What’s going on in the art world?

Earlier this month Francis Bacon’s “Three Studies of Lucian Freud” set the record for most expensive artwork ever sold at auction, going for $142.2 million at Christie’s. The same auction saw a record set for a living artist, with Jeff Koons' “Balloon Dog (Orange)” sculpture selling for $58.4 million.

Meanwhile, Sotheby’s logged a record for an Andy Warhol piece, with one of his gruesome car-crash silkscreens selling for $105.4 million at auction in New York.

Is there a bubble in the art market?

“It’s more than a bubble,” artist, patron, collector and author of the novel "Ponzi & Picasso" Rochelle Ohrstrom tells The Daily Ticker in the accompanying video. “This is an art market that’s run by Russian oligarchs trying to get their money out of Russia before Putin takes it. This is drug cartels looking to launder money, [and] hedge fund owners looking for bragging rights to buy trophy pieces.”

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As for being a bubble, “Who knows?” quips Ohrstrom, but she says that, when interest rates go up, the art market will start to come down.

Ohstrom believes low interest rates are helping fuel some of these art sales, because there’s so much money available to be loaned. She also speaks to other financial benefits of art investing for the super wealthy, including selling a piece of art and rolling the money into another art purchase, allowing the seller to avoid paying capital gains tax on the sale.

This process, however, is a “complicated/costly procedure that only makes sense in certain very specific situations,” David Selig, a New York accountant and tax practitioner, writes to The Daily Ticker. Selig also points out that unless you’re a real art dealer, long-term capital gains on art is 28%.

Ohrstrom also says there are many ways auction houses help people enhance their financial life when it comes to selling art, including guarantees (in which the seller receives an undisclosed amount of money for the art, regardless of how the auction turns out).

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Hedge fund billionaire Steven A. Cohen recently drew attention for selling the pieces from his valuable private art collection – raising about $88 million at a Sotheby’s auction. Dealbook reports its not clear how much Cohen made, though, because Sotheby’s gave him a guarantee. Meanwhile, Dealbook’s sources estimate Cohen’s sale was a reflection of his trading instincts, not his recent legal woes.

Along those lines, Ohrstrom says the next big art sale is in February in London, and she expects a frenzy of people trying to sell their work and get high prices, in an art market that “seems frothy and toppling.”