Extra! : "Rare guitars, $50,000 per string"  

Posted 1/28/2006


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Some vintage guitars now command astronomical prices as non-playing investors jam the market. But while prices for the rarest models are still rising, new buyers who head into this arena may get burned.

By Jim Washburn

Just how much can a guitar possibly be worth?

The question came up as several top vintage-guitar dealers sat at a picnic table backstage at a Rolling Stones concert in Arizona on a December day in 1981. They were guests of Keith Richards' guitar tech, Alan Rogan, who, along with keeping Richards' guitars in tune, was charged with obtaining more rare ones for his collection. As with other guitar-driven bands, a Stones tour was like a huge vacuum cleaner sucking up America's rare instruments, and these dealers were the bristles.

Over the previous decade, dealing in old guitars had gone from being a girlfriend-repelling hobby to a lucrative business that put one backstage with rock royalty. Yet, as the band warmed up some yards away, the dealers' conversation suggested the bloom had gone from the rosewood. In 1981, the flagship of rare electric guitars, the 1958-1960 sunburst Les Paul Standard (original list price, $265), was changing hands for the ludicrously high price of $10,000. Some dealers felt it had reached its zenith.


"A couple of the guys at the table started arguing over which would be a better investment: putting a Les Paul in a vault for 10 years, or putting the $10,000 in a T-bill account," recalls Steve Soest, one of the dealers present. "That knocked a bit of the magic out of the day."

Those arguing against the guitar's longevity would have done well to heed a song in the Stones' set that day: "Time Is On My Side." Within 10 years, sunburst Les Pauls were selling for $50,000 . . . then $60,000, and then $80,000. Now they are so coveted that plainer ones go for upwards of $150,000, while those with a pedigree or particularly dramatic flamed-maple tops have pushed past $300,000. The nine-pound guitars are worth their weight in gold, five times over.

The spike in the value of Les Pauls, as with other iconic instruments such as pre-1966 Fender Stratocasters and pre-war Martin acoustics, is a consequence of non-musical investors piling into the market. Even the decidedly non-rockin' Forbes magazine trumpeted the trend in a 2005 article titled "While My Guitar Gently Reaps."

"The reason is easy enough to see," says Richard Johnston, co-owner with Frank Ford of Gryphon Stringed Instruments in Palo Alto, Calif. "Anyone who's followed the prices of these guitars would have to be pretty stupid not to realize that there's hardly anything else, even California real estate, that's gone up at such a horrendous rate."

Meanwhile, Southern California dealer Soest muses, "I used to get musicians asking me to help find a guitar with a sound they wanted. Now I get calls are from people who don't play and never intend to, saying, 'I've got $50,000 to invest. What should I buy and can you help me find it?' I don't know anymore if I'm a guitar dealer or a stockbroker."

From inexpensive workhouse to rock icon
Such times would have been hard to foresee when Leo Fender introduced his solid-body electric Broadcaster guitar (soon renamed the Telecaster) in 1950, intending it as a durable tool that working musicians could afford. When Gibson followed suit two years later with its solid-body Les Paul model, the company was so dubious of its prospects that they considered leaving the Gibson name off the instrument.

The Les Paul was only a moderate success, and by the time Eric Clapton started playing one in 1966, it had been out of production for six years. Other players adopted the Les Paul -- including Jeff Beck, Jimmy Page, Peter Green, Mick Taylor, Mike Bloomfield and Duane Allman -- and suddenly everyone wanted one.

Fender nearly discontinued its now-legendary Stratocaster in the late 1960s, until Jimi Hendrix came along and created a new musical vocabulary on one. The Strat remained in production and Gibson reintroduced the Les Paul in 1968, but the demand for vintage guitars only increased through the 1970s.

"That's because the new guitars were such crap," says Laguna Beach, Calif., musician and dealer Dan Yablonka. "The guitar companies were bought up by corporations, and they became like the car companies in the '70s, where instead of Mustangs and Coupe de Villes, they were foisting Chevettes and Pintos on us."

CBS bought Fender in 1965, and by 1970 "pre-CBS" had become a catch-phrase for a quality Fender. In that corporate era, product quality also suffered at Gibson, Gretsch, C.F. Martin & Co and other U.S. brands.

It wasn't until the 1980s that manufacturers got back on point, for the same reason that U.S. automakers did: The Japanese were cooking their goose, making copies of classic American guitars that were truer to the classic designs than the current domestic guitars were.

New guitar-minded owners at Fender and Gibson restored the brands' reputations. But by then, the "older is better" maxim was so firmly established that the manufacturers contributed to that mystique by issuing "vintage reissues" of their old guitars. These remain a substantial part of their lines, with some companies even offering "relic" guitars, which, like pre-distressed jeans, come with factory-applied scrapes, tarnish and cigarette burns.

New buyers beware
This glut of new "vintage" guitars further complicates matters for uninformed guitar investors, who increasingly have to rely on the integrity and expertise of dealers. Is that really a 1953 Telecaster, or a 1958 with changed parts, or a modified 1989 reissue, or a luthier's deft copy? With tens of thousands of dollars hanging in the balance, authenticity has become a major issue.

"There were only about 1,700 sunburst Les Pauls originally made, yet people have counted 2,200 that purport to be today," notes Yablonka. "You need to have handled and studied hundreds of old Gibsons sometimes to tell the difference."

Before guitars became such rare commodities, musicians commonly modified them or switched parts around, which can seriously effect the price. A refinished Stratocaster might look great, but that new paint makes it worth less than half what one with a beat-up original finish might bring. Along with making it harder for a novice to discern what's truly rare, these "players' guitar" modifications also subtract from the number of "investment grade" rare guitars out there.

Compared to a flat stock portfolio, rare guitars might look like a wild new frontier to investors, but it's been mined for decades. With very few of what Yablonka terms "under grandma's bed" guitars left to be discovered, collectors have resigned themselves to paying top dollar.

A super-collector's super-stockpile
No matter how much money an investor spends, he'd be hard-pressed to match the woodpile of super-collector Mac Yasuda, who owns what's possibly the world's largest guitar collection, and certainly its finest aggregation of flattop guitars.

If an investor waves $250,000 around long enough, he might eventually scare up an abalone-encrusted pre-war Martin D-45, considered the holy grail of acoustic guitars. Meanwhile, Yasuda already owns 14 of the 70 or so known to still exist. He has about 500 other guitars, plus some 200 ukuleles and sundry stringed things. It provides some notion of the caliber of instruments he deals in to know that he once sold a guitar case for $10,000.

Yasuda started singing and playing country music when he was a teenager in Kobe, Japan. When his hero Hank Snow performed there in 1967, Yasuda and his band-mates got to meet the singer backstage. "A Japanese company had just started making steel-string guitars, and we brought ours to show off. Hank was playing a beat up 1934 Martin D-28, so I asked him, 'Hey, Hank, you're such a rich and famous guy. Why won't you buy a brand new guitar like this?' He just kept laughing over that, and his band did too," he recalls.

Three years later, and somewhat more informed about the virtues of vintage guitars, Yasuda came to Michigan Tech on a scholarship. Sent to a conference in Nashville, he skipped out to prowl Music Row instead. At George Gruhn's guitar shop, he saw a beautiful old Gibson J-200 acoustic for $450, and he only had $25 to his name. It was a Scarlett-O'Hara-clutches-the-turnip moment for Yasuda. "I stood there looking at that guitar and swore, 'Someday I will own all the J-200s!'"

He's well on the way, owning 60 choice J-200s now. Since he can only play one at a time, does it ever concern him that the instruments are being kept out of the hands of musicians?

Too expensive to actually play?
"I don't think most musicians can afford to play guitars like this anymore," he says. "They're too expensive, too risky to perform with. You wouldn't play a Stradivarius in a country band, and that's what these guitars are like now."

Yasuda still performs -- he's appeared on the Grand Ol' Opry dozens of times -- and he used to loan rare instruments to musicians for their recording projects, but the value they now hold has raised insurance issues. He hopes to eventually open a museum. That, or they may go back on the market. "I'm going to die someday, and my wife sure doesn't want them around," he says.

Some longtime collectors and dealers worry about the implications of the instruments languishing in vaults and display cases. "It's like selling Disneyland to the Martians or something," frets Soest. "These things were made to be played and enjoyed." He concurs with other experts, though, that there's no shortage of excellent instruments today.

Johnston says, "I have less patience than I did 20 years ago with musicians hollering about collectors buying all the good stuff, because the new instruments available now are so much better than they were 20 years ago. That's true for the top-line guitars, but also moderately-priced and even cheap guitars are good. You can get a Chinese acoustic guitar for well under $500 that you could be confident stepping onto any stage with. And if you have $1,000 to $2,000, there's a lot of fine stuff."

Another longtime dealer, Rick King, who owns the Tacoma, Wash., Guitar Maniacs shop, says, "I remember people whining 15 years ago that 'collectors are buying all the good guitars and putting them in display cases!' I haven't seen that it's stopped anyone from making music. There's this basic economic theory that when the demand for an item exceeds the supply, the value goes up. As musicians, we tend to forget this basic economic theory, which can lead to the basic sour grapes theory of 'waa, waa, waaaa.'"

Junior Watson takes it all in stride
"Let them all fight over it. I've got what I need," is how blues guitarist Junior Watson regards the vintage market. He's had vintage Gibson and Fenders in the past, and now can't afford them. Even the oddball budget instruments he favors, such as the Harmony Espanada (a 1950s department store arch top that unaccountably has aluminum rims, like a dinette table), are in collectors' sights now. Watson paid $50 for his decades ago, and he'd be hard-pressed to buy another, since they now sell for up to $2,500 on eBay, with ads that invariably trumpet "Junior Watson plays one!"

These days he favors a '50s Harmony Stratotone (which, along with Tom Waits and John Hammond playing them, has helped nudge prices from $250 five years ago to $1,600 today) and a Strat copy he pieced together from $400 of aftermarket parts. "After I scraped the finish off the neck with a razor blade, it sounds and feels so close to a '57 Strat now that it's insane," he claims.

The boom in guitar investing is a tide that's raised all boats. Even some of the '70s Fenders and Gibsons, whose questionable quality spurred the rise of the vintage market, can sell for thousands today. Brands that once sold for $39 in department stores and drug stores -- such as Silvertone and Teisco -- have their collectors. Some name companies also made guitars under different brands, such as some 1930s Montgomery Wards Radio King guitars that were made by Gibson.

Such esoterica, and the terminology used in the guitar world (see "Building a six-string portfolio" for a small sampling) suggests you had best be an informed consumer before you put your nest egg in a guitar case. There are scores of books on guitars, some of which go into great detail about how to verify their authenticity. Vintage Guitar magazine is also a monthly source of info.

It's a good idea to have any potential investment checked out by an experienced dealer or luthier, because many things that aren't readily apparent can be wrong with an instrument. Even if a guitar isn't going to be played, its playability remains a major factor in its value.

Playing it, though, just might be of value to you.

Johnston says, "I tell people that the only way they'll be sure of a good return on their investment is to enjoy the guitar and play it. Then, if it doesn't go up in value, they can still look back on the experience fondly. Whenever people buy an object purely as an investment -- whether it's a ring they don't wear, a car they don't drive or a guitar they don't play -- I think they're setting themselves up for disappointment, because who knows what the market will do tomorrow?"

Building a six-string portfolio
While it certainly helps to be rich to get into the vintage guitar market today,

there's still some fun to be had in all price ranges.

If you're absolutely sagging with cash, here are the blue-chip investments:

  • Martin: Pre-war Martins (especially with herringbone trim or abalone inlay, and Brazilian rosewood back and sides);


  • Fender: Pre-CBS Fender Stratocasters (particularly in custom factory colors) and Telecasters (1954 and earlier with a black anodized pick guard are preferred);


  • Gibson: 1950s Les Paul Standards (the 1952-1957 Goldtop models can still be had for under $50,000) as well the intensely rare '50s Gibson Flying V and Explorer models, remain the premium investments. "Dot-neck" 335s and other semi-solid models are also in demand;


  • Some less-common instruments, such as D'Angelico arch-top jazz guitars, also have a long track record of appreciating.

If you have less than $10,000 to play with, consider Fender's Jazzmaster and Jaguar guitars, and Gibson's lower-line 1950's Les Paul models such as the Special and Junior, and '60s models such as SGs and the Firebirds, as well as upper-tier flattop acoustics such as the J-200 and J-45, and arch-top jazz guitars.

Gibson also had a second line of instruments, Epiphone (today the brand on its budget imports), with the Casino model the Beatles played being particularly desirable. The Beatle connection also adds to the luster of Gretsch and Rickenbacker guitars.

If you have only a couple of thousand dollars, or even just hundreds, there are still plenty of vintage instruments to be had. Look at Fender and Gibson's student lines, such as the former's Mustang, Duo-Sonic and Musicmaster models, or Gibson's Melody Makers. The Japanese Ibanez copies of U.S. guitars can also be found in this range, as can the guitars and basses of any number of lesser-known U.S. makers, such as Danelectro, Kay and Harmony.

Rick King considers '50s and '60s Danelectros (favored by Jimmy Page, David Lindley and others) to be among the most undervalued instruments today. Vintage guitar amps -- particularly the '50s tweed-covered or '60s "blackface" Fenders and "plexi-panel" Marshall models -- also have yet to appreciate the way guitars have.

-- Jim Washburn