His optimism was confirmed in June this year when guitars and memorabilia from the collection of the late, great Les Paul raised nearly $5 million when sold by Julien’s Auctions of Beverly Hills. A 1951 Nocaster sold for $216,000, a 1982 Les Paul went for $180,000 and a 1940s Epiphone Zephyr fetched $144,000.
Nashville-based dealer George Gruhn, who’s been collecting and dealing vintage instruments since 1963, believes the up to tenfold increases in prices seen between mid-2002 and early 2007 were not based simply on increased demand from musicians or collectors: he blames speculators. ‘Speculators have seen that prices have escalated considerably over a relatively short period of time,’ he says. ‘They anticipate that prices will continue to rise which, they believe, will permit them to buy instruments, hold them for a year or two, and then flip them for a big profit. These people are not buying for the long haul.’
Further, when they are priced out of the market a price correction is inevitable. Gruhn concludes that when, as recently, collectors complain that speculators have pushed them out of the market, ‘it effectively means no-one who intends to keep the instrument for the long haul has ever been known to pay the new price. Once this happens, in my experience, the market will collapse back within a year and a half to two years to prices that people who want to keep one are willing to pay.’
Rick Zsigmond of New Kings Road Vintage Guitars in London agrees that large segments of the vintage guitar did get ‘carried away with itself’. He spotlights what he affectionately calls ‘the three-legged stuff, guitars that have been refinished, repaired or changed’, as being the major area to have suffered in the recent correction. ‘Some of those guitars with refinished tops or repaired headstocks got way over the value of what they were worth as guitars because the vintage tag carried them up there. That kind of stuff has definitely taken a serious knock – I’ve seen £20k guitars marked down to £10k in that market.
‘But when it comes to good clean original stuff – ’59 Les Pauls, good ’50s Strats not ridiculously priced in the first place – the market has definitively picked up in the last 12 months. I don’t expect them to be appreciating at the rate it was up until the world went mad, but I would definitely say that high-end good, clean, original guitars are always going to be worth money.’
‘The good thing about a guitar,’ Zsigmond concludes, is that ‘It’s worldwide currency – you can take it to Europe, Japan or wherever. It’s not like a left-hand-drive car; it’s always going to have a currency wherever you take it.’
3. Old Fashioned Values - The Vintage Guitar Market