What a year it has been! Economic, political, and social issues have dominated the news worldwide.
Given stagnation of interest rates in many countries investors continue to look at alternative alternatives to maximise returns on their investments. Whilst wine and coins are good examples of traditional collectables in this market, guitars are becoming increasingly popular. And for good reason. Many models have seen significant growth compared to more traditional investments (stocks, commodities, etc).
To help make sense of the guitar market, we’ve put together 5 indices alongside guitar experts and financial experience. These indices are similar to stock market indices like the S&P500 or FTSE100, for example.
To collate the indexes we use values for the top collectable guitars from each manufacturer (using mint condition values). Each index has a yearly average of the guitars that make up the index, indexed back to 2012 = 100. Our VGP50 index is a collection of the top 50 guitars that make up the Fender, Gibson, Gretsch, and Martin indices.
Over the past 7 years top-rated Fender’s have only seen a slight growth in value of 2% (2012 = 100, 2017 = 102). Some guitars in this index have faired paticularly badly. The 1950 Fender Broadcaster (Blond) has been through a particularly bad period with mint conditions now valued at $56,700 compared to 2011 at $90,300 – a fall of well over 30%.
Unlike the top Fender’s, the top 13 collectable Gibson guitars have seen a good return over the past 7 years of around 20% (would be more except prices slipped slightly in 2017). Perhaps unsurprisingly, the iconic 1959 Gibson Les Paul Standard (Sunburst, Highly figured) is one of the best performers of all guitars considered in our indices. Mint condition examples are now valued at $462,000, versus $393,750 in 2011.
Our Martin index is by far the most erratic with big losses in 2016. However, the index is also the best performer this year. It has risen from 97 points, to just above its original value at 102 points in 2017. We expect to see continued growth in 2018 where the index could hit well over 110. This growth will likely be driven by the rarest guitars, including the 1930 OM-42.
And finally, another badly performing index, Gretsch. Whilst this index held its value well between 2014 and 2016 where other indices faltered, over the past 12 months we’ve seen a small drop in prices of around 2% for the 12 Gretsch guitars considered in this index. Not all guitars have performed badly though. The 1962-1964 Gretsch White Falcon Stereo (6137/7595) (Double-cut 6137) has continued to attract higher prices year-over-year since 2012.
Overall investing in highly collectible guitars has provided a net positive return of +6% over the past 7 years – most of this has been driven by collectable Gibson models. We expect to see a continued increase in guitar prices (low to high-end) over the coming 12 months due to instability and stagnation in traditional investment markets.
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