Nov. 16 (Bloomberg) -- London jeweler and art collector Laurence Graff spent more than $40 million this week on Andy Warhol and Jean-Michel Basquiat paintings in New York, plus red and blue diamonds in Geneva, on a bet they'd appreciate in value.

He paid $8.4 million for a Warhol soup-can picture, and $15.7 million for Warhol's double image of Elvis Presley. He also bought images by the pop artist of Jackie Kennedy and Truman Capote, along with Basquiat's portrait of Sugar Ray Robinson. In Geneva, he added diamonds, including the red jewel last night at Christie's International for a record $2.7 million.

Christie's and Sotheby's largest-ever evening auctions of contemporary art, which took in $630 million, came after an 11- year quadrupling of the top works' prices. Yet businessman Graff secured most of his art near or below the low estimates, indicating auctioneers and consignors may have to scale down their highest expectations at future sales.

``Prices came down relative to the high estimates,'' said Graff, in a telephone interview from New York yesterday. ``What I bought I mostly managed to buy at the low estimates. I think they'll go higher,'' said Graf, who has a $3.1 billion fortune according to the U.K.'s Sunday Times.

Half an hour after buying one picture, which he declined to name, a dealer offered to purchase it for more than he'd paid, he said.

Warhol and Basquiat were on a list of overvalued artists compiled by New York dealer Richard Feigen, whose clients include Paris's Louvre museum. The list was published earlier this week by Bloomberg.

Hilton, Beckham

Graff, who shows Paris Hilton and Victoria Beckham wearing his jewelry on his Web site, helped to finance his spending spree by selling more than $10 million of art at this week's auctions. He said he saw no ``crack'' in the market, and rare works should continue to appreciate.

``What else do you do with your money?'' Graff said. ``If you buy shares, you have no control over the market. If you buy an asset, you've got it in your hands. You can sell it, or hold onto it.''

Graff, a small, lean man of 69 who often wears pinstriped suits, opened his first retail outlet in the 1960s. With workshops in five cities, he has stores -- and a travel schedule -- from Las Vegas to Moscow and Dubai, and placed second on the Sunday Times Rich List of self-made Britons. A Tokyo store opened about two months ago and will soon have an opening party, he said.

Active Buyer

As a collector, Graff ranks among the most active on lists compiled by art magazines. He said he couldn't remember how many artworks he owns. He has joked about giving up jewelry-making and becoming an art dealer, ``because I love it so much,'' he said.

Asked if he planned to resell the Warhols he'd bought this week, he said, ``I have no plans to sell them on at the moment, but I have always chopped and changed around. Since the late 1960s, I've been buying and selling art.''

Graff paid $12.5 million for a red Warhol ``Liz'' in 2005. He has said it's a better work than Hugh Grant's former ``Liz,'' which missed its estimate of $25 million to $35 million and took $23.6 million including commissions at Christie's.

In Geneva, Graff said he paid $1.2 million per carat for a blue diamond at Sotheby's, the highest price ever for that color. His red diamond purchase also broke a record.

Diamond prices are more scientific than art values, Graff said. ``Diamonds are more calculated to price per carat, and there's a rarity factor with colored diamonds. Paintings are more speculative, and they fluctuate more.''

To contact the reporter on this story: Linda Sandler in London at lsandler@bloomberg.net.

Last Updated: November 16, 2007 04:58 EST