Rare Book Monthly

Articles - September - 2015 Issue

Changing Valuations

A649361e-5500-4108-a765-e2e197f60129

Euro/dollar diverging recently

Over the past year we have seen substantial changes in auction outcomes as expressed in US dollars.  Auctions of course are priced in local currencies, the dollar, pound [-5%] and euro [-12.5] predominate but there are also sales in Mexican pesos, Canadian dollars, Australian dollars [-27.5% ] Swiss francs and occasionally a few others.  We always convert to dollars to make comparison easier.  This said, this past year has seen dramatic shifts in currency values that are affecting the overall market by creating larger differences in outcome by region.

 

Of course, in a perfect world, prices would seamlessly adjust day-to-day and place-to-place to reflect exchange differences but that is not always happening.  We can tell because, while the number of auction lots in Europe continued to increase in the first half of 2015, the continent, which has wrestled both with the “Greek problem” and resistance to the monetary easing that has been employed in the United States, have seen outcomes reported in euros weaken.  These differences have made the euro particularly unstable and for the first time in memory suggest, we think mistakenly, that the long-term trend toward a worldwide auction market is losing steam.  It is not but it is a reminder that the euro is an incomplete experiment.

 

Auction sales, by dollars and units, do not always increase.  We see periodic declines because of uncertainty, be it war, recession or depression.  We know that sellers, when they feel this uncertainty, waxing prudent, withhold material and or impose higher reserves to protect themselves against momentary bidding collapses.  And auction houses by and large reflect this reality by not disclosing reserves [which can and do get quietly adjusted] based on market conditions and consignor cold feet.  After all, from seller commitment to the banging down of the auctioneer’s hammer, it often takes six months and not uncommonly a year.  And in that time a lot can happen.

 

Beyond all consideration for life’s uncertainties the introduction of dramatic shifts in exchange rates presents opportunities and risks not seen since the 1970s, the last time that auctions were essentially local and often not accessible to distant bidders.  Theoretically, an item should be worth the same in London, Paris and New York and the Rare Book Hub Transaction Database assumes this to be the case.  But this spring’s results suggest that local prices do not so effortlessly adjust.

 

Such shifts are as often political as they are economic.  China recently devalued the Yuan to keep their factories operating at full capacity.  They did so because they felt the need to maintain a 7% growth rate, a rate that is the envy of the developed world.   But the underlying story is that as the general population shifts from county to city more people need jobs and in a Communist country the government is expected to provide them.  Keeping people on the farm so to speak is fine for some but for many others the challenge and economic advantages of the city lead to unrest if the need is not met.  In other words, China devalued to maintain social order.

 

In Europe the euro is the outcome of a social system that also manages economic integration.  The European union is clearly more a social than economic alliance and perhaps their deepest motivation is to avoid war.  They have their history and it is a bloody one.  Through economic alliance they hope to minimize conflict.  And they are succeeding.  But they are also packaging Germany and Greece in the same currency package and it’s an untested idea being tested for the first time.

 

The United States, before they were united, was a short-lived confederation that quickly gave way to the subjugation of states rights to a unified central government.  Today’s EU is the equivalent of America’s confederation and many expect the United States of Europe to become the logical long-term outcome.

 

While the EU labors on the euro will continue to be periodically unstable, for itself and by extension, casting instability among other currencies.  One outcome will be unusually significant differences in European auction results when translated into US dollars, numbers that on their face suggest weakness this spring but that, when examined more closely, simply reflect Europe’s social, political and economic transformation from a group of counties to a group of states.

 

Finally another way to look at the data is to set aside the assumption that auction results should be uniformly expressed in dollars.  When all results are converted into euros rather than dollars the first six months of 2015 show a 2% gain rather than an 18% decline.  The world is changing and we will adjust our methodology as/when needed.

 

The following analysis compares the past eight years’ January-June auction sales expressed in both dollars and euros. 

 

January-June Sales from 2008-2015

     
               
 

In US Dollar Terms

Average FX Rate

In Euro Terms

 

 

$mm

% Growth

EUR/USD

% Growth

€mm

% Growth

 

1H 2008

$247

 

1.56

 

€ 159

   

1H 2009

$135

(45%)

1.35

(13%)

€ 100

(37%)

 

1H 2010

$169

25%

1.31

(3%)

€ 129

29%

 

1H 2011

$190

12%

1.43

9%

€ 133

3%

 

1H 2012

$307

62%

1.30

(9%)

€ 236

78%

 

1H 2013

$322

5%

1.31

1%

€ 246

4%

 

1H 2014

$345

7%

1.37

5%

€ 251

2%

 

1H 2015

$283

(18%)

1.11

(19%)

€ 256

2%

 

 

 

Rare Book Monthly

  • <b>Swann Auction Galleries: Fall 2017 Auction Schedule</b>
    <b>Swann Auction Galleries Sep 19: 19th & 20th Century Prints & Drawings</b>
    <b>Swann Auction Galleries Sep 28: Printed & Manuscript Americana</b>
    <b>Swann Auction Galleries Oct 5: African-American Fine Art</b>
    <b>Swann Auction Galleries: Fall 2017 Auction Schedule</b>
    <b>Swann Auction Galleries Oct 17: Early Printed, Medical, Scientific & Travel Books</b>
    <b>Swann Auction Galleries Oct 19:<br>Art & Storytelling: Photographs & Photobooks</b>
    <b>Swann Auction Galleries Oct 26: Rare & Important Travel Posters</b>
    <b>Swann Auction Galleries: Fall 2017 Auction Schedule</b>
    <b>Swann Auction Galleries Nov 2:<br>Old Master Through Modern Prints</b>
    <b>Swann Auction Galleries Nov 7: Autographs</b>
    <b>Swann Auction Galleries Nov 14: 19th & 20th Century Literature</b>
    <b>Swann Auction Galleries: Fall 2017 Auction Schedule</b>
    <b>Swann Auction Galleries Nov 16: Contemporary Art</b>
    <b>Swann Auction Galleries Dec 5:<br>Maps & Atlases, Natural History & Color Plate Books</b>
    <b>Swann Auction Galleries Dec 14: Illustration Art</b>
  • <b>Announcing a new Books for Sale platform hosted by Biblio</b>
    <b>List your books simultaneously on Rare Book Hub and Biblio</b>
  • <b>19th Century Shop’s Catalog 170 Great Books and Photos. Please inquire for a copy.</b>
    <b>19th Century Shop:</b> Exodus 10:10 to 16:15. Complete Biblical scroll sheet in Hebrew, a Torah scroll panel. Middle East, ca. 10th or 11th century.
    <b>19th Century Shop:</b> Copernicus Refuted. (Astronomy.). Scientific manuscript of a course of studies at Collège de la Trinité, Lyon. 1660s.
    <b>19th Century Shop:</b> Israel’s War of Independence and the Early Days of the IDF. 58 photographs presented to Israel Ber, IDF officer and later convicted spy.
    <b>19th Century Shop’s Catalog 170 Great Books and Photos. Please inquire for a copy.</b>
    <b>19th Century Shop:</b> Early Unpublished Darwin letter on the races of man. Autograph Letter Signed [to Henry Denny]. Down, Kent, June 1, [1844].
    <b>19th Century Shop:</b> Classic Image of American Slavery. Kimball, M. H. <i>Emancipated Slaves</i>. New York: George Hanks, 1863.
    <b>19th Century Shop:</b> (Underground Railroad.) Scaggs, Isaac. Important Runaway Slave Poster: $500 Reward Ran away, or decoyed from the subscriber…
  • <b>Bonhams, inviting consignments for Sep 27:</b> Newton. <i>Philosophiae naturalis principia mathematica</i>. London, 1687.
    <b>Bonhams, inviting consignments for Sep 27:</b> Josephus. <i>De antiquitate Judaica.</i> Lubeck, 1475-76.
    <b>Bonhams, inviting consignments for Sep 27:</b> Carlerius. <i>Sporta fragmentorum, Sportula fragmentorum</i>. Brussels, 1478-79.
    <b>Bonhams, inviting consignments for Sep 27:</b> Fridolin. <i>Der Schatzbehalter</i>. Nuremberg, 1491.
    <b>Bonhams, inviting consignments for Sep 27:</b> Pinder. <i>Der beschlossen gart des rosenkrantz marie</i>. Nuremberg, 1505.
    <b>Bonhams, inviting consignments for Sep 27:</b> Isidorus Hispalensis. <i>Synonyma de Homine</i>. Nuremberg, 1470-71.
    <b>Bonhams, inviting consignments for Sep 27:</b> Durer. Sammelband including <i>Underweysung der messing</i>. Nuremberg, 1525-29.

Article Search

Archived Articles

Ask Questions