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!'"