The jangled world of the vintage guitar market

It's a cosy boys' club, the world of vintage guitars. Most of its members are the men of the baby-boomer generation, now aged 40 to 55, who idolised the likes of Hank Marvin, Pete Townsend, Jimmy Page, Eric Clapton and Jimi Hendrix. In the olden days they played air guitars: as they age and prosper, they can afford the real thing.

There is no shortage of guitar collectors in the UK, but the heart of the vintage guitar market is firmly established in the United States, home of such legendary makers as Fender and Gibson, and of the jazz, blues and rock musical traditions from which they sprang.

As Paul Alcantara, vintage-guitar consultant for Guitar Buyer magazine, explains, the market for collecting guitars was rooted in the idea that old guitars were better than new ones, more skilfully made, and using finer materials.

"That idea started with acoustic guitars, pre-war Martins and Gibsons, and they were indeed superior instruments, made with high-quality materials such as Brazilian rosewood, which was embargoed after the 1960s," Mr Alcantara says. When it came to electric guitars, the golden age encompassed the 1950s and early 1960s, before Fender (which, along with Gibson, dominated guitar production) was taken over by CBS in 1965 and apparently run into the ground by the new owners.

"Americans also blame the British invasion by the Beatles and the Rolling Stones into the US for the deterioration in the quality of guitars produced," Mr Alcantara says. "All the young kids suddenly wanted guitars, output shot up and manufacturing quality control plummeted."

By the 1970s, neither Fender's output nor Gibson's was up to much. " A lot of 1970s Fenders and Gibsons are quite poor instruments," Mr Alcantara says. "Late 1970s' Stratocasters are heavy with a thick , polyester finish and thin-sounding pickups, and are really not very nice, but they are now touted by dealers as vintage instruments with prices to match simply because they are 30 years old."

The enduring collectors' items date from the golden age, when the quality of workmanship and relatively small scale of output ensure continuing interest from enthusiasts. Importantly, and unlike other instruments such as pianos, electric and steel-string guitars do not deteriorate musically with age. "They improve in sound over about 30 years, then just continue at that quality," Mr Alcantara says.

Whatever an investor buys should be original, without any parts changed or subsequent customisation, and in as close to mint condition as possible. As Steve Maycock, musical instrument specialist at the Sotheby's auction house, says: "There's a limited supply of vintage guitars from the golden period, so the best examples will always attract interest and retain their value."

At Vintage and Rare Guitars in Denmark Street, off London's Charing Cross Road, the manager Adam Newman explains that solid-body electric guitars, Fender or Gibson, from the 1950s to mid 1960s have a special place in the hearts of nostalgic rockin' baby boomers. "The combination of that iconic appeal and the rarity value of an example in good, clean, original condition means people will pay premium prices,"he says.

On the whole, Mr Newman says, Gibson electric guitars tend to command slightly higher prices. At the upper end of the market, a 1958-60 Gibson Les Paul with a sunburst finish could cost upwards of £85,000, though Mr Newman emphasises that "originality and condition are absolutely paramount considerations."

Other rare and pricey gems include original Gibson Flying Vs and lightning bolt-shaped Explorer Flying Vs. Mr Newman points out that although prices do rise over time, it is difficult to make generalisations about price movements because different guitars enjoy different periods of popularity. He says: "It's the 50th anniversary of Fender Stratocasters in May this year, which may explain why they are currently hard to come by and prices have gone up a bit recently. You might pay £15,000 to £20,000 for a 1950s Stratocaster with a sunburst finish in good clean condition."

Early 1960s Strats in good condition can be found at about £10,000 to £12,000. But by 1963-65, small modifications were creeping in and prices are correspondingly lower, nearer £7,000 to £8,000. But again, condition counts for a lot. "We had a nice Sunburst '63 last year which went for £7,850," Mr Newman says. "A much more beaten-up and hard-played guitar fetched £2,000 less."

Mr Alcantara, too, picks out a pre-CBS Fender Stratocaster or Telecaster as a classic good buy, especially in custom colours such as bright blue. "Fender had a catalogue of custom colours, basically car paints, that could be specified when you ordered a new guitar," he says.

But there is no obvious logic to the relative values of vintage guitars, Mr Alcantara says. A Les Paul Custom would have been more expensive than a Les Paul Standard model when new. But collectors would rather have the model favoured by guitar heroes such as Mike Bloomfield, Eric Clapton, Jimmy Page and Peter Green, with the result that a Custom might now be worth US$10,000 (£5,700), and a Standard could command around US$80,000.

On the acoustic front, the golden era dates further back, to the 1930s, when steel strings were first introduced. It is a smaller but equally buoyant market, Mr Newman says. "For instance, only about 90 pre-war Martin D45s were made, so if one came on the market it would cost hundreds of thousands of pounds."

But you do not have to spend five or six-figure sums to dip a toe into the vintage guitar market. Andy Newman estimates that for £3,000 or £4,000 you could pick up a less popular model of a pre-CBS Fender such as a Jaguar or Jazzmaster, which again were originally higher-grade models but were less in demand by collectors. "Makes such as Gretsch, Rikenbacker and Epiphone up to the end of the 1960s are also worth looking at," Mr Newman says.

Finally, if you are prepared to take a gamble on a modern classic which could gain collectible status in the future, Mr Alcantara suggests looking at newer companies such as Paul Reed Smith. This one started manufacturing vintage quality guitars using modern construction methods and technology in the mid 1980s.

Mr Alcantara says that early ones are now worth thousands of dollars. "I believe we're going through a golden age of guitar-making, so it would be worth buying early ones and holding on to them," he says.