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Guernsey’s Guitar Auction Could Rewrite Investment Guitar Market Thinking, Prices

by Wayne Jordan (03/31/14).

This Martin OM-45 deluxe model serial #42125 could set the record for highest-selling guitar at auction on April 2, when it crosses the block at Guernsey’s in New York.

Roy Rogers bought a Martin OM-45 deluxe model for $30 before he was Roy Rogers. It eventually sold for 460,000 in 2009 at Christie’s.

In 1933, struggling 22-year-old musician Leonard Slye needed a guitar. He found one at a California pawn shop and paid $30 for it. In 1933, $30 was an average week’s wage, but Slye believed that the guitar—a three-year-old Martin OM-45 deluxe model serial #42125—was worth the price. New Martin OM-45s retailed for $225.

Slye went on to become the famous movie and recording star Roy Rogers, dubbed “King of the Cowboys.” The Martin stayed with him through the 1940s. Although Rogers didn’t know it at the time, the Martin was a rare find; there were only 14 of the OM-45 Deluxe models made, and his guitar was the prototype: #1 in the series.

In 2009, Rogers’s OM-45 was sold by Christie’s for $460,000. A similar 1930 vintage OM-45 (#44999, with an Adirondack spruce back and sides, Brazilian rosewood neck, mahogany fret board with ebony frets, and gold-plated banjo tuners with pearl buttons) will be sold in an auction at Guernsey’s of New York on April 2-3, 2014, titled “The Artistry of the Guitar … A Landmark Collection at Auction.” The starting bid for Guernsey’s 1930 OM-45 guitar is $875,000, and it is estimated that it will bring $1,750,000 to $2,000,000.

If Guernsey’s 1930 OM-45 crosses the $965,000 mark, it will be the highest price ever achieved by a guitar at auction. The $965,000 price was reached just last December (2013) by the Fender Stratocaster owned and played by Bob Dylan at the Newport Folk Festival in 1965. The prior record for a guitar at auction was Eric Clapton’s 1956 Fender Stratocaster, which brought $959,000 in 2004.

Guernsey’s is offering another OM-45 Custom Deluxe (a 2000 re-issue) at the same auction for a starting bid of $46,000. The re-issue is expected to bring from $95,000 to $105,000.

Guernsey’s is offering another OM-45 Custom Deluxe (a 2000 re-issue) at the same auction for a starting bid of $46,000. The re-issue is expected to bring from $95,000 to $105,000.

Pardon me? $105,000? For a 14-year-old re-issue? That’s just crazy. Or is it? My 2012 Vintage Guitar Magazine Price Guide lists the OM-45 Custom Deluxe at a value of $12,000 to $14,000. Can the value of that guitar have appreciated 705 percent in two years? Given the recent auction prices achieved for vintage guitars, I would say that it is possible, but not likely. My guess is that it won’t cross $60,000, even riding on the coat-tails of the 1930 OM-45.

As the auction prospects for these two guitars indicate, the market for vintage guitars seems to be picking up steam once again. Vintage guitar values are tracked by Vintage Guitar Magazine’s “42 Guitar Index.” The “42 Index” is considered to be a very conservative take on the vintage guitar market. Created 20 years ago, the index is comprised of 42 Fender, Martin and Gibson models from the 1960s or earlier, and is a price-weighted indicator based on sales. The vintage guitar market took a sharp decline in 2008 after more than a decade of steady gains. From 2006 to 2008, values of vintage guitars rose by an unheard of 82 percent. In 2009, values plummeted 10 percent, and fell another 24 percent in 2010. Values continued to evaporate until the fall of 2013. Now, the market is on its way back up, rising 8 percent in 2013. Currently, the 42 Index is at $750,800, down from its peak of $876,200 in 2007.

Critics of the “42 Index” point out that just 42 guitars from just three makers don’t accurately represent the guitar market as a whole. The Index doesn’t track guitars that have become classics in their own right, such as D’Angelico arch-tops and dozens of models by Gretsch, Guild, Rickenbacker and National. The market, they say, is actually more vibrant than the Index demonstrates.

A vibrant market for vintage guitar collecting is just what companies like Anchorage Capital Investment are counting on. Anchorage, administrators of The Guitar Fund, state as its investment objective: “to outperform the 42 Guitar Index, which has demonstrated over the past 19 years an average annual return of over 22 percent.” Anchorage advertising maintains that over time, the guitars they invest in will improve in tone, since acoustic instruments improve with age. They conclude that since the supply of vintage guitars is limited, prices will continue to rise.

Vintage Guitar Magazine’s “42 Guitar Index.” The “42 Index” is considered to be a very conservative take on the vintage guitar market. Created 20 years ago, the index is comprised of 42 Fender, Martin and Gibson models from the 1960s or earlier, and is a price-weighted indicator based on sales.

Like most advertising, the “improve with age” claim doesn’t stand up to close scrutiny. It’s true that some acoustic instruments improve with age, provided they are well-built in the first place and well-maintained during their lifetimes. Solid-body electric guitars, however, don’t improve with age—and most of the guitars in the “42 Index” and most of the hot-sellers at auction are solid-body electric guitars. Some early electric guitars were fraught with problems (pickup feedback, warping necks) that were overcome in subsequent models.

Of course, “guitar tone improves over time” is a moot point for investment-fund guitars, because most of them will be stored in a vault and rarely taken out to be played. The Anchorage fund, though, has a “loaner” program in which investors and famous musicians may be allowed to occasionally play an investment guitar.

Bernard A. Wagenmann, co-founder of Anchorage CP, emphasizes that his fund is best viewed as a long-term investment, stating “… though this exotic strategy has proven to be a tremendous investment, investors cannot expect the same type of liquidity as in the stock and bond markets, which is why potential investors should view this as a long term investment strategy.”

Guitars held by an investment fund must be stored, maintained and insured. Also, the fund pays management fees, and when the guitars are sold, the selling costs are high compared to other investments: auction fees can consume 10 to 30 percent of a guitars final price, whereas stock brokerage fees are usually one to two percent, and real estate fees about five percent. Unlike stocks, guitars are not liquid; investments are usually held for at least 10 years, and they can take time to sell.

Collectors who wish to circumvent a guitar investment fund and “go it alone” may find that there are both short-term and long-term gains to be made. The current demand for collectible guitars is high, and America has tens of thousands of guitars stored in closets and under beds. There is still “guitar gold” out there to be found. For you independent-minded sorts, here are a few gems to look out for:

John D’Angelico’s record book lists this 1946 D’Angelico Excel guitar’s date of manufacture as Nov. 16, 1946 and “Del Castel” as the customer. Completed a little more than a year after the end of World War II, this guitar does not exhibit the usual compromises in material quality often seen in instruments produced shortly after the war. It is one of the more economical guitars in the auction with an estimated selling price of $70,000 to $80,000.

Vintage Guitar Magazine lists its top-10 collectible guitars as:

• 1936-39 Martin D-45 ($320,000 to $400,000);
• 1958-60 Gibson Les Paul Standard ($300,000 to $375,000);
• 1958-59 Gibson Explorer ($250,000 to $310,000);
• 1958-59 Gibson Flying V ($200,000 to $250,000);
• 1931-36 Martin D-28 ($140,000 to $170,000);
• 1938-42 Gibson Super Jumbo/SJ-200 ($90,000 to $120,000);
• 1957 Gibson Les Paul model ($86,000 to $106,000);
• D’Aquisto archtops ($75,000 to $100,000);
• 1950 Fender Broadcaster ($68,000 to $86,000);
• 1957-60 Gibson Les Paul Custom ($66,000 to $81,000).

Note that in the above list, D’Aquisto is listed as a “most collectible” but didn’t make the cut when the “42 Guitar Index” was created. That should give hope to newbie collectors: not all collectible guitars are on the 42 Index.

For those without “big bucks” to throw at a guitar investment, a more modest tactic would be to look for:

• Guitars made using Brazilian rosewood. It’s been illegal to import Brazilian rosewood into the US since the 1970s, and some guitars made before the Second World War used copious amounts of it. All other points being equal, such guitars will rise in value quickly. Be careful, though, about guitars trimmed in ivory because new U.S. government regulations concerning interstate sale of ivory could limit resale possibilities;
• Guitars made by recognized modern-day masters, like Wayne Henderson. Clapton owns a Henderson, as do other top artists. Once the Clapton Henderson hits the auction block, values of Henderson guitars will skyrocket. Like D’Aquistos, many small-shop guitars are destined to bring top dollar in the future;
• Pre-CBS Fenders. Collectors are still buying anything made by Fender before the CBS buyout in1965.
• Well-made entry level guitars owned and played by rock stars, like Danelectros and Silvertones.

Remember, today’s investment-fund guitars will be locked up in a vault somewhere and held for at least 10 years. In the meantime, second-tier guitars will rise to the level of top tier, and so on. I define “second-tier guitars” as being those models that are seen at major guitar auctions (like the one at Guernsey’s on April 2-3) but that achieve only modest prices. Investors who buy and hold those guitars may discover investment funds knocking on their door in about 10 years, when many of the country’s vintage guitars will be locked away in a vault.

In the meantime, the guitars that you hold personally can always be taken out, played and enjoyed. Just be careful with them: condition is a critical part of a vintage guitar’s value.


Wayne Jordan spent more than 40 years in the music business as a performer, teacher, repairman and music store owner. In 25 years of musical instrument retailing he has bought, sold, rented or repaired thousands of pianos, band & orchestra, combo, and folk instruments. Wayne is currently a Virginia-licensed auctioneer and certified personal property appraiser. For more info, visit Wayne Jordan Auctions or Resale Retailing with Wayne Jordan.

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