Recap: The modern art of finance, Yazzy's at www.williamverdult.com

According to the Economist.com, AUCTIONS are getting riskier. For auctioneers, that is. The guaranteed prices they offer to sellers of particularly desirable paintings are reaching dizzying heights. At four big New York sales in the coming fortnight, Sotheby's and Christie's have guaranteed to pay their sellers a sum unofficially calculated—by me—at $645m, or £310m.

Guarantees are a profitable tactic in a rising market. If the hammer price exceeds the guarantee, the difference is shared between the auctioneer and the seller. The auction house gets a top slice of the sale proceeds as well as a commission.

If a painting fails to sell, on the other hand, a guarantee can cost the auction house dearly. They are a gamble. At Christie's, the gamble is with François Pinault's money. At Sotheby's, it is the shareholders'.

Since guarantees were first offered in the late 1980s the volume and the sums involved have been rising fast—as have the prices for top art at auction.

The sums involved in next week's impressionist and modern sales are breathtaking. No fewer than 57 of the 167 lots on sale have guarantees. The exact figures are a little secret between the seller and the auctioneer, but a rough and ready method of evaluating the guarantees is to make them equivalent to the lower estimated prices. For instance, the Christie's estimate for a moody portrait of Dora Maar by Picasso is $6.5m to $8.5m, which means you can guess a guarantee of $6.5m.

It may be no coincidence that the highest estimate in the sales—$40m to $60m at Sotheby's—is for a Gauguin of two figures in a vivid landscape painted in Tahiti, titled “Te Poipoi”. It is owned by the family of Joan Whitney Payson. Since they are confident enough of getting what they think it is worth, they do not bother with a guarantee.

One explanation for rising numbers of guarantees could be that the sellers do not share the appearance of sublime optimism given off by the auction houses. But signals are becoming slightly more mixed. Last week's print sale at Christie's in New York was a promising bellwether, with 88% of the lots sold, for $16.36m, including the buyer's premium. But there were indications of a softer market at Sotheby's contemporary art sale in London on 12 October.

Works by Damien Hirst, Jean-Michel Basquiat and Gerhard Richter were unsold, and prices for Andy Warhol were usually at the low end of the estimate.

They sure are.

Christie's sale of impressionist and modern art takes place in New York City on November 6th, Sotheby's