Montrealer Warren Hill's discovery of an early Velvet Underground recording could deliver an enormous return on the music lover's initial 75-cent investment.

As of noon on Tuesday, bids for the rare acetate have topped $124,000 US on online auction website eBay, where the 1966 recording is on sale until Friday.

While flipping through old vinyl at a New York yard sale in September 2002, Hill stumbled on what he thought was simply a recording of the influential band.

"I just thought I was buying something that might have been maybe a live bootleg or something like that," Hill told CBC News in Montreal Tuesday morning.

Hill enlisted the help of his friend, Portland music collector Eric Isaacson, and the two were astonished when they played the recording for the first time.

"We played about 10 seconds of it and both of us realized pretty instantly that it was nothing we'd ever heard before by that band," Isaacson said.

"It was the first recording of the band," he added. "It was a completely unique … one-of-a-kind record at the time."

The recording was an acetate, an in-studio medium musicians and producers often used to record the day's work to take home for immediate review.

Hill and Isaacson discovered that the recording was actually the band's first "draft" of their eventual LP Velvet Underground & Nico, featuring versions of songs that the band's mentor, the famed artist Andy Warhol, had initially shopped around to record labels.

"We had no idea what it was worth for a long time," Isaacson said.

"Everybody who was an expert on records [was] baffled by it since it was such a unique item."

Over the past few years, the two music collectors have been discussing the sale of the rare recording and finally decided on an online auction through Saturn Records in California.

When the auction opened in late November, "the opening bid was 99 cents," Hill said, adding that the price began to skyrocket "maybe two or three days in."

However, Hill remains unruffled by the high bids.

"Things have kind of fallen through before so I'm not gonna get too excited about it yet," he said.

"I just want to wait until things actually happen before I get too excited. I don't want to spend it in my head until I have it."