Rare stamps in a class of their own
Joanna Pitman advises investors who are wary of turbulent stock markets to investigate the world of philately, where values have risen steadily for 50 years Stamps, it is said, are the most valuable commodity on earth by weight. An 1868 Benjamin Franklin stamp, for example — a standard-sized stamp weighing a fraction of a fraction of a gram — was bought recently for $2.97 million by an American investor. So the claim may well be true.
Rare and desirable stamps, in good condition, can make impressive investments. The GB30 index, which tracks the values of the 30 rarest Great Britain stamps, has 'never once fallen in the last 50 years', says Geoff Anandappa, investment portfolio manager at the stamp dealers Stanley Gibbons in London. 'It has gone up by an average of 10.7 per cent per year over the last 50 years, and by 10 to 15 per cent per year in the last five years.'
Even hardened financial investors are impressed. Bill Gross, director of the fixedincome investment fund Pimco, which has $687 billion under management, says stamps are a better investment than the stock market. He's the one who bought the Benjamin Franklin stamp, so he must have given some deep thought to the question of relativities with other asset classes. Gross started investing in stamps about ten years ago. Recently he auctioned his portfolio of Great Britain stamps in New York, giving the proceeds to the charity Doctors Without Borders. He originally bought the collection of stamps for $2.5 million; the pre-auction estimate for them was $5 million, and $10.5 million was realised in the actual sale.
Stanley Gibbons is one of the world's leading stamp dealers, founded in 1856 on the basis of the purchase by Edward Stanley Gibbons of a sackful of rare triangular stamps from the Cape of Good Hope. The company now manages between £10 and £12 million of stamp investment portfolios.
In the world of philately there are two types of buyer: collectors and investors. Collectors typically spend from £5 to £100 on a stamp. Stanley Gibbons stocks two to three million of these kinds of stamps for collectors to browse. In the collecting world, buyers tend to collect either by country or from the reign of a chosen monarch such as Queen Victoria — or they find some pleasing personal theme to pursue, collecting only stamps that feature birds, boats, clowns or bears.
Investors, on the other hand, buy investment-grade stamps that typically start at £1,000 each, and they are rarely interested in what is depicted on them. Stanley Gibbons recommends only about 100 to 150 of these stamps for investment at any one time, but constantly searches the world's stamp dealers and auction houses to supply investors on their waiting lists with particular gems.
If you are thinking of branching into stamp investment, the best advice is to concentrate on Great Britain and Commonwealth stamps, particularly classic stamps from Australia, Hong Kong and the Falkland Islands. These will usually be a hundred years old or more, and the high-value stamps — high in denominational value, that is — are particularly sought after because they tended to be printed in smaller quantities. Good quality Victorian £1 or £5 stamps, for example, are rare and expensive. A very fine Victorian £5 stamp in used condition would be worth £4,500. In unused condition, it would be worth £10,000.
If the stamp still has the original gum on the back, and is in the same condition as it was when issued by the Post Office, then it will be extremely highly prized, and priced. The back of a stamp is as important as the front,' says Anandappa. 'If the original gum is fully intact, and the perforations are undamaged, it'll be worth a premium.'
For all the 100,000 collectors on the books of Stanley Gibbons, there are only a few hundred investors, but 95 per cent of those investors make use of the company's free storage and insurance. There is also an off shore investment branch in Guernsey. Many investors never ask to see their stamps.
Curiously, the upward gradient of stamp indices has never correlated with the more familiar indices for shares or house prices, nor with those for art or wine. 'Stamps seem to be in a category of their own: they simply do not link up with movements in other investment markets. Surprisingly few people realise how strong an investment in carefully chosen rare stamps can be.'
The royal family has collected stamps since they were invented, but it was George V who built up the royal collection and gave Stanley Gibbons a Royal Warrant in 1914. The present Queen is not an avid collector herself but the Royal Philatelic Collection has been enlarged considerably during her reign. Housed in St James's Palace under the care of its Keeper, Michael Sefi, the collection is now worth a very large sum indeed. Unfortunately I'm forbidden from revealing the figure. Six years ago the then Keeper of the collection invested in a block of ten Penny Blacks, one of the largest known blocks, produced on 6 May 1840, the first day of issue. It cost his employer £250,000. It would now be worth between £1 million and £1.5 million.
A typical stamp investment portfolio will include four or five different types of stamps: a handful of Queen Victoria high-denominations, some Penny Blacks and Twopenny Blues, George V seahorse stamps, Edward VII stamps, and perhaps a few modern examples incorporating production errors. These specialist error items are very undervalued at the moment, says Anandappa: scarcity gives them the potential for a great rise in value over the next ten years.
The other big trend in the stamp world — as in so many other investment sectors — is a growing level of enthusiasm from new-rich investors in Asia. There are an estimated 18 million stamp collectors in China, many of them interested in early Great Britain and Commonwealth stamps Similar interest is growing in India.
If you have some spare cash and you don't like the look of the stock markets this summer, now might be a good time to retrieve your childhood stamp album from the attic and revisit a hobby that could bring you handsome and steady returns.
Read Martin Vander Weyer's weekly business column at www.spectatorco.uk.
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