November 16, 2017 / 5:05 AM / in a month

Breakingviews - Da Vinci record vividly depicts scarcity value

NEW YORK/HONG KONG (Reuters Breakingviews) - Scarcity value was on vivid display on Wednesday night at Christie’s in New York. The auction house sold Leonardo da Vinci’s “Salvator Mundi” for $450 million to an unidentified telephone bidder, after hyping the 16th-century work with a weeks-long world tour. That price, more than four times Christie’s roughly $100 million estimate, makes it by far the most expensive piece of art ever sold at auction.

It is tempting to view this as a high-culture manifestation of the high valuations evident across financial markets. The S&P 500, Dow Jones Industrial Average, FTSE 100 and Nikkei indexes all hit record highs this month. The median home value in the United States is also at an unprecedented high, according to Zillow.

In Silicon Valley, where the tycoons appreciate the scientific bent of the famous polymath, Apple’s market capitalisation topped $900 billion this month, and shares in Alphabet, Amazon, Facebook and Alibaba all hit records too.

But while frothy markets and abundant liquidity probably helped, the bigger picture is about scarcity value. Fewer than 20 of the old master’s paintings are known to exist, and this was the only one in private hands. So the auction represented a once-in-a-lifetime chance to bid for a Leonardo.

Contrast that with the previous record holder, Pablo Picasso’s “Les Femmes d’Alger” (Version O), which sold for $179 million in 2015. There are far more Picassos in circulation and that work was one in a series of 15 paintings. “Salvator Mundi” is at once a masterwork, and also an incredibly rare commodity.

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