Mad About Strads: Fiddling the Stradivarius Market
The cult surrounding the 300-year-old violins has sent prices through the roof, making the Italian masterpieces a coveted investment worth millions. Only a handful of dealers control the market -- and they’re willing to pull any number of strings to maximize profits.
Up in Katzelsdorf, a hamlet on the outskirts of Vienna, people seem to live one step closer to heaven. High on the hill above this picturesque village towers sits Eichbüchl Castle. This lofty stronghold, where Napoleon’s sister once held lavish parties, is now the residence of an extremely successful businessman from Bremen, Germany.
Dietmar Machold, 58, deals in antique violins. Ten years ago, he made millions virtually overnight when he sold three Stradivariuses and a Guarneri. The deal netted a tidy profit, so he decided to treat himself to something really special. Machold splurged and bought Eichbüchl, just as a successful stockbroker would indulge himself with a Ferrari or a rich doctor might purchase a Porsche.
Down in the village, in the local pub, folks don’t know much about Machold. Everyone realizes, of course, that he acquired one of the finest collections of violins in the world for the Austrian National Bank, and that the Austrian Ministry of Culture awarded him with an honorary doctorate for this achievement. Rumor has it that "Herr Professor" has managed to become "very, very rich," thanks to his business.
Yet none of the villagers can even begin to imagine how the lord of the castle up above pulls the strings in the mysterious world of the international violin trade. Machold and his companion, Austrian teacher Barbara Drews, 31, proudly welcome guests to their home behind the 700-year-old walls, battlements and turrets of Eichbüchl. The violin dealer has transferred the main branch of his family business, now in its fifth generation, from Bremen to Austria and made Machold Rare Violins a world leader in the highly competitive market for rare string-instruments.
These instruments rank among the great icons of Western culture, alongside the Gutenberg Bible and the Mona Lisa -- especially that most legendary violin of all, the Stradivarius.
Boom in Stradivarius Market
Machold has a wealth of stories to tell. In 1985, he sold his first Stradivarius to North Korea, via East Berlin -- for only $285,000 at the time. A Mr. Kow came to Checkpoint Charlie at the Berlin Wall. They drove to the North Korean embassy. The Stradivarius remained there, for testing and as a sign of good faith. Mr. Kow then paid with 1,000-mark bills.
Machold’s cell phone is constantly ringing. Calls from abroad. From Chicago, where it's early in the morning. From Seoul, where it's late in the evening. On the line are potential Stradivarius buyers around the globe, and potential major deals. "Business with these instruments has started to boom to the point that, at times, it reaches incredible proportions," says Machold.
Antonio Stradivari fashioned more than a thousand instruments until his death in 1737, and his neighbor Giuseppe Guarneri del Gesù (1698-1744) produced hundreds of violins. About 600 violins, 60 cellos and 12 violas stamped with Stradivari’s initials inside still exist today, along with some 140 violins from the workshop of Guarneri del Gesù.
Within just a few decades, the value of these instruments has risen exponentially. In 1971, the "Lady Blunt" Stradivarius sold at Sotheby’s for $200,000, creating a minor sensation. In 1998, the "Kreutzer" Stradivarius went under the hammer at Christie’s for $1.5 million.
These days, even damaged violins made by the master himself command prices of a million euros, while his finest sounding instruments sell for many times that amount. In May 2006, Christie’s auctioned the "Hammer" Stradivarius for some $3.5 million; top instruments are now valued at over $6 million. What’s more, buyers increasingly see Stradivariuses as a lucrative investment.
The supply, moreover, is dwindling as more and more Stradivariuses and Guarneris are purchased for collections like the ones owned by the Austrian National Bank -- or bought by institutions like the German Foundation of Musical Life. This benefits talented young musicians, who are able to borrow these fine instruments free of charge.
Global Interest in Old Violins
At the same time, demand continues to rise because the sector has become a pioneer of globalization. Up until the early 19th century, only European dealers traded in old violins. Decades later, the US market joined the fray. In the 1970s, demand from Japan grew, followed by Korea. Now investors from China are showing a keen interest in this Baroque cultural treasure, which is still regularly played by musicians around the world.
"The Stradivariuses are the key rate for the market. If their price goes up, then the Guarneris and other historical violins follow suit," explains Machold. Every year, 10 to 20 Stradivariuses are offered for sale on the world market. Once a seller’s name is leaked, dealers descend on him like eagles diving for juicy prey.
People might ask why a Stradivarius that weighs roughly a pound should now be worth 500 times its weight in gold. But the world of violins dismisses such cynics as cultural ignoramuses. Experts insist that the sound produced by the wood of the Stradivariuses is the ideal violin tone. According to enthralled musicians, instruments produced by the godfather of violinmaking carry soft tones more powerfully into the far corners of concert halls.
How did Antonio Stradivari manage to set standards that have stood the test of time? What makes his stringed instruments far more admired than other outstanding centuries-old violins by such masters as Amati, Bergonzi, Ceruti, Guadagnini and Rogeri?
Roughly a century after the first violins were made in Italy, England and Poland, Stradivari opened his workshop in the town of Cremona in 1666. Music had established itself in court life, nobles treated themselves to orchestras, and violins were used as concert solo instruments for the first time.
- Part 1: Fiddling the Stradivarius Market
- Part 2: Where Does the Remarkable Sound Come From?
- Part 3: A Flood of Fakes
- Part 4: 'No Worse than the Carpet Trade'
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