Are guitars a good investment? Well it is a good question when faced with the following headline…
In December a red Gibson Flying V owned by KK Downing of Judas Priest fetched £150,000 at auction!
The guitar was being auctioned by Bonhams on behalf of the Rainbow Children’s Hospice. The sale therefore raised a lot of money for a worthy charity. But let’s face it who wouldn’t like to be given a cheque for £150,000?
There has also been a lot in the news recently about David Gilmour auctioning off a number of his guitars. If you’ve missed out on the story you can get the full details by visiting the Christie’s website.
Of the guitars up for auction it is his 1969 black Fender Stratocaster which is attracting the most attention. Christie’s expect it to fetch anywhere between $100,000 – $150,000.
With all these stories you could be forgiven for thinking – are guitars a good investment?
Sadly none of us are David Gilmour or KK Downing, although if either of you are reading thanks for dropping by! It is therefore unlikely that we will have, in our possession, a guitar that we can auction off for a life-changing sum of money. However, it would appear that the guitar doesn’t have to have been played by a famous guitarist to be worth a good sum of money.
Is there any evidence to support the idea that guitars are a good investment?
Well yes there is.
Recently Vintage Guitar Magazine set up an imaginary “guitar index” of 42 vintage instruments. They wanted to see how the value of the guitars compared to the returns an investor could have obtained by investing in the Dow Jones.
What they found was quite interesting.
They found that if you had bought the guitars featured in the index in 1970 the value would have increased from $15,100 to $37,500 by 1980. By 1990 the guitars would have been worth $153,000. Further data shows that between 1963 – 1975 vintage fretted instruments increased in value by as much as 25% per year. This kind of performance out-paced the types of returns that you could expect from investing in the Dow Jones.
In essence if you had timed your purchase correctly and invested in the right guitar you would have seen your money grow handsomely.
The question is…
What makes a guitar a good investment?
From our research there are four things that will make a guitar highly collectible. The four criteria are, in no particular order:
Understandably if the guitar is rare it will command a premium. However, if it is rare and is made by one of the big names of the guitar industry (think Fender, Gibson, Gretsch or Rickenbacker) then you are onto a winner.
If it is a vintage guitar then it is highly likely that it will command a certain cache and therefore be highly attractive as an investment proposition. The difficulty with vintage is what makes a guitar vintage? Just because it is old doesn’t make it a collectible and therefore valuable guitar.
Finally if the guitar has been played by a famous guitarist, which can be verified, then the guitar will command a premium price.
Now if you combine a big brand name, with rarity, vintage and fame then you won’t need me to tell you that you have a very good investment.
However, as I stated above, if you are not David Gilmour or KK Downing then you will probably have to settle for brand, rarity and vintage.
How big is the classic guitar market?
Relatively speaking the classic guitar market is quite small. For example the value of the entire musical instrument business in the US is approximately $7 billion. It is estimated that the classic instrument market represents just $100 – $200 million. Bear in mind that this figure represents all classic instrument sales not just guitars.
The market is therefore quite small but nonetheless there are some guitars out there that are changing hands for quite substantial sums of money.
If you check out California based Norman’s Rare Guitars you can find some vintage guitars for some pretty amazing prices. For example how about a 1941 Gibson SJ-200 with horseshoe inlay. This very rare guitar will set you back a cool $125,000. If that is a little bit on the pricey side you can pick yourself up a 1930 Gibson L-5 Special for $30,000 or a 1942 D’Angelico New Yorker for $28,500!
So what are the options?
If you are not a famous guitar player and so can’t leverage your fame to sell your guitars what are the best ways to invest in guitars?
Well as you can tell from the prices quoted above it is something you have to go into with your eyes open. As with anything that is collectible you need to be armed with the correct information. It is well worth checking out websites that sell rare and classic guitars. By checking out what guitars are commanding the top prices you can gain a better understanding of what makes a guitar an investable proposition. Below is a selection of some of the best sites.
A book that is well worth checking out is Gruhn’s Guide to Vintage Guitars. Written by Nashville based George Gruhn and Walter Carter the book is the most extensive and detailed list of specifications ever published. If you need to identify, date and establish the authenticity of a guitar then this is the book you must have.
But Classic Guitars are very expensive!
That is true and, I don’t know about you, but I certainly can’t afford $30,000 to buy a classic guitar in the hope that it will gain value.
So what are the options?
Well, this gets very difficult because, if you can tell which guitars being produced today will be the classic guitars of tomorrow, you have a gift that is verging on the clairvoyant!!! But applying the criteria described above you could make a judgement on which guitars produced today might prove to be collectible in years to come.
- Go for the big names such as Fender, Gibson, Gretsch and Rickenbacker.
- Pick the limited edition custom models that will have an in built rarity value.
But most importantly if you take a punt on a guitar there is one advantage it will have over any other investment. You can enjoy playing your investment as you hopefully watch it appreciate in value! That for me makes the guitar a very worthwhile investment.
Over to you in your opinion are guitars a good investment? As always we would love to hear your views.