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Art prices are not strictly commodities. Their price is influenced by social mood as reflected by stock prices and regulated by liquidity – the availability of money supply (both debt and cash).. Art prices appear to save their boldest moves for the aftermath of big advances. When well-heeled investors can afford to bid up “quality” works of art. The present art market frenzy. It’s just amazing to see it happen time, after time, after time, in such well-proportioned dollops of bidding frenzy - after so many big peaks. Keep in mind that the stock market, in our opinion, has actually been in a long-term topping process since 1998. Major sales since this time - Van Gogh’s “Portrait de l’artiste, ”$65 million; Rubens’ “Massacre of the Innocents,” $76.7 million; Picasso’s “Boy With a Pipe,” $104.1; and Klimt’s “Adele Bloch Bauer I,” $135 million) are really one continuous long-term sell signal. Remember emotion for higher prices peaks when the market is at its highest. That applies to any market. Consider the chart below and there is an uncanny resembelance between the S&P stock index and the Art Index. Its all about emotion and public mood. 
Here’s the long-term correlation between the art market and the S&P 500. Notice the dotted lines at the beginning of the uptrend in the 1930s. It shows the coincidence of price action. That is the natural order between art and stocks was very much in place at the lows. When they are guided more by prudence than greed, investors in the risky world of artworks don’t get ahead of themselves just as they don’t buy NASDAQ stocks to the exclusion of Dow stocks, at the beginnings of long stock rallies. So, an art market that surpasses “everything that came before it” as the S&P exhausts itself well below its own peak and the larger financial world suffers a nasty bout of risk aversion, is anything but promising. The Klimt Sensation
The art market of the new century is surpassing everything that came before it. Picasso is the new Ferrari, as collecting art becomes a form of self-promotion and famous works of art sought-after status symbols for the world's nouveau riche, for old money and for the super-rich.Just last month, Klimt's "Adele" dethroned the previous recorder holder, a Picasso that sold for $135 million. It's only one of many records being broken in the art world these days. In four days last week, collectors in London spent £285 million (€412.8 million) in an auctioning frenzy the newspaper Independent called the "Sale of the Century." New buyers from Russia, India and China have been especially quick to pay record prices, and not just for blue chip artists like Picasso and Warhol, or for Impressionists from Paul Cézanne to Vincent van Gogh. The entry of these new buyers into an already hyped-up art market means one thing: plenty of new money. Experts estimate that the Russians alone are injecting $300-500 million into the market each year.
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