This breaks the previous world record price for a single Titanic-related item set at $340,000. According to the auction house staff, the winning bid went to a British buyer based in the UK. It had been set to be auctioned for an estimated £300,000 ($485,796).
U.K. auction house Henry Aldridge and Son has spent over six years and many thousands of pounds researching and investigating the instrument's authenticity. Police forensic evidence, audio archive material, Oxford University research and a CT scan have all been used to prove it is the real deal.
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"It's the most fantastic discovery," Andrew Aldridge, a chartered valuation surveyor at the auction house told CNBC.
The instrument is said to have been played by RMS Titanic bandmaster Wallace Hartley, and could be the single most valuable piece of Titanic memorabilia, if the valuations are met.
The violin, which was found with Hartley's body and passed through several hands before turning up at the auction house in 2006, was played by second-class passenger Hartley on Titanic's fateful night of April 14, 1912, according to the auction house's press release. Hartley was leader of the Titanic's quintet band and after the famous ship struck the iceberg, legend has it that he assembled the band on deck and started playing the "latest popular melodies" in an attempt to calm passengers.
According to reports in the The Deathless Story of the Titanic published two weeks after the tragedy, once the band realized the gravitas of the situation, they started to play hymns instead of trying to save themselves. They were only silenced, the book says, when the ship "reared up in her death agony" and all eight members of the band perished.
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Henry Aldridge and Son have describe the Hartley Violin as "the holy grail" for Titanic memorabilia. It has signs of restoration and large cracks on the body of the instrument and is unplayable but it is still one of the most iconic collectables from the 20th Century, Aldridge said.
"There has been a certain element of CSI behind the research; a mixture of modern scientific techniques allied with historical research," he said in the press release.
"The violin has attracted interest from collectors all over the world especially after its recent successful three month exhibition in the United States where in excess of 300,000 enthusiasts viewed it, it then moved onto Titanic Belfast for a further three and a half week exhibition period."
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Aldridge told CNBC that the accompanying sales manual that comes with the instrument is nearly two inches thick with the amount of research undertaken. There were more than 250 additional lots of Titanic memorabilia that will go on under the hammer at the same time, with estimates from £50 up to £200,000.
- CNBC.com's Matt Clinch. Follow him on Twitter @mattclinch81