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Gibson Guitar, The Smart Investment

Vintage and Rare Gibson Guitars are Bucking the Economic Trend and Proving to be a Sound Investment

Jeremy Singer
|
05.05.2010

When was the last time you dusted off the boxes in the attic, sorted through the items in your closet or took a good look through your loft and stumbled upon a guitar case in the corner? Well, back in 2007, an American gentleman did exactly that. When he opened up the guitar case, he saw something very special inside: a highly prized 1959 Gibson Les Paul Standard in pristine condition. The Les Paul was valued by a reputable company and the gentleman was told he could expect to sell it for a six-figure sum. Gibson Guitar is well known and highly regarded worldwide by guitar aficionados and guitarists from all musical genres for consistently producing the finest electric and acoustic guitars. Gibson has a unique history steeped in tradition, innovation and quality craftsmanship. On any given stage at any given gig around the world over the decades, chances are you would have seen a guitarist rocking out on his/her Gibson guitar. These international acts range from icons like Led Zeppelin, AC/DC, The Beatles, The Who, Free, The Rolling Stones, Creedence Clearwater Revival, Thin Lizzy, Kiss, Guns N’ Roses, Oasis, Paul McCartney, BB King, Madonna, U2 and Aerosmith to the vanguard of today’s music, such as Foo Fighters, Kings of Leon, Metallica, Joe Bonamassa, Lenny Kravitz, and Pearl Jam, to name a few. The brand loyalty of this ‘Who’s Who of Rock ‘n’ Roll Royalty’ is a testament to the playability, durability and prestige of playing a Gibson guitar — be it a Les Paul, SG, ES-335, ES-175, Explorer, Flying V, Firebird or a Super 400.

The trend for serious guitar collectors to invest in both vintage & rare Gibson guitars is not a new one, but it is becoming more attractive for non-guitar collectors to focus their attentions on such instruments, due to the substantial financial return, say, a vintage 1958 or 1959 Gibson Les Paul Standard or a 1961 Gibson SG could provide. For example, a 1960 Gibson Les Paul Junior can appreciate by an incredible 500% after only six months of ownership. There is one particular factor that can guarantee a guitar's appreciation. Aside from being in mint condition with original parts, electronics and paint, the guitar would need to be tied to a formidable artist or an event that resonates in the modern popular conscience. This would then give that guitar a far greater financial return when it comes to it being sold to a specialist dealer or at auction. The vintage and limited edition guitar growth in market value is often quoted at about 15% per year on average, but these are generally limited to instruments built during the 1950s and 1960s.

Just about every guitar player wants to pick up a fine vintage or limited edition instrument. However, these days there are more than just musicians looking for masterpiece instruments from the 1930s through the early 1970s. Vintage and limited edition Gibson and Epiphone guitars are a great investment that only increases in value. In particular, vintage Gibson guitars have consistently performed with more stability than the stock market. There are a number of reasons that collecting these types of guitars is an excellent strategy. For one, they’re more tangible than a company stock or bond. They give you an attractive piece to display, and are fun to collect. Guitars also don’t lose value over time. In fact, it’s just the opposite – guitars consistently gain value as they get older, as long as you take the time to keep them in good condition. If you’re a musician as well as an investor, you’ll appreciate the superior action and tone of a real vintage instrument. The most popular and sought-after vintage guitar with collectors is the 1959 Gibson Les Paul Standard, often considered as the holy grail of electric guitars, played by a legion of iconic musicians such as Jimmy Page, Peter Green, Slash, Billy Gibbons, Joe Perry, Gary Moore and Jeff Beck, to name a few.

“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.

Auction houses, such as Christies, Sotheby’s and Julien’s, are seeing a steady flow of vintage guitars coming through their auction rooms and are commanding very attractive financial returns for their owners. In March 2008, Anchorage Capital Partners announced The Guitar Fund, a $100M fund investing in the rare and vintage guitar market, citing an average annual return of over 31%, according the ’42 Guitars’ tracking index, created by Vintage Guitar magazine. The fund was reported to have a number of initial institutional investors for shares to the value of between $5M and $10M. Arguably the most desirable solid-body electric guitar of all time is the sunburst finish 1958-60 Gibson Les Paul Standard, commonly referred to as the ’Burst. In his recent book Million Dollar Les Paul, UK guitar historian Tony Bacon charts the rise of this near-mythical beast, arguing that the $1M ’Burst is all but inevitable, current economic events notwithstanding.

“The Vintage Gibson guitar market has continued to grow over the past decade, especially as investors realize how safe this market is in terms of diversifying their portfolio. It is a more secure market than most stocks or bonds and will only continue to rise due to the increase in foreign markets like Russia and Asia. Vintage Gibson guitars are the heart and soul of the pop culture movement, as nearly every major artist in the history of rock ‘n’ roll and music as a whole has played a Gibson.” – Darren Julien, President/CEO of Julien’s Auctions.  

There is no other manufacturer that has produced a greater variety of professional and prestigious guitar models than Gibson. Every guitar model that Gibson ever built has its own unique history and story. There are no two alike, even if they share the same name. “I've noticed," says Ted Owen, "that some shops don't even put prices on certain guitars anymore. There's just a little note saying, ‘Ask.’” Owen is the Director of Acquisitions with the Fame Bureau, the memorabilia dealers located in Denmark Street, London's guitar shop heartland. Rock guitars are the Fame Bureau's specialty — and right now the market is booming. Put your money into bricks and mortar, they say. But, according to Owen, a small bit of nicely shaped wood with six strings and a few bits of metal attached could now be a better investment. They don't even have to have belonged to someone famous.

The figures are eyebrow-raising. A 1959 Gibson Les Paul Standard in trademark sunburst finish, popularized in the 1960s by Keith Richards and Jimmy Page, and considered by many to be the perfect guitar, originally cost about $225. Now, says Owen, one can fetch up to $385,000. “We didn't have World War Three," says Owen. "We had rock 'n' roll. These guitars are significant of a moment in time." Particularly in demand are vintage and rare Gibson instruments specifically associated with the birth of pop. "They're a status symbol," says Owen. "They look cool on your office or bedroom wall.” In a way, presumably, that drum kits and keyboards do not.

The price hike for vintage guitars was actually started by famous musicians, according to Adam Newman of Denmark Street's Vintage and Rare Guitars. Newman's biggest sale was an original Gibson Flying V, beloved of the Kinks and Jimi Hendrix, that had serious Spinal Tap rock madness overtones; it went for $923,000. "They have a look that caught the moment," says Newman. You have to spend a pretty penny to get one."

However, you don't need a fortune to invest in all rock guitars. Newman says that a 1970s Gibson L-6S, that would recently have set you back $925, would now fetch more than $1,800, since Razorlight's Johnny Borrell started playing one. Nor must the guitars be in good condition. In fact, you don't even have to invest in a whole guitar: a 1959 Gibson Les Paul Standard pickup surround - the plastic that goes around the part that picks up string vibration - can fetch up to a cool $6,200.

An example of vintage & rare Gibsons sold over the years include:

· 1958 Flying V (only 81 produced; typically sell for $100,000+)
· 1958 Explorer (only 100 produced; one example with original Bigsby and custom-made plate cover sold for $611,000 at a Skinner Auction in Boston in October 2006; it was purchased new in 1958 for about $250)
· 1958 Les Paul Standard (only 434 produced; typically sell in the $50,000-$250,000 range)
· 1959 Les Paul Standard (considered the Holy Grail of guitars; only 643 produced; typically sell in the $100,000-$500,000 range, and up)
· 1960 Les Paul Standard (only 635 produced; typically sell in the $50,0000-$250,000 range)
· The 2005 Gibson Custom Shop Eric Clapton "Crossroads" ES-335 (250 guitars produced, sold out in 72 hours)
· The 2006 Jimmy Page Custom Authentic Les Paul (first 25 were signed, played, and numbered by Page himself; $25,000 original price tag, but now typically sell for $80,000-$100,000)
·  The 2007 Custom Shop Jimmy Page Signature EDS-1275 Doubleneck (25 Aged, 250 VOS models, sold out in less than one week)

Gibson has also cornered the coveted signature guitar market with Gibson Custom Division, Gibson USA, Epiphone and Gibson Acoustic producing limited edition replicas of the world’s most iconic guitars played by the world’s leading guitarists. Taking one guitar as an example is the Gibson Custom Jimmy Page Signature #1 1959 Les Paul Standard model, which was based on exhaustive research from Jimmy's original guitar. It faithfully recreates all the unique features (including an elliptical neck profile and single push/pull pot for series parallel pickup switching) that make the #1 the legendary instrument it is. The Gibson Custom Jimmy Page Signature model was available in a limited edition of 150 and an unlimited run in Custom Authentic Finish. These guitars and many others like them were snapped up by private collectors as soon as they left the factory and are now trading hands for hundreds of thousands of dollars.

So whatever your reservations about purchasing a rare vintage or limited edition Gibson guitar, consider the options. The Gibson brand name at the top of the headstock represents not only quality, but also a timeless classic that has evolved and grown over the years to become the world’s greatest guitar company and producer of fine guitars. The guitar will not only play beautifully and enhance your guitar playing experience, but will go on to become a family heirloom or, at the very least, become a sound financial investment. A Gibson guitar is a lifetime investment that will always strike the right chord financially.


George Harrison’s Gibson SG that Julien’s Auctions sold back in 2004 for $560,000

Photo Credit: John Rahim

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