IT MAY be modern art going under the hammer at one of Christie’s auction halls in London, but most of the prospective purchasers look downright antique: tweed jackets and threadbare twinsets abound. No matter: when it comes to the big pieces of the day, the serious cash comes in via the internet or phones manned by sleek women with bright lipstick and thick-rimmed glasses. A painting that once belonged to Noël Coward causes a bidding war between telephone buyers. It was expected to go for no more than £20,000 ($30,000), but ends up selling for £250,000. Helpful displays throughout the room convert the sum into roubles and Hong Kong dollars. “I just come to watch the spectacle,” says a middle-aged man. “Prices are mad!”

The global art market is booming. Last year sales reached a record €51 billion ($68 billion), nearly double the level of 2009 and slightly above the previous peak of €48 billion in 2007, according to the European Fine Art Foundation. Last month an anonymous buyer paid $300m for Paul Gauguin’s “When will you marry?” (pictured)—the highest price ever paid for a work of art. A few days later another record was broken when an American paid £30m for a painting by Gerhard Richter—a record for a living European artist. On average, prices for contemporary and post-war art have risen by 19% over the past year.

The sums changing hands are so colourful that they have inspired a whole new profession: consultants who pick out paintings for their clients based not on aesthetics but on potential returns. Philip Hoffman, who manages funds that invest in art on behalf of rich families, notes a steady shift from buying art for pleasure to buying for investment. According to Deloitte, a (conventional) consultancy, rising prices in recent years have attracted lots of speculators: nearly three-quarters of art purchases are made at least partly as an investment, up from half as recently as 2012.

Institutional investors first entered the art market in the 1970s as a hedge against inflation: the pension fund of British Rail, for instance, put £40m, or about 3% of its holdings, into oil and canvas. (Although returns were not bad, it sold its last piece in 2003.) Art is also billed as a useful form of diversification, although like many other supposedly “uncorrelated” assets, it did not live up to that billing during the financial crisis. Another selling point is that it is tangible—a popular attribute since the crisis, when lots of abstract and incomprehensible financial instruments proved huge liabilities.

Unlike many other real assets, such as farmland or property, art is also movable, which is handy for buyers who do not plan to tell the taxman about it. It can be a relatively discreet way of investing, too: Christie’s arranged $916m of private purchases in 2014, compared with just $266m in 2009.

Even so, the risks of investing in art are high. Prices are volatile and the market is idiosyncratic—no two pieces are interchangeable. “Especially at the top it’s based on the passions and whims of a small group of collectors,” says Orlando Rock from Christie’s. The most popular genres and the most expensive pieces skew art’s overall performance as an asset.

Last year 0.5% of transactions accounted for nearly half the value of all fine art sold at auction.

According to Arts Economics, a research firm, the value of works of art that cost more than €200,000 is growing five times faster than the cheaper stuff. And although contemporary art has had a great year, prices for Old Masters are stagnant and Chinese decorative art is losing value.

Worse, transaction costs, sometimes as high as 4%, make art an especially expensive asset to trade. Those who buy for aesthetic reasons tend to get better returns than those who buy purely for financial gain, says Philip Hook of Sotheby’s, another auction house.

“People buy art when they’re confident about their future wealth,” says Clare McAndrew, an art economist. She sees the current boom as part of a wider resurgence in optimism since the crisis.

When gloom next sets in, unlucky investors will at least have something pretty to look at.