Rare Gibsons: Safe as houses?

In an article on the Gibson website, Jeremy Singer notes the steadily increasing value of vintage and rare Gibsons.

“It’s official – guitars are better investments than homes,” says rock ‘n’ roll memorabilia expert Ted Owen. They’re also better investments than stocks and shares. A 1958 Gibson Explorer, bought for $247.50 in 1963, was sold in 2006 for $611,000. That’s almost a 20% year-on-year annual return versus an average of 12% for the typical house or the 9% typically produced investing in shares. Adam Newman, manager of Vintage & Rare Guitars says, “Late Fifties Gibson Les Paul Standards bought for a few hundred dollars could be worth well over $300,000. With rock ‘n’ roll memorabilia auctions taking place on a regular basis, it’s now easier to purchase a vintage or rare guitar that, in turn, is a solid investment.

Not long ago, I ruminated on the resale value of guitars listed in the classifieds of a 1980 newspaper issue.  I guess "the one that got away" for me was a 1959 Strat, all original, that I found in Sault Ste. Marie for $1500.  They also had a 1955 Tele, clean, $1500.  I couldn't afford the guitar - couldn't even fathom it - but my bandmate had a friend back in Toronto with a job.  We bought it for them and they threw in a 1962 Fender Musicmaster for me for free for testing the guitar and helping to broker the deal long distance. Crazy times. If I'd had the cash in the bank to buy that guitar in 1988, it would possibly be worth $38,856.00.  Not a bad increase.

What surprised me most about the article was not its recommendation of vintage Gibson guitars as an investment, but the increases that it cited for recent Gibson products like the 2006 Jimmy Page Custom Authentic Les Paul, which saw increases of 300% and 400% in price soon after its initial sale to the public.  Were those guitars, limited to only 25 guitars signed, and more importantly, played by Jimmy Page himself, an IPO? The stock is, in this case, a highly limited product that is dripping with semiotic connotations.  To own a guitar that was played by a legend holds great weight for some people, and they will pay for it.

There's even an investment fund for vintage guitars now, offered by Anchorage Capital Partners.  They promise a 31% annual return.  Should everybody get on the bus now? Or has the market peaked?

The most valuable guitars in the world are associated with the musicians that emerged in the U.S. and especially England from about 1964-1968. This period is ground zero for classic rock, which suggests that guitars owned by Jimi Hendrix, Eric Clapton and Jimmy Page are valuable because of the durability, at least so far, of that body of music over time. When that music, and those artists, cease to hold great affective force amongst large sections of the public, the value of those investments will fall precipitously.  When Eric Clapton dies, will the Eric Clapton model Stratocaster become more valuable? Or less so, because Clapton's stock will fall when he is no longer touring? Death is a great career move, but more so when you are young and full of promise.  It remains to be seen how this will play out, for the most part.  I don't believe that the Fender Stevie Ray Vaughan Strat increased in value much after his death in 1990, but it is somewhat more coveted now because John Mayer used one for a while.  And the baby boomers are largely into their sixties.

I'm not sure that I would recommend vintage guitars to, say, a relative as a long-term investment.  It seems to me that the values of the rarest guitars have become ridiculously inflated and that they must fall as the affective power of the 1960s musicians amongst the general public subsides with age and death, both of the performers and of the audience.  But the decline will at least be slow, so there is still money to be made on the vintage guitar market in the shorter term.  But I won't be subscribing to Guitar Aficionado anytime soon either.  I play 'em.