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Rare Collectibles: Making Money Off Vintage Guitars
From antique silver spoons to license plates and toy train sets, collections that  start as a hobby can quickly grow to become a valuable asset.

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For some of us, our hobbies can be more than just a way to pass the time-- they can also end up earning a pretty penny. In a four-part series, we take a look at how to cash in on your rare collections.

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What is a Vintage Guitar? And How Much Can They Cost?

The term vintage guitar refers to models of acoustic and electric guitars produced in limited quantities between the 1920s and 1960s by companies such as Gibson, Fender and Martin.  

“They were built right. Built by small companies that paid attention to the details and used handmade components,” says Ward Meeker, editor of Vintage Guitar Magazine.

These guitars can cost anywhere from $10,000 to $600,000. Tommy Byrne, owner of BJ & Byrne Guitars and founder of an upcoming fund that will invest in vintage guitars, estimates that “guitars such as the late 1950s Gibson Les Paul Standards will exchange hands for between $350,000 and $600,000. A 1958/59 Gibson Flying V is worth more than $200,000. A pre-war Martin acoustic, such as the D-45 model will yield over $400,000 and an early 1950s Fender Stratocasters will trade for more than $50,000.

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Market Outlook for Vintage Guitars

“They are cultural icons,” says Meeker. “They were played by the guys and girls who wrote songs in the 50s and 60s and are deeply imbedded in American culture. Once guitars made by Fender and Gibson, who were keen on quality, became popular, you saw the rise of cheaper brands.”

Just like the real-estate market, the guitar market has had its ups and downs.

“From mid-2002 to early 2007, prices were going berserk,“ says George Gruhn,  founder of Gruhn Guitars.

Speculators got into the market, driving up prices beyond the reach of average collectors. Now, according to Meeker, “the market is in a slow recovery.” He estimates that a Les Paul Standard that sold for $400,000 has a more realistic and accurate valuation of $250,000.

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How to Value a Guitar

Vintage Guitar Magazine created the 42 Guitar Index in 1991 to track the values for a group of 42 guitars. It is a conservative indicator of the overall performance of the vintage guitar market, and the magazine also publishes a price guidebook based on surveys sent out to dealers.

An appraiser will also be able to put a dollar value on a guitar. Gruhn of Gruhn Guitars has been appraising guitars since the 1970s, and looks for “who made it, what model and year it is, what condition it is in cosmetically and structurally, and if it has been customized or repaired.”

There is a difference in valuing a true vintage guitar and one used by a celebrity. “If one was owned by a famous performer, then it can go to the memorabilia market, where they don’t care about originality,” says Gruhn, who appraises up to 10 guitars a day.

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Strumming up an Investment

If you are looking for an investment instrument that invests in actual instruments, the experts suggest checking out the upcoming Guitar Fund from Anchorage Capital Investment Management in Great Britain.

“We saw an innovative investment strategy with much higher returns and lower risks than are typically associated with other asset-backed type investments,” says Byrne, Anchorage’s founder and CEO and the owner of BJ & Byrne Guitars.

The Guitar Fund will be a $100 million fund, which requires a $250,000 minimum investment, according to Byrne. The fund has not begun trading yet, so it does not have a portfolio, but management plans to concentrate on Tier 1 guitars, which it defines as “guitars that are of all original parts and in excellent condition and have a market value of over $50,000, excluding memorabilia guitars owned by famous musicians.”

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Rare Collectibles: Making Money Off Vintage Guitars

From antique silver spoons to license plates and toy train sets, collections that  start as a hobby can quickly grow to become a valuable asset.

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