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Chinese Discover Merits of Modern Art

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The well-heeled crowd in China clearly isn’t reading the monthly missives of Dr. Gary Shilling.

The world renowned economist, who generously sat down with us recently for a chat at Minyanville HQ, believes that deflation will dominate the economic landscape here and abroad for the next decade and offers investment strategies flowing from this forecast.

One area to avoid, says Dr. Shilling: art. As he has noted, artwork and similar tangible assets - such as antiques and jewelry - tend to appreciate in value during periods of high inflation. He doubts they will do well, however, in the environment of slow economic growth, deflation and pressure on high incomes that he foresees in the years ahead.

“The value of these tangible assets is more likely to be in the enjoyment they give their owners than as rapidly appreciating investments,” Dr. Shilling argues.

Newly wealthy Chinese beg to differ, however. Businessweek reports:

“Eager to capitalize on the desires of Chinese collectors who are moving into just about every category of the art market these days, major dealers and galleries are papering their walls with late Picassos. Many of the works are coming from American and European collectors who acquired them in the 1970s, '80s, and '90s, and appear eager to cash in on the boom.”

In fact, these Chinese fans of Picasso have more reason to celebrate: a lot more of the modern master’s paintings might be coming to auction soon.

“A 71-year-old retired electrician is at the centre of a legal battle after coming forward with more than 200 hitherto unknown paintings by Pablo Picasso, a French newspaper reported Monday.

Experts who have examined the collection have estimated it could be worth some 60 million euros (80 million dollars), Liberation reported.

...Le Guennec said he had worked installing alarm systems at a number of Picasso's residences, including a villa in Cannes in the south of France, during the last three years of Picasso's life -- he died in 1973.

He said he had been given the works as presents, either by Picasso's wife or from the artist himself. The collection included 271 works, Liberation reported.” (Hat tip: Marginal Revolution).
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