Prices Plunge

Tarnishing collectibles

> Investors in 1979 paid about $7,500 for a set of three 1930 U.S. Zeppelin stamps at auction--a big increase over the 1961 price of $175. But this year at a California auction, the stamps' sale price fell 27%, to $5,500.

> A top-quality, one-carat round diamond had increased in price in less than a decade by nearly 940%, to $62,000.

But today the rock goes for a mere $44,000.

> Orient Handel, a store in San Francisco, accumulated a stock of Persian rugs worth $1.2 million to meet strong customer demand. But many of the rugs remain unsold. Says Manager Albert Neherayoff: "Three years ago we used to sell a minimum of $40,000 in rugs each month. That's gone down to $20,000 or $15,000 --or even less. I'm praying that business picks up."

The rush to beat inflation by buying such tangible goods as fine art, jewelry and even old art nouveau advertising posters, which picked up steam about two years ago when inflation began roaring ever higher, now appears to be slowing.

Last week the large New York auction houses released figures for the 1980-81 sales season, which ends in August, showing a leveling off of once spectacular growth. Christie's reported sales of $130 million, a rise of 15% as compared with 242% last year. At rival Sotheby Parke Bernet, sales were up 20%, to $300 million, less than one-third last year's rate of 66%. "The market is much more selective now," explains Elizabeth Shaw, vice president of Christie's. "People are not just buying because they have nothing else to do with their money. They are more careful this season." Adds Robert C. Woolley, senior vice president of Sotheby's: "The person who is interested in buying an English commode, for example, will postpone that purchase for six months so he can cash in on the high rate in six-month savings certificates."

Robert S. Salomon Jr., stock-research chief for Wall Street's Salomon Bros., who keeps tabs on the market value of collectibles and other commodities, reports that for the first time in five years, diamonds and Oriental carpets failed to increase in value during the twelve months ending June 1. At the same time, U.S. coins actually lost 8% of their value. One of the best investments during that period was prosaic common stocks, which increased in value by 25.3%. That was faster than rare books and U.S. stamps (both rose by 18%) or paintings by old masters (up 23%). Only Chinese ceramics, which increased in value by 36.5%, proved to be better investments than stocks. Jim Powell, the editor of a newsletter called Collectibles Market Report, says that the boomlets in photographs by Ansel Adams and 1920s posters have petered out this year.

High interest rates are the main cause of the slowdown in price rises for collectibles, but there are also several other special factors. Says Robert Woolley:

"There are many nuances in the market. Russian enamel is soft because a major American buyer is out of the market. Nineteenth century Dutch painting is off because of the prospects of a Socialist-dominated government in Holland, which has depressed demand from Dutch citizens."

The collectibles market is now likely to be very unpredictable for investors. As expected, Sotheby's sale last spring of one of Pablo Picasso's self-portraits went for $5.3 million, the highest sum ever paid at auction for one of his paintings. But during that same week, Christie's received only half of the $20 million expected from one of its auctions. Among the unsold works: a still life by Picasso reportedly done in 1912.

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