How to hack the art market

A few days ago I decided to sell some old coins I had found deep down in a drawer. It turned out the old collectibles were worth about $5 - not that great. But the expert in the coin store told me he would sell these coins to a guy who bought all of those particular coins. My theory is that this guy will try to buy all of these almost worthless coins, and then melt down all of them - all of them except for one coin. This last coin will now be very rare and thus very valuable because of the supply and demand effect. 

But what about the art market - like paintings and sculptures. Why are some paintings very valuable while other paintings that might look similar are almost worthless. We can can't apply the supply and demand effect here because almost all paintings differ from all other paintings, so we can't generally buy all paintings from one artist and destroy all of them except for one. It might work if the painter is a famous artist - but what if we are stuck with a painting by an unknown artist?

Why are these stools by Ai Weiwei worth at least $500,000? It's not because of a potential future increase in the price of the art - because in the long run your investment in art may only do about as well as your holdings in bonds. And art comes with greater risk.

Grapes by Ai Weiwei. Source: AGO

According to a few articles I've found, this is how you can hack the art market and increase the value of your art collection:
  • Scamming and faking. There's a veteran art dealer who believes there are people who keep the Andy Warhol market hot by manipulating his auctions. There's also people who pay a lot for unknown artists, but these artists will now become famous because someone has bought their paintings, so more people will jump on the bandwagon
  • Previous owners. You tend to pay a premium for a piece once owned by someone famous
  • Famous. Something that has been shown in a museum is worth extra
  • Prestige. One art dealer is famous for saying, "If I can't sell something, I just double the price." Some people prefer to pay more than makes sense because they want to show the world that they can afford it
  • A collection. People want a collection of art by one artist. The demand for old artists with fewer paintings has cooled down, but the demand for artists with many paintings and sculptures, like Andy Warhol and Pablo Picasso, has increased 
  • Improve the work of art. You can add value to any work of art, thus increasing its perceived significance (and price) in the eyes of a collector, by adding:
    • Signature
    • Title
    • Date
    • Number
    • Explanation
    • Documentation
    • Ingredients - so future art collectors can conserve it
  • Other aspects.
    • Paintings of beautiful young women and children are more expensive than ugly old men. But widows in black or sick children are very hard to sell. For example, an orange Marilyn Monroe by Andy Warhol is worth $15 million, but Richard Nixon sells for just $700,000
    • The places in paintings are also important - Venice is more expensive than France
    • Calm weather in paintings is more expensive than stormy weather
    • Paintings with death in them is generally less expensive than paintings with life in them
    • Paintings of eagles are more expensive than sparrows - and this rule can be applied to other animals as well
    • In general, paintings with bright, bold or pale colors are far more expensive than dark works
    • A bigger painting is generally worth more than a small one

Source: Newsweek, ArtBusiness, The Art Newspaper