Modern Trader, a monthly journal for professional traders and investors, invited me to present an alternative in investing to their audience. I was honored to prepare an article providing an introduction to a very exciting category of investing: instruments and bows of the violin family.
Beautifully edited and professionally laid out, the publication did a wonderful job presenting the article. To provide access to those who are not subscribers to the magazine, I am providing the article in it’s full unedited version for all, right here! Thanks to Modern Magazine for giving me this opportunity.
Investing in Rare Violins
Often seen as a passion project, or part of a philanthropic venture, rare & fine stringed instruments offer an exciting option to diversify one’s investment portfolio while providing an opportunity for an exceptional long-term investment. Though historically rare violins have not been widely recognized as assets for investment, this category is gaining interest due to the steady increase in value, a lively international market and finite supply.
A Stable Market
With greater than 150 years of valuation, studies have demonstrated that fine classical Italian instruments offer a steady increase of approximately 3-5% per annum with a dramatic percentage increase over the last couple decades. Over the past 20 years, many instruments in the top tier have climbed in value 12-25% with little downside or volatility, performing among the top asset classes exclusive of private equity. Even instruments not in the top-tier offer a steady increase in value, appreciating approximately 5 ½ % annually as cited by Donald M. Cohen, publisher of “The Red Book – Auction Price Guide of Authentic Stringed Instruments and Bows,” whose latest publication covers 15 years of collected auction sales results in the violin trade from 1997 to 2012. Donald also notes that the total dollar volume of auction sales has increased by more than 10% per year since 2006 further demonstrating an active and healthy market.
Tiers within the Market
As with any market there are numerous products available, depending on how much capital is available to invest. Even if one does not know about violins, the majority of people have heard the name Antonio Stradivari, who is universally celebrated as one of, if not “the” finest violin maker throughout history. An innovator in his time, with exquisite craftsmanship and artistry, Stradivari had a prolific career and his instruments noted for their tone and quality of materials continue to inspire violin makers today. Stradivari is not alone in this premier class of making some of finest violins from the golden age of violin making in Italy during the 17th-18th century. Guarneri del Gesu, Giovani Battista Guadagnini, Nicolo Amati, Domenico Montagnana and recently Bergonzi are among the makers that fine examples today can range in price from $1,000,000 – $15,000,000 and have proven significant financial returns for investors.
There is a finite supply and limited access to these rare examples of the violin family, with approximately 600 Stradivari instruments and 140 by Guarneri del Gesu violins known to have survived today. A diminishing supply due to the ravages of war, natural disasters and accidents throughout time has inspired institutions to collect and preserve the rarest examples. As the accessibility lessens and the values of the instruments continue to climb, opportunity increases for instruments in the 2nd and 3rd tier.
Not everyone has upward of $1,000,000+ to invest, which does not have to be a limitation for making a smart investment in the violin industry. As one category of instrument experiences a price increase, the effect trickles down to the other categories, increasing their value and elevating them to a new level of desirability. The market looks to instrument makers that have had steady output, with consistency in quality and sound to help determine the next makers to rise, filling in the recent gap created from a valuation shift. A maker who has seen a recent surge in value is French violin and bow maker Jean Baptiste Vuillaume. Not only was he a prolific maker, recognized for his outstanding output of quality instruments and innovations, but also he is accredited to training numerous violin and bow makers that are among the top makers to date. When the fine Italians reached new territory in value, Vuillaume prices went from a steady 80k-100k to an easy $300,000+, and a record of $1,361,015 in 2016 at auction for a matched string quartet.
There are makers old and new, in a wide variety of price points from different origins that can offer a sound opportunity. In talking with violin expert and scholar Philip J. Kass, he expressed that there are many possibilities in any school of violin making that could offer the quality one would look for in investing. In the English School, Philip mentioned John Frederick Lott II as having a “distinctive style that matches today’s aesthetic.” In the 1990’s his instruments were commonly priced around $20,000. Today it is not uncommon to find his instruments priced around $150,000 with a recent auction record this year for a violin at $108,000.
“Look to prominent makers of their age,” such as makers like “Giovanni Francesco Pressenda and Giuseppe Antonio Rocca in Italy. In France consider Lupot, Pique, Gand and Bernardel, in Germany & Austria consider Stainer, Geisenhoff and Michael Dotsch, and while in Hungary look to Nemessanyi,” guided Philip. All of these makers among many others were highly respected in their time and remains so to this day.
As mentioned earlier, the golden age of violin making is commonly considered 17th-18th century and even more distinctly, the geography to have taken place in Italy. Today conversely, many industry experts acknowledge that the violin making industry is experiencing a new renaissance. As makers once inspired and learned from one another, the same is happening today within the violin making community. The quality of craftsmanship is flourishing and many contemporary makers are now among the distinguished class whose instruments are considered a valuable investment.
A good example of contemporary instruments increasing in value comes from Paul Becker, a violin maker & dealer in Chicago, Illinois who has followed the footsteps of multiple generations of violin making in his family. The Becker instruments are prized for their rich tone, excellent wood selection and exemplary workmanship, a bar of excellence that was established by Paul’s grandfather, Carl Becker Sr., a celebrated American violin maker. Since 1970 Becker instruments have gone up in value 5-12% annually and continue to be sought after by musicians and collectors.
As with most collectible investments, factors such as condition are a significant consideration in valuation. That being said, it does not mean that an item that has had restoration or is need of restoration doesn’t offer investment value or sales appeal. Often an item that has had some wear from use identifies it as an item that works well for working musicians. The depreciation an item takes in relationship to other items of a more pristine quality can provide a good option to acquire a quality piece at a reduced price. Even though the item isn’t expected to financially perform at the top of its class in sales, if well maintained or restored will increase in value within the industry standard.
Preparing to Buy
We are in a time where access to information is greater than ever before. The violin industry has plentiful opportunities one can indulge in to gain a basic understanding of instruments, makers and a range of values. The online resource Cozio offers articles from scholars and experts in the industry, detailed pictures of instruments, auction prices and industry news. The maker archive on the Amati website also offers articles on makers and auction sales records. A printed resource; “The Red Book” culminates the sales results of all auctions in the violin trade. “The Fairfield book of Known Violin Makers” is another among innumerable books that can help provide insight. All of this information is readily available and can help become more educated in this field.
In addition to familiarity with the product, a relationship with an industry expert is highly advisable. There are many dealers and advisory groups in the industry that cater to collectors and understand the process of finding the right instrument for the investment period within the funds available. Documents such as provenance, certificates of authenticity, condition reports are an important part of the process and help to provide reassurance in an investment. Technology has even entered the buying process, but does come with additional costs. Reports such as dendrochronology reports and CT scans further help to identify an instrument and review it for hidden damage.
There are some important decisions to make about becoming a steward of an important instrument. Some investors prefer to keep their investment in a secured vault until they are ready to sell. On the contrary, others loan their investment to concertizing musicians. Both options have their upsides.
An instrument that is stored in a vault (preferably with the controlled humidity) cost less to insure (approximately .2% of the value each year). Storage of the instrument means it will not sustain any damage, which is a risk when it is being performed on, further preserving its purity and value. On the counter-side an instrument that is being performed on and featured in prominent recordings is gaining allure and exposure, which when partnering with the right musician can significantly increase its value. In this scenario, the investment period is more long-term and insurance can be closer to .4% of the value of the instrument each year.
Selling Your Investment
When preparing to sell your instrument it is important to establish a timeline of when to sell. How quickly one needs to sell and the expected return play significant roles into the sales strategy of the item.
In the violin trade purchasing violins through auction was previously primarily a wholesale environment, while musicians and collectors worked primarily with retailers. With the development of the online market, purchasing through auction has become more common to those who previously would have been retail buyers. This has yielded higher prices at auction, especially on the fine items. Even with the shift, the general assumption is that auction prices are still approximately 50% less than retail. Auction is an excellent option to expose an instrument to a large, international buying market and move the item quickly, though it is unlikely to yield full retail value.
The retail environment is more intimate. Each dealer has their own relationships with buyers and collectors, and has their own approach when presenting an item for sale. They are motivated to help optimize the sale, which will prospectively yield a higher dollar amount when selling (that is if the item isn’t a recent acquisition known on the open market), but it can be expected to take more time (approximately 1-2 years).
There is very little downside to investing in rare and fine instruments. The areas of the greatest risk include damage to the instrument during time of ownership, unknown damage and compromises to the instrument or misidentification upon purchase.
The Endangered Species Act has caused some concern over the ability to transport and sell certain items, due to their composition including materials such as ivory. Other materials such as ebony (which is used on the fingerboard of violins and for the frogs on bows) and Pernambuco (for bows) are materials that are also endangered. There is an active lobby within the violin industry that has received the recent support from the work of the NRA lobby, who likewise has interest in protecting antiques made with materials such as ivory before the act was signed December 28, 1973. Recent definition to the legislation has helped to assuage the concern of possession or transportation of these items that contain endangered materials, however, should the legislation change to hinder the ability to sell items containing endangered species, it could complicate the transportation or sale of an item.
An Active and Demanding Market
The market of rare and fine instruments is not only very active, but one that continues to grow in frequency and movement. In 2004, Orchestrated Investments, Inc. cited research conducted by Nobuyoshi Ozawa at the University of Cincinnati that estimated the market capitalization for rare stringed instruments (those made over 150 years ago by the top 270 makers) to be approximately 12.3 billion, and 100% of this market turns over every 30 years, making this market not only financially lush and viable, but also liquid.
Restricted supply and increasing demand from markets such as Russia, China and Korea have accelerated the gains for rare and fine instruments. Large institutional buyers have not only created more competition, but have placed pressure on the rare stringed instrument market by reducing the number of instruments on the open market, which undeniably accounts for the continued increase in prices on the international scene, and escalated demand.
– Stable market – 150 years evidence of steady increase in value, even in times of significant downturn in the economy
– Increased demands for violins in the vibrant international market
– When purchasing there are options in any price category. The key important factors are Maker, Price, Certification and Condition
– Establish a relationship with a trusted industry expert
– Decide the type of stewardship (storage or philanthropic)
– Establish a timeline for selling
The violin trade can be an intimidating industry to approach. Though there are several outlets for good information, as with any major investment it is important to align yourself with trusted experts in the industry. Investing in violins can yield personal satisfaction, alongside the preservation of an art-form that has been cherished throughout several centuries, while offering a stable and rewarding return.
Notable Violin Sales at Auction in 2016
“The past few years have seen phenomenal growth for 2nd and 3rd tier makers in the stringed instrument market. 2016 in particular has brought surges in demand for instruments in the $100,000-500,000 range. As most of the famous 17th and 18th century Italian makers have now exceeded this price range, new attention and interest is been given to makers like Vuillaume, Rocca, Balestrieri, Storioni and Pressenda. Investors who take a long view and are interested in slow-steady growth can find great opportunities in this segment of the violin market.” – Jason Price, Founder & Director of Tarisio Auctions
Giovanni Battista Guadagnini Violin – $1,253,000
Giovanni Battista Guadagnini Cello, the “ex-Havemeyer 1743” – $1,505,000
Jean Baptiste Vuillaume String Matched String Quartet “Evangelists” – $1,361,015
Antonio & Hieronymous Amati Cello – £407,500
Tommaso Balestrieri Violin 1788 – $366,097
A Violin Case by W. E. Hill & Sons, 1887 from the “Apostles” collection – $17,220
In the preparation of this article, a special thank you for interviews with:
Jim Warren of Kenneth Warren & Son, Violin Dealer & Expert
Paul Becker of Carl Becker & Son, Violin Maker & Dealer
Philip J. Kass, Expert & Author on Fie Stringed Instruments & Bows
Donald M. Cohen, Bow Maker and Publisher of the Red Book, Auction Price Guide of Authentic Stringed Instruments and Bows
Jason Price of Tarisio Auctions, Founder, Expert & Director
Written & Prepared by: Emily T. Lane
Emily is Founder and Curator of Elan Fine Instruments, helping musicians buy and sell fine instruments, curating violin auctions, and developing innovations for the industry. Additionally, she serves The Open String Foundation – providing instruments to children in need.