By Rick Zsigmond, Owner of New Kings Road Guitar Emporium.
Precious metals may be an obvious investment class but there is a growing realisation that the best value could actually be found in rock.
It is in rock music that the guitars made famous by the likes of Jimi Hendrix, Eric Clapton and Mark Knopfler are cherished. For those players, the chance to own a guitar of a certain vintage is undeniable but the growing scarcity of truly rare instruments means that investors from outside the music world are plugging into their potential.
Guitars dating to the ‘golden period’ for Fenders and Gibsons – the mid-to-late 1950s – have proved rock solid investments for those that have the money to invest. Some of the most famous models were not made in huge volumes meaning that in some cases, only a few hundred were ever made. That provides a buffer against deflation.
Meanwhile the upside can be staggering. A specific vintage guitar sold for £20,000 in 1991 is now worth upwards of £400,000.
That point is made clear when a truly remarkable item comes up for sale. A Gibson Les Paul dating to the company’s magic year – 1959 – is set to be sold at the New Kings Road Vintage Guitar Emporium this year with a starting price of £400,000. The guitar had one owner and still has all of its original receipts that provide irrefutable proof – or provenance in collecting terms – of its entire history. The guitar, owned by a jazz player, will fetch more than most instruments wielded by more famous players.
The rock solid back story enshrines much of its value. The instrument is worth up to £200,000 more than if the same guitar was found in a cupboard without any back story. The guitar is a kingpin of vintage guitar investment.
As with any investment involving intangible cultural value, there are pitfalls when buying. Purchasers can be tempted to pay huge sums for guitars with tenuous connections to stars that have little intrinsic value beyond the fame game. Likewise there are copious numbers of fakes out there as well as over-priced classics that do not stand up to scrutiny no matter what the seller paid.
The three key points in determining the value of a guitar include the quality of the instrument, the provenance and the number of the models that were made. Those classic models from the Golden Age were made in limited numbers making them the most desirable guitars on the market.
Those on the lookout for such opportunities also need to consider the entire package rather than just being starstruck by the guitar. An original case will bolster the value of the guitar as well any documentary evidence.
Conversely any signs of modification should be factored in. Restoration work is commonplace in the vintage car mark but signs that a guitar has been repainted can wipe 60 per cent off the potential value of a vintage Gibson. A few dinks and scratches found on a well-loved guitar should be overlooked as nobody expects a 60 year old guitar to be in a pristine condition.
Other factors to consider include original colours. The limited number of ‘blonde’ guitars, for example, means that a vintage model will be worth much more than the standard ‘sunburst’ colours. The exception is the 1959 Les Paul which was never made in blonde, only in sunburst.
Most investors looking to take advantage of appreciation in the classic guitar market feel the connection to the history of the instrument. If they are not a famous musician themselves, many buyers will also play. Some collectables end up behind glass, in safes or, in the case of wine, in the basement. Vintage guitar buyers are more likely to play the instruments whether they are wealthy musicians, investment bankers or software billionaires.
Prices for classic guitars have steadily risen since the 1980s. Economic circumstances can of course cause distortion with the price of some guitars, notably Fenders, cooling in 2009 as a growing bubble in guitar prices burst. Yet the price on Gibson Les Pauls held firm which was a sign of durability and the correction helped to highlight the value inherent in the best and rarest models.
The impact of Brexit, which has hit the pound hard, has also played into the hands of international buyers looking to cherry pick the best British deals. American buyers were picking up deals within 24 hours of the vote while Japanese buyers have emerged looking for UK stock for the first time in a decade.
The feeding frenzy that takes place for the rarest guitars that go for more than half a million pounds does not mean there are not more affordable opportunities out there. Gibson is no longer making its ‘Collector’s Choice’ series of guitars under the Custom Shop marque. That locks in scarcity value for those still on the market meaning that a £2,000 guitar could easily double in value within the next five years.
All of which means those thinking about investing in a rare Gibson, Fender, Martin or Gretsch should not fret.
Rick Zsigmond, Owner of New Kings Road Guitar Emporium (http://www.newkingsroadguitars.co.uk). The Emporium is part of the family, an alliance of professional and trusted advisers which provide services to the entertainment industries www.thefamily.me.uk