FEATURE
STATE OF THE UNION � George Gruhn , Norman Harris , Jay Boone
From time to time we like to see how the vintage guitar market is doing , to see what is moving up in value and what is going down and try to get a feel for the overall “ state of the union ”. We knocked on three well known vintage dealers doors with those thoughts in mind . We start off with George Gruhn giving us some historical overview .
GEORGE GRUHN - GRUHN GUITARS NASHVILLE , TN ( photo by Vincent Ricardel )
I have been collecting and dealing fretted instruments since 1963 and have operated my shop since January 1970 . During that time I have seen many twists and turns , peaks and valleys in the vintage and used instrument market as well as dramatic change in the market for new instruments . There have been times when prices were going up at a rapid rate and other periods in which they were plateaued and other times in which prices were falling due to a variety of factors .
From 1959 through 1963 during the great folk music boom , prices of acoustic instruments were rapidly rising while prices of used and vintage electric guitars were very low due to general lack of demand . It should be borne in mind , however , although prices of acoustic instruments were rapidly rising , they were rising from extremely low prices to prices that were beginning to approach the equivalent cost of a new guitar . People were not paying super premium prices over and above the cost of a new one to get a vintage instrument .
In the mid-1960s the folk boom was winding down , but the Beatles and the Rolling Stones
and other rock bands hit , tremendously increasing the demand for guitars both acoustic and electric and many students on college campuses nationwide discovered the appeal of R & B music , and soon thereafter psychedelic rock . Prices of vintage electric guitars soared when some of the premier players discovered the merits of vintage guitars , resulting in rapid escalation of prices of pre-CBS Fender Telecasters and Stratocasters as well as original 1950s Les Paul Gibson models such that some of these instruments increased in value sufficiently that vintage examples were bringing more money than an equivalent new electric guitar in the case of Fenders . Since the single cutaway Gibson Les Paul Junior and Special models were discontinued in mid 1958 , the sunburst Les Paul Standard at the end of 1960 , and the black Les Paul triple pickup Custom in very early 1961 , there was no equivalent new Gibson in the mid-to late 1960s , but original examples were bringing more money than most new Gibson electric guitars at that time .
From 1969 through 1975 , during the great folk rock era , rock ‘ n roll money was injected into the acoustic market and acoustic and electric guitar prices escalated rapidly with many instruments costing significantly more money than a similar looking new example .
Prices stagnated from 1966 through the mid- 1980s and the fretted instrument music scene was at best lethargic . This was a very difficult time for music dealers due to the fact that the baby boomers had largely dropped out of the market and not yet reentered after their midlife crisis . Inflation was very high , and prime rate interest by 1981 was over 20 %. This was an extremely tough time for musicians as well as musical instrument dealers .
Market conditions turned around considerably in the mid-1980s when baby boomers reentered the market and prices escalated significantly , although they slowed down from 1993 through 2002 due in part to the fact that during the so called “ Dot-Com ” era it was more profitable to put money in the stock market than into guitars .
From mid-2002 through early 2007 prices of many vintage collectible fretted instruments escalated at an unprecedented pace such that prices of some of these instruments went up tenfold in a matter of 3 & 1 / 2 years . This pace was unsustainable and came to a crashing halt in late 2007 .
There are essentially three different types of buyers for fretted instruments : utility tool users , true collectors , and speculators . These are three very different types of buyers who have different goals and motivations . Utility tool users often are expert musicians , but they are not greatly concerned with age of an instrument or its total originality . Collectors are interested in having a coordinated collection with a theme and are very willing to pay more money than a utility tool user for the right item . Speculators frequently have more money than either utility tool users or collectors , but their ultimate goal is not to keep an instrument for more than two years before selling it . They target instruments which they feel are going up in value such that they can pay full current retail at the time of their purchase and sell at a profit after holding the instrument for a couple of years .
When the economy hit the skids in late 2008 , many musicians simply held onto their instruments , but many musicians who had no “ rainy day cash fund ” to help them get through hard times were forced to sell . Prices dropped
12 Mar � Apr 2017 CollectibleGuitar . com