TO PEOPLE who are serious about their philately, the idea of buying stamps purely as an investment is little short of heresy. To investors who have seen poor returns from stock markets, the idea of stamps as an alternative investment may now look rather tempting.
Only a few years ago, many in the stamp market were distancing themselves from the promotion of stamps as an investment. Today, however, that has changed and the words stamp and investment are being mentioned in the same sentence.
A further development on the horizon is the change from 2006 that will allow pension funds to invest in stamps, subject to Inland Revenue agreement, as an asset with potential for growth.
One of the prime movers in the recent promotion of stamps as investments is one of the best-known names in the market, Stanley Gibbons. Last month, when it announced bumper half-year results with pre-tax profits up by 86 per cent, it also set out its stall in the investment market. “We are building relationships with independent financial advisers to develop the sale of stamps as an alternative investment,” says Paul Fraser, chairman of Stanley Gibbons.
“There are more than 30 million stamp collectors worldwide, so it is a matter of supply and demand driving up demand for rarities,” says Adrian Roose, of Stanley Gibbons.
In addition, he points to the company’s own index of key stamps, the Stanley Gibbons 100, which tracks the retail and auction prices of the 100 most commonly traded stamps. In 2003, it rose by 15 per cent. Since 1997, the increase is 51.4 per cent.
A Penny Black in mint condition, says Mr Roose, has risen by 25 per cent in the past year and now sells for about £5,000. A pair of Penny Blacks sold at Stanley Gibbons for £18,000 this year, having been bought for £8,500 in 2001.
Clearly, the stamps that will appreciate in value are not first-day covers issued in vast quantities, or those issued by obscure countries and given away in handfuls. For investors who are not real enthusiasts, Stanley Gibbons offers a portfolio management service. The minimum investment is £5,000, which would buy two or three stamps. The average investment is about £20,000.
Other leading players in the stamp market acknowledge the strength of prices for good-quality examples. At Spink’s inaugural auction in Paris last November, a 1 franc vermillion issued in 1849, from the La Fayette collection, fetched a record €924,00. But the specialists in stamps, coins and medals are more cautious in promoting stamps for their investment appeal.
David Parsons, associate director of Spink’s stamp department, says: “The business of investing in stamps is a bit of a touchy subject. As auctioneers, we do not like to get involved in investment.”
While Spink does not offer a portfolio service, it does advise collectors on what to buy. “We can suggest what to buy, educate buyers and point them in the right direction,” Mr Parsons says. “The market is buoyant but has gone through ups and downs in the past, especially in the late 1970s and early 1980s.”
He adds that the promotion of stamps as an investment meant that many people charged in during those periods, some of whom “bought stamps at vastly inflated prices”. Eventually, the bubble burst and it took the market quite a time to recover.
Recent price rises, he says, have been underpinned by collectors buying because of their love of stamps, rather than as investors. For the serious collector, “quality has become the most important factor in the pricing of stamps”.
However, spotting quality is no job for the amateur. Expert advice from a reputable dealer or auction house is essential. It is also worth remembering, particularly if you are buying as an investment, that the stamp market is not regulated like financial markets.
The best advice is to buy through companies that are members of the Philatelic Traders Society, which monitors dealings in the market, and also runs key events such as the Stampex shows.
For collectors, forthcoming events include the autumn Stampex from September 15 to 19 in London. Bonhams, which holds ten sales a year, has its next auction on September 21 and 22 at its Knightsbridge saleroom. On September 22 and 23, a collection of Australian state stamps and a private collection of the distinctive triangular stamps issued by the Cape of Good Hope will be sold at Spink.
Collectors worldwide will be focusing on the first of a series of very important sales at Sotheby’s in September. The Sir Gawaine Baillie collection is being sold in ten sales running into 2006. It is described as the most important collection to be sold for 50 years.
The scale and quality of the collection has proved something of a revelation. After Sir Gawaine’s death last year, Richard Ashton, of Sotheby’s, was asked to give a valuation and was amazed by what he discovered. “It was like going into Aladdin’s cave,” he says. Even Sir Gawaine’s family had little idea. “I realised I was probably the first person to see the collection in its entirety.” It runs to 300 albums, 100,000 stamps and is likely to realise more than £11 million.
A selection of stamps from Great Britain is the first to be sold from the collection. The sale takes place over three days, from September 29 to October 1. It includes the lot with the highest estimate in the sale, a sheet of 20 two shilling stamps issued in 1880. The stamp was printed in brown, having previously been printed in blue, but was in use for only a few months.
“Previously, a pair of these was the largest number known,” Mr Ashton says. A sheet of 20, therefore, is expected to sell for up to £250,000. The sale also includes an example of a stamp known as the Tyrian Plum, a 2d stamp printed in 1910 in a distinctive plum colour.
Before it came into use, the King died and most of the stamps were destroyed. For a survivor such as this example, expect to pay £20,000 to £22,000.
Stanley Gibbons: 020-7836 8444, www.stanleygibbons.com; Spink: 020-7563 4000, www.spink.com; Philatelic Traders Society: 01252 628006, www.philatelic-traders-society .co.uk; Stampex: 01252 628006, www.stampex.ltd.uk; Bonhams: 020-7393 3900, www.bonhams.com; Sotheby’s: 020-7293 5000, www.sothebys.com.
