NEW YORK (Reuters) - The market for vintage guitars is tuning up again after years of hitting flat notes.
Its comeback will be tested next week, when California-based collector Hank Risan puts 265 of his 700 guitars on the block in the biggest such auction in recent memory.
Up for sale are electric and acoustic guitars by D'Angelico, Gibson, Gretsch, Martin and Washburn and others, from the 1890s to the 1950's, a period many collectors see as a golden era of guitarmaking.
A 1930 Martin OM-45 deluxe acoustic, one of only 11 made, lists a starting bid of $875,000 and is expected to be the highlight of the auction, set for April 2-3 at boutique auction house Guernsey's in New York.
The sale is being closely watched not only by guitar enthusiasts hankering for a historic "axe," both to play and as an investment. Dealers are looking for a fix on prices after the market cratered in 2008, as wealthy investors and aficionados got slammed by the financial crisis.
"This is the first time in six years, basically, that there has been this sort of opportunity to see whether there has been a recovery," said Peter Szego, a collector and former architect who last year edited a history book on American guitars.
An index by Vintage Guitar Magazine that uses the value of 42 classic guitars as a market proxy has started to tick upward after falling some 30 percent from its 2008 peak of $1 million, when the financial crisis sent collectors scurrying, to a trough early last year.
In the years before 2008, many speculators, particularly for electric guitars, jumped into the market for the first time, creating a bubble.
The index remains some 25 percent below peak.
Yet, there have indeed been signs of life in the market.
In December, Christie's sold the 1964 Fender Stratocaster guitar owned and played by Bob Dylan at his legendary electric performance at the Newport Folk Festival in 1965 for $965,000, an all-time record for a guitar at auction.
That beat out an Eric Clapton-owned 1956 Fender Stratocaster that fetched $959,000 in 2004 at Christie's.
The Guernsey's sale will be all the more scrutinized since Christie's is no longer holding guitar auctions, instead offering private sales only.
On Thursday, the first production model Fender Stratocaster was sold for $250,000, the Associated Press reported. The 1954 guitar was sold by George Gruhn of Nashville for owner and historian Richard Smith to an unnamed U.S. buyer who was not a musician, it said.
The breadth and size of Risan's collection and the fact that this is not a celebrity auction make this sale a better gauge of the health of the broader vintage guitar market, experts said.
Catherine Jacobs, co-owner of Philadelphia-based store Vintage Instruments, which reviewed the condition of the guitars for the auction, said that it is rare, for instance, for a Washburn guitar to be up for auction, let alone several of them at once.
Other standouts from the auction are a 1959 Gibson J-200 previously owned by Eric Clapton, and a 1941 Gibson SJ-200 once owned by Stephen Stills, each expected to fetch hundreds of thousands of dollars.
Risan, the chief executive officer of intellectual property protection company Media Rights Technologies in Santa Cruz, started collecting guitars as a young adult in the 1970s. He planned at one point to open a museum to house them but said that project was too time consuming. As the collection became hard to manage, the 59-year-old Risan chose to auction guitars off.
Some of the price estimates are ambitious, such as the $1.75 million to $2 million on the 1930 Martin OM-45, well above what the Dylan guitar fetched in December. But Risan says his guitars are "investment-grade instruments."
"These guitars that are being sold are all works of art and will only go up in value," he said.
Risan said several museums have made inquiries, but declined to say which. He pointed to the current exhibit on early Martin guitars at the Metropolitan Museum of Art in New York as proof of how vintage guitars have come to be seen as art.
Despite some promising signs, dealers still detect caution in the market, even for guitars seen as blue chips likely to hold their value.
"They're always the most desirable, but does that mean that people are willing to spend what they used to spend on them? The answer in general is 'no'," said Stan Werbin, owner of Elderly Instruments in East Lansing, Michigan.
A successful auction could lure other sellers into the market, many of whom have been waiting out the market's decline.
"There are going to be a lot of eyes on what's going to happen here," Guernsey's President Arlan Ettinger said in an interview at the auction house's storage space in Manhattan.
"Collectors everywhere want to see life return to this market."
Editing by Mary Milliken and Lisa Shumaker