Sticky fingers
How to make big bucks from tiny stamps
INTERESTED IN A RARE STAMP PORTFOLIO?
ADRIAN ROOSE EXPLAINS HOW YOU’D BE IN VERY GOOD COMPANY
IT’S KNOWN AS the “Hobby of Kings” for good reason. George V was an avid stamp collector, famously spending an hour a day with his collection. His 1904 purchase of the Mauritius Two Pence Blue for £1,450 set a new world record for a single stamp.
Over breakfast a courtier asked if he had seen that “some damned fool had paid as much as £1,400 for one stamp”. “Yes,” George replied, “I was that damned fool”.
The collections of King Faruk of Egypt, Tsar Nicholas II of Russia and King Carol of Romania are also well documented. Experts believe that the Royal Philatelic Collection is now valued at £400m, making it the largest single asset of Queen Elizabeth II.
And with good reason. Few alternative investments can match the long-term security and returns of rare stamps. Over the last five years alone, they have outperformed gold, the Dow Jones and other more traditional investments. They have shown an average 9.5% per annum increase over the last 50 years and offer excellent liquidity. It is this long-term confidence in the market that enables stamp dealers to offer investments with a guaranteed minimum return and an unlimited upside.
Fig.1 (right) highlights this potential. In 1999 the combined value of these four stamps was £8,250. Five years later it was £13,200 – an increase of 60%. In 2006 the total value of this portfolio was £17,000, representing an increase of 29% in two years and an increase of 106% in seven years.
Forget about any preconceived ideas you may have about stamp collecting being a dying hobby. Stamps are currently the third most traded category on eBay. There are 48m stamp collectors around the world, with an estimated 18m in China alone.
If you are looking to build a stamp collection, the key is rarity and quality.
The average stamp collection is an amalgamation of childhood memories, worth little more than nostalgic importance. The value is in items of the utmost rarity of the highest quality.
And rare stamps are just that – Stanley Gibbons recommends just 331 stamps from its current 3m stockholding for investment, a miniscule 0.0001%.
To get started, remember that knowledge is king. The serious beginner should find a reputable dealer who offers authenticity and money-back guarantees. A stamp dealer worth his salt will consider you a long-term client and gain pleasure from helping you build a valuable collection. Knowledge comes with experience. Take, for example, the two stamps in Fig.2 (p89). They are two very similar, very valuable stamps but there is actually a £34,000 difference in price between the two. Don’t be the person paying £47,000 for a £13,000 stamp on the recommendation of an inexperienced dealer.
Remember that condition is of paramount importance but is often an underestimated factor in stamp purchasing. Any slight deviation from perfection will have a dramatic effect on a stamp’s value and will definitely influence its investment potential.
“Collectors and investors have begun to realise that better Great Britain stamps are constantly decreasing in supply,” says Brian Bayford of BB Stamps. “Don’t necessarily buy the most expensive items; I would recommend that superb quality should be the primary concern as that will always be the first to sell.”
In Fig.3 (p89) the two images depict the same item: one appears to be a perfect strip of four and the other, in reality, is a repaired strip with margins added. This shows the need to buy from an honest and knowledgeable dealer and the dramatic effect flaws can have on value. Vincent Cordell, chief buyer at Stanley Gibbons Limited, echoes this. “If an item is listed at a price that is too good to be true, then it probably is. The slightest fault, such as a short perforation or small tear, can slash 95% off the value of a stamp. The slightest difference in colour can also dramatically affect the price, as can perforation differences and other flaws.”
We have stressed the importance of finding a reputable dealer, as well as some of the potential pitfalls from buying from the wrong dealer. But you can sidestep these potential pitfalls by buying at auction.
Colin Avery, auction manager at Stanley Gibbons, highlights the current successes being enjoyed by prestigious auction houses. “Auction prices have been very high recently with many items exceeding their catalogue value. We are happy to recommend items to new buyers, negating any real need for philatelic knowledge.”
So what countries should we look out for? “Great Britain remains buoyant and a recent auction of India was completely sold. India will be a big mover, given the size of the population.” Andrew Claridge at Grosvenor Auctions agrees. “We have seen a dramatic rise in interest in Great Britain and British Empire and Commonwealth stamps from both the United Kingdom and abroad. Interest is particularly keen at the top end of the market, where collectors and investors are competing for the rarest and highest-quality items.”
If you are considering investing in the rare stamp market, you can do so with the comfort of various professional organisations that provide authenticating services. The Royal Philatelic Society is the oldest such organisation. “Many collectors will require reassurance that a rare or expensive stamp is genuine and does not have defects,” says Chris Harmon, their President. “We have issued nearly 200,000 certificates since 1894 and have given opinions on most of the great world rarities as well as many thousands of more common stamps. The certificates are recognised throughout the world.”
The economic benefits of the rare stamp investment market are clear. Massive growth potential, strong historic returns and a simple supply and demand situation are all key factors, but there is one other boon. “Apart from the obvious point of portfolio diversification, the fascination of owning something of which there may be only half a dozen examples in the world is very powerful,” says Dominic Pemberton, director of Cazenove Singapore. With unique stamps starting at £1,000, it is good to know that an opportunity to own something so acutely rare (and a great investment opportunity) still exists today.
Adrian Roose is Associate Director of Stanley Gibbons (Guernsey) Limited
WHERE TO START
■ STANLEY GIBBONS AUCTIONS +44 (0)20 7836 8444 www.stanleygibbons.com/auctions
■ GROSVENOR AUCTIONS +44 (0)20 7379 8789 www.grosvenorauctions.com
■ BB STAMPS +44 (0)1256 773269 bbstamps@lineone.net
■ ANDREW VAUGHAN PHILATELICS LIMITED +44 (0)1827 63367 sales@stampsgb.co.uk
■ EMBASSY PHILATELICS +44 (0)2392 412512 info@embassystamps.co.uk
■ PHILATELIC TRADERS SOCIETY +44 (0)1252 628006 www.philatelic-traders-society. co.uk
■ THE ROYAL PHILATELIC SOCIETY LONDON secretary@rpsl.org.uk www.rpsl.org.uk
TOP TIPS
■ If a stamp is cheap, it is for a reason – there are no bargains.
■ Look out for obvious repairs – an example is hinges in unexpected places hiding paper damage.
■ Quality remains long after price is forgotten.
■ Rarities of today are rarities of tomorrow.
■ A smaller number of superb quality stamps is better than a large collection of nostalgia-driven purchases.
