Today’s art marketplace can seem perplexing. It’s not because its biggest collectors are spending so much but because of how they are choosing to spend it. While there’s nothing incomprehensible about a collector paying a king’s ransom for a masterpiece, the confusion comes from how much is being offered for works that many art lovers would claim have not proved their artistic – and market – worth, especially when compared to the Old Masters.

Proof of just how skewed the relative values of works of art have become in favour of the postwar and contemporary emerged at Christie’s in 2005 when Rothko’s 1954 “Homage to Matisse” sold for $22.4m – far more than anything by the masterly Matisse himself. Then at Sotheby’s New York in May, one of the 50 or so works painted by Francis Bacon that were inspired by Velázquez’s extraordinary portrait of Pope Innocent X – and by no means the most remarkable of the bunch – sold for $52.7m, almost double the artist’s recently set record auction price. Yet compare that to the comparatively modest £8.4m paid for “Saint Rufina”, a painting by Velázquez at Sotheby’s London on July 4. Consider, too, that a state portrait of Lorenzo de’ Medici by Raphael, no less, sold last week at Christie’s for £18m, more than £3m less than a self-portrait by Bacon went for at Sotheby’s last month.

Most noteworthy, however, is that both Velázquez and Raphael are the rarest of market rarities (perhaps that is even part of the problem in a market that prefers its artists to be prolific and heavily traded). They are also two of the greatest and most celebrated painters and the genius of both men was recently a focus of exhibitions at London’s National Gallery. It could be that many new collectors do not realise that such Old Masters are still, if rarely, available to buy on the art market. Or they might be wary of entering a field so dependent on connoisseurship and potentially fraught with issues of attribution and condition. Certainly the story of how this Raphael originally came to be sold for a song in New York in 1968 as an anonymous 16th-century portrait of François I could be enough to alarm anyone.

Painted on canvas and almost a metre high, the painting presents Lorenzo de’ Medici, the somewhat reluctant ruler of Florence from 1513 to 1518 and also named Duke of Urbino by his ambitious uncle, Pope Leo X. It was Leo who arranged for his nephew to marry a cousin of the French king François I, a crucial ally against the Holy Roman Empire and rival Italian powers. Leo commissioned the artist, who was widely regarded as the finest living painter, to produce an appropriately impressive portrait to send to his betrothed. Finished early in 1518, it is as much a bravura display of Medici splendour and dynastic intent as a painted likeness.

Certainly it is the gorgeous stuff of his court costume that is most beguiling – the strawberry and gold chevron-patterned silk of his voluminous sleeves, the rich and subtly textured gold damask and the delicately painted soft grey fur.

The portrait was recorded as belonging to Cosimo I de’ Medici in 1553 but, during the 19th century, came into the possession of two prominent British collectors, Lord Northwick and Hollingworth Magniac.

By the mid-20th century, perhaps due to its dirty surface and poor condition, which included some overpainting, it had been demoted to the status of a mere copy and, by 1968, even the identity of the subject was mistaken. Bought for $325 by Ira Spanierman, a dealer in American paintings, it was finally cleaned and conserved. In 1971, the distinguished scholar Konrad Oberhuber, declared it was the lost original. Oberhuber also believed, crucially, that it was painted entirely by the master’s hand. After all, it was an important commission and Raphael would have been eager to curry the favour and patronage of François I.

No living scholar has doubted this reattribution in print, not least since X-ray photography has revealed significant pentimenti – changes that indicate that it is an original rather than a copy.

The X-rays also showed losses of paint, the most serious to the right part of the face (on the viewer’s left) and to the shirt.

So why did it fetch just £18.5m at auction? It seems a modest sum in comparison to the $50m that the Getty Museum was prepared to pay for Raphael’s “Madonna of the Pinks” before it sold to the National Gallery for a gross figure of £35m (£22m with tax breaks). In real terms, it can hardly have cost much more than the £5.3m paid back in 1995 for the artist’s black chalk study for the head of an apostle. Certainly, Christie’s was playing it safe when it came to its estimate of £10m-£15m. As the triangle in the catalogue denoted, it had a financial interest in the picture.

There is no doubt that if it, like the Madonna, had been discovered in an old country-house collection, the market would have found it far more appealing. Before the sale, there were also mutterings about studio participation in late Raphael and about the disparity in the quality of the painting of the face and of the costume. It could be argued, however, that Raphael’s portraits of close friends, such as of his intimate Baldassare Castiglione, are far superior to his commissioned court portraits where the costumes invariably steal the show.

But, as one crestfallen underbidder, the London dealer Simon Dickinson, said after the sale: “I thought it was absolutely wonderful”. And there is perhaps an irony in the thought that Spanierman’s 1,000-fold return on the painting is greater than today’s speculators in contemporary art could possibly hope for.