipped in Listerine. So any purchaser, even a dealer, may well be left holding nothing more than an old bottle that may or may not have been touched by Thomas Jefferson--hardly a $500,000 item.

“The point is, it’s the quality of the wine and not the history of the bottle that determines wine values,” explained Darrell Corti, a Sacramento dealer and wine judge. He said the very finest wines should cost no more than $1,000 a bottle. “Wine is a terrible investment. If you want to make a good investment, buy land.”

Despite this corking of wine as a valued collectible, there is no doubting the soaring of other values.

Posting a Gain

According to Sotheby’s Art Index, paintings posted a dollar gain of 42% last year. Rare coins earned a 25% return.

Greg Martin, an antique arms and armor appraiser for Butterfield & Butterfield of Los Angeles, knows that 10 years ago, a hunting rifle once presented to President Teddy Roosevelt could be snapped up for $250,000. Now, he says it’s worth $2 million.

Some experts, particularly in the Ferrari field, are seeing prices driven up by panic buying. Collectors, according to Jonathan Tower, publisher of the Tower Report, an investment newsletter, are grabbing any Ferrari, gambling on the upward spiral before inflation prices them out of tomorrow’s market.

In his own broad arena, Jay Cantor, head of museum services for Christie’s of New York, blames at least part of the overall sizzle on “a lot more money in a lot more hands . . . and being made in huge doses through leveraged buyouts and so on.”

The expansion, popularity and press coverage of auctions has proved to a cautious, hoarding public that the market for fine things “is enormously liquid . . . where you not only can sell easily, but at a large profit.

“The Japanese countries have been an important factor in the art market for far longer than our headlines would suggest. It hasn’t been a constant presence, but a significant one, and now we’re seeing the Pacific Rim countries.”

There has been a cultural blitz in America, Cantor added. Airline travel is now so slick, so frequent that buyers and sellers are only hours from auction centers. An expansion of life-style media--from Esquire through Vanity Fair to the rich and the famous of Robin Leach--has exposed more Americans to quality trappings.

“And doing all buying and selling at public auction, in the open and before television cameras, has reduced the risk of fraud in an exposed public’s mind,” he continued. “Compared to (before) hushed dealings in a dark back room between you and a dealer.”

Transformed Era

Despite the enormous prices, he cautioned, purchases of eminent desirables by kings’ ransoms remains a tiny commerce.

“Two years ago, the value of cars imported to the United States alone was $30 billion,” Cantor said. “The figure for art auctions was $2 billion. Worldwide. However, we get more front-page coverage.”

Still, it’s a trade that has transformed the era from “one of art collecting to one of art consuming.

“But it is an intelligent consumerism . . . by people not necessarily interested in investment but in maintenance of value. To put it another way, familiarity is breeding respect.”

Among the high rollers, it should be noted, there really is no disrespect for money.

Even with billionaire Malcolm Forbes.

He was in Spain earlier this month, riding his Harley-Davidson motorcycle, flying his hot-air balloon, and staying at the Ritz in Madrid.

There, Forbes found the price of one hotel service to be way beyond his expectations. “I’m thinking of taking my laundry bill and having it framed,” he said.

Now there’s an item that should be worth something one day.