On April 3, 2009, a 1930 Martin OM-45 De Luxe acoustic guitar once owned by ‘The King of The Cowboys’ Roy Rogers sold for $554,500 at Christie’s in New York. It’s one of an increasing number of guitars attracting huge sums as collectors and investors acknowledge the rarity and ultimate desirability of popular music’s number one instrument.
Marginally closer to reality, in March 2008 Anchorage Capital Partners announced The Guitar Fund, a $100m fund investing in the rare and vintage guitar market, citing an average annual return of over 31 per cent according the ‘42 Guitars’ tracking index, created by Vintage Guitar magazine. The fund was reported to have a number of initial institutional investors for shares to the value of between $5m and $10m.
Back down in the real world, guitar investment for individuals and enthusiasts is a more personal endeavour; perhaps a guitar or six to help pay for your offspring’s university funds or, with pensions subject to so much uncertainty, your own nest egg. So if you fancy taking the plunge, which guitars will represent the best investments over the next quarter century?
Older the better
The first stop for casual collectors and investors is the vintage market, interesting because it’s a relatively new phenomenon. “Going back to the 1970s and 1980s ‘vintage’ guitars were just second-hand guitars,” explains leading UK guitar seller and broker Richard Henry. “Back then you might see a 1959 [Gibson ES-] 355 priced just as a used guitar. Before long, though, it was clear that people were starting to get lots of money for these old guitars.”
For vintage guitars the highest grade investment instruments are certain key models that come from the golden years in a company’s history. The Martin Roy Rogers’ guitar is the perfect example. First, it was made by the most revered company in flat-top acoustic guitar history. Second, it’s old and has extensively documented, rock solid provenance. Third, as number 1 of only 14 such guitars that were ever made – and only in that year – it’s rare, rare, rare. Finally, it’s in exceptional condition for a guitar nearing its ninth decade. “When I first specialised in vintage guitars, I found it easier to sell a clean guitar than one with overspray on the neck, changed tuners, changed pickups or whatever,” says Richard Henry. “It might be an equally nice guitar, but it had no appeal to collectors and investors. By contrast, player’s-grade guitars are always going to be that; general issues that might make it fine for a player, but not for an investor.”
Perhaps the most desirable solid-body electric guitar of all time is the sunburst finish 1958-60 Gibson Les Paul Standard, commonly referred to as the ’Burst. In his recent book Million Dollar Les Paul, UK guitar historian Tony Bacon charts the rise of this near-mythical beast, arguing that the $1m ’Burst is all but inevitable, current economic events notwithstanding. The mid-2009 reality is more sober. At the time of writing Richard Henry has a clean 1958 example up for $265k. He sold one in February 2008 for $400k. Why the significant drop?
“It’s just supply and demand. If there are five guys calling different dealers for mint, custom- coloured Strats the price goes up,” he says. “If there’s nobody, the price goes down! Six years ago we started to see a lot of interest in vintage guitars again and because of the demand some guitars just doubled in price. The market hit the ceiling the same way it did with the housing market and now prices are correcting themselves.”
Closer to reality
Behind the investment-grade pieces are a plethora of much more attainable vintage guitars. Lifelong guitar enthusiast Ralph Barenthien has built an impressive collection of Gibson archtop guitars of the 1920s-1950s. “They are still outside the bubble,” he explains of their values, “and I don’t care much about so-called ‘investment-grade’ instruments. That market has gone crazy – the peak was probably 2007 and now it’s coming back down to a normal level. Let’s face it,” he continues, “we all know that a 1959 Les Paul is not really worth $400,000 – it’s just common sense! The prices are up there because people who don’t actually play guitar have pushed them upwards.”
And his view on guitars in pure investment terms? “A guitar is a guitar is a guitar and it belongs to the musicians. I buy every instrument for myself. Selling an instrument is sometimes very painful for me. I can appreciate a bunch of good instruments, even after the market has collapsed. If a guitar turns out to be a good investment, that’s fine, but it has to be a good guitar in the first place. I’d rather buy a perfect instrument with virtually no return potential than an ‘investment grade’ guitar that doesn’t sound right.”
So is there money to be made in non-investment grade vintage guitars? “Yes, but you really have to know what you’re doing. I don’t think ‘outsiders’ with purely monetary motives will ever be able to invest successfully in a complex market like this without professional advice.”
One significant worry for non-experts – just as with art, timepieces and antiques – is the proliferation of fakes. Moving in the shadows of some nonetheless extremely prominent lights, a handful of highly skilled artisans have perfected craftsmanship and ageing processes to the point where even reasonably well-informed players and pundits are uncertain. Gibson’s records indicate 1,712 Les Paul Standards shipped between 1958 and 1960 of which around 1,500 were ’Bursts. The oft-repeated gag is that there are now only 2,000 left – clearly, if you can sell a fake 1959 ’Burst for a quick’n’dirty $100,000, you can take your time getting it exactly right: that might be the best investment of all.
The lure of the new
One way to avoid the vintage market melée and spiralling prices is in new investment and collectors’ instruments. The big names loom large: Fender, Gibson and Martin all build exceptional limited-edition ‘Custom Shop’ instruments aimed squarely at the collector’s market. Fender has enjoyed great success with its Tribute series instruments; exact, dent-for-dent, scratch-for-scratch replicas of famous instruments such as Eric Clapton’s Blackie Stratocaster. New prices have ranged from around £8-15k+. Likewise Gibson has produced numerous limited-run instruments signed and authenticated by artists including Jimmy Page of Led Zeppelin among others. Richard Henry advises caution: “In my opinion, a new guitar can only ever be a long-term investment, and by that I mean 20 years or more. Look at The [Eric] Clapton ES-335s [Gibson, 2005]. They were £10k, but they’re selling now for £5.5k. Likewise 1970s Fenders – in the mid-to-late 1970s, you could buy a new Stratocaster or Telecaster for around £350 or thereabouts. Those guitars today are going for £1,200 to £2k. Is that a good investment?”
Outside of the Big Three, Paul Reed Smith Guitars of Stevensville, Maryland, is the leading brand for high quality, American-made electric guitars. Alongside its regular line, PRS also produces limited-run and ‘Private Stock’ instruments that sit squarely in the collector/investor market. Earlier this year, PRS announced a limited run of 28 guitars featuring the best of the company’s skill and materials for a cool £25,000 each. They were instantly collectable, and sold quickly. On a similar bent are the select few at the top of the boutique guitar market; names such as Collings, Tyler, Tom Anderson, Gene Baker and many others who all have their enthusiastic players and collectors, though their appeal is far from universal, moreover the disparity between the top-tier, vintage investment-grade instruments and everything else has widened significantly.
To buy or not to buy?
So, predictions for a reasonable investment going forwards? “For me it’s the iconic pieces: any 100 per cent original, exceptionally clean Les Paul, 335, Strat or Tele, 50s Blackguard Teles, early 1960s custom-colour Strats, 1950s and early 1960s 335s and 1958-60 Les Paul Standards,” says Richard Henry. “They’re the ones that will always be strong because they’re the guitars that every other guitar is measured against.”
And if you don’t have $25k+? “New-ish second- hand American guitars hold their money,” he offers. “If you buy a good American Telecaster, used, you’ll get your money back – you might even make £50 short term if you buy right. In the long term that’s a better investment than a new guitar, but you won’t get rich on it.”
“In my area of interest,” adds Ralph Barenthien, “I would say a 1950s Gibson ES-225, 1960s Gibson SG Special and 1940s and 50s Gibson flat tops, but the weak pound is the biggest problem for people like me who source most of their guitars in the USA.” The Roy Rogers guitar discussed at the top of this piece would have set you back $225 back in 1930, somewhere between 10 and 20 per cent of annual American average family income at that time and a heady sum just as the Great Depression was biting hard. Clearly, beautiful guitars have never been cheap. They have, however, always been fun. Love or money – can you afford to confuse the two?
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