Maybe we're not considering all the right types of art.
A certain man has lived in the bush for thirty years, eating what he can find and sleeping in a tent. One day by chance, he meets someone, it's love at first sight, and they move into a nice house together. Of course the lifestyle change is jarring at first for someone who'd been living in the bush that long, but he wants it to work out all right, and it does. One day, in an emotionally-charged gesture, he hammers one of his tent pegs into the livingroom wall. They both smile. He is home here.
The tent peg is not pretty, nor was it made with particular care or dedication - it's just a factory tent peg. In the bush, it was important because it was useful. Stuck in this livingroom wall belonging to these two people, it's no longer useful, but it's definitely art. It's art because it has meaning, not because of how nice it looks.
A knife being displayed has a number of possible meanings, and a strangely-decorated-possibly-useless knife may add on a few more potential meanings. Not all of the meanings are ones I like, for example "Look at me, I have good taste, because diamonds! ON A KNIFE!!!" - but there are lots of meanings anyway.