BOTH BRAHMINS and dilettantes flock to art showcases, such as Art Basel. Serious collectors generally avoid art auctions in favor of galleries, lamenting that speculators are driving up auction prices to ludicrous heights.

Serious collectors normally eschew the free-for-all of the auction houses in favor of the gallery market, where relationships and reputations matter more than a swollen wallet. Indeed, Tirschwell had not bid at auction for nearly two years, but her passion for the French Fauvist lured her to Christie’s sale of Impressionist and modern art. She promised herself that she would pay no more than $50,000 for the painting, which the auction house estimated would sell for $18,000 to $25,000.

Those who have coveted a collectible caught in the throes of an overheated market can picture what transpired next. "Do I hear $20,000?" barked auctioneer Richard Brierley. A telephone bidder quickly jumped in, setting off a sparring match with Tirschwell that soon drove the price up to $110,000. Her jaw set, Tirschwell bid $125,000; her adversary held her tongue and Maternité was hers. The 30-some attendees broke into applause; Brierley clasped his hands and hopped about gleefully. Tirschwell, flushed and "a little bit in shock," grabbed her coat and papers and broke for the door, spurring Brierley to quip: "May I see your paddle before you leave the room?"

The Valtat commanded the highest price that day, and Christie’s brought in $2.3 million in all, a new record for its midseason sale. Prices in the art markets have been rising for years; the Christie’s auction was merely the latest point on an upwardly sloping curve that shows no signs of plateauing. A few weeks earlier, Pace/MacGill gallery’s Peter MacGill, representing a private buyer, set a new high price for photography when he bought Edward Steichen’s The Pond-Moonlight for $2.9 million.

Unfortunately, serious collectors like Tirschwell often end up paying the price–literally and figuratively–for the market’s exuberance. But they do have some advantages. All but the most passionate (or naïve) collectors typically eschew auctions, insulating themselves from the impoverishing bidding wars. They rely on carefully cultivated relationships with specialists–art advisors and the established gallery owners–who act as their charges d’affaires in the art world, helping them build collections, alerting them when coveted pieces become available and brokering private sales. These authorities are increasingly in demand, as new collectors look to gain the insights and relationships that will allow them to build important collections of their own.

Art Nouveau Riche
Gallery owners say the collecting herd separates itself into dilettantes and Brahmins when the former ask questions like, "Will this appreciate?" and the latter inquire about an artist’s body of criticism and interest from art institutions. Iwan Wirth, co-owner of galleries in Zurich, London and New York, says that he will not work with people who look solely to an artwork’s financial potential. He, like many serious gallery owners, prefers to hold the best works for museums, longtime serious collectors with whom he has formed relationships and art advisors who can assure him that their buyers are not speculators. He recently rebuffed some Chinese collectors who were flush with cash but clearly sought to purchase artwork for speculative purposes. "It’s not a democratic process," he says. "I want the people who buy with their eyes, not their ears."

TOP VIEW: Prices in the art market remain on their upward trajectory, driven in no small part by speculators who often irritate serious collectors by competing for important works. But seasoned collectors can circumvent these investors by eschewing auctions, building long-term relationships with respected galleries and advisors, and remaining alert to undiscovered and overlooked artists.

Those willing to pay large sums indiscriminately quickly earn a reputation as speculators; in close-knit art circles, this usually condemns the buyer to haunt the auction market. The most elite gallery owners realize it will hurt their own reputation, as well as their artists’, if they sell to the wrong buyers. "The speculative buyers are the hedge fund types who are playing the market like a stock play, who focus on certain hot artists and buy it all," says Wendy Cromwell of Cromwell Art, an advisory firm in New York. "And at a certain point, they’re all going to be dumping it–and that’s going to be interesting."

Those driven solely by the prospect of outsized speculative gains run the risk of acquiring inferior pieces that will not hold their value. "It’s not born of a curatorial focus or a curatorial eye or any particular intelligence around the thing that’s being bought," says Thea Westreich, who runs an art advisory service in New York. Iconic contemporary art in particular is subject to fluctuations in critical opinion, and its value can erode if collectors fear a buyer has overpaid. One bellwether for this market is the value of work by Damien Hirst. Experts who study the economics of the market believe prices today are more volatile than normal in part because hedge fund manager Steven Cohen substantially overpaid–reportedly forking over between $8 million and $12 million–for Hirst’s shark-in-a-tank piece, The Physical Impossibility of Death in the Mind of Someone Living, 1991, in 2005. Hirst is reportedly working on a new shark-in-a-tank piece.