Rare Stamps Coins Art and Antiques Are Items on Which Investors Can Make a Large Profit

Investment in postage stamps

The British Guiana 1c magenta is i of the rarest, and most valuable, stamps in the earth. Sold in June 2014 at Sotheby's for $9.48 1000000.

Philatelic investment is investment in collectible postage stamps for the purpose of realizing a profit. Philatelic investment was popular during the 1970s just so fell out of favour following a speculative bubble and prices of rare stamps took many years to recover.^[1]

Overview [edit]

Investing in rare stamps requires a loftier degree of expertise and tin can be very risky for the novice. Rare stamps are amid the virtually portable of tangible investments, take upward little space merely require careful storage as condition is one of the about important factors in determining the value of a stamp. Other tangible investments include art, antiques, precious metals, rare coins and many others that are all termed culling investments. Involvement in stamps as an investment tends to increase when traditional investments are not doing well, causing investors to seek alternatives. The increasing historic period of the population in western countries has too been credited with a resurgence in interest in stamps.^{[2] [3]}

A British auctioneer warned: "Unless yous know what you are doing – and this only comes with many years of experience – it is very difficult to buy sensibly and at the correct prices. When you buy on a retail ground, yous have to overcome the profit margins the dealer has built into his selling price, plus VAT. When you sell, you also have to overcome dealing charges, whether you sell to an auction business firm or a dealer. That would consume an awful lot of value. To overcome that marker-up and sell at a profit would require quite a few years of appreciation."^[four]

Before investing [edit]

A High german 1 Reichsmark stamp. Ane of the most mutual and least valuable stamps in the world.

A stamp investor should have a good noesis of:

• Nomenclature,
• Condition grading,
• Authentication,
• Handling and storage,
• The stamp market,
• Philatelic literature.

The prospective investor will besides benefit from attending stamp clubs, auctions, philatelic shows and having a relationship with a knowledgeable dealer.

Very subtle differences in color, perforation, overprinting, and the similar may be what differentiates a valuable stamp from a mutual one. The investor not only has to exist very knowledgeable of these issues just also know (or at least take a reputable skilful available to cheque) whether alterations have been made to make an inexpensive stamp look like a valuable 1, or indeed, whether the stamp itself is simply a counterfeit.

The value of a postage [edit]

The value of a postage stamp is determined by a number of factors including:

• The number available on the philatelic marketplace,
• Need from collectors inside and outside the land of origin,
• Condition, a damaged stamp is worth simply a fraction of one in fine condition,
• Thematic appeal,
• Perceptions as to current or future value,
• Current events, a news issue may temporarily increase values, for instance after the death of Diana, Princess of Wales,
• The place of buy or auction. Values vary according to where the transaction takes place. Prices vary from country to country for the same postage stamp and prices realised at an sale may exist unlike from those charged by a dealer or in a individual sale between collectors.
• Historical significance and/or the rarity of the postmark on a used stamp.

Rare or unusual stamps can be submitted for Philatelic expertisation. The opinions of experts differ and have evolved over fourth dimension. Conflicting skilful opinions, such as on colour shade or whether a postage stamp has been reperforated, tin have a huge effect on a postage's value.^[5]

Buying stamps [edit]

A British i shilling embossed stamp, typical of the type included in an investment portfolio.

There are a number of places where a prospective investor tin purchase stamps:

• The internet,
• Auctions,
• Stamp dealers,
• A few specialised postage stamp investment firms,
• From a collector in a individual sale.

Stamps purchased for investment are ordinarily old classic stamps in fine status, such as British Victorian stamps or American stamps from earlier 1900. These may be thought of as the equivalent of buying a blue chip share. Although hereafter prices may vary, as long as there is a hobby of stamp collecting there is likely to exist practiced demand for these stamps.

Stamps typically included in an investment portfolio will exist rare and priced in the thousands of dollars or pounds but they volition probably not be the greatest rarities as those unique items are typically sold at public auctions and may accomplish prices approaching or exceeding $1 million US.

Some collectors and investors besides try to anticipate future trends and buy depression now, this withal, is hard to get right and may take a long fourth dimension to pay off. Investors may effort to identify a developing country with an expanding middle class who may have the time and money to pursue a hobby like postage stamp collecting as the developing domestic demand may help to force prices upwardly. Recent examples have been Republic of india and China.

Some firms are developing collective or mutual funds where money from many investors is pooled and each investor owns shares or units in the fund. The fund then invests the money in stamps.

Size of the market [edit]

Unlike stocks and shares, the majority of transactions in the philatelic or stamp market take place informally, by post order, or in retail environments, and therefore the size of the marketplace is hard to determine. The market place is certainly much smaller than the fiscal markets simply it is not trivial. It has been estimated at £5 Billion.^[half-dozen] The bulk of these transactions, however, are likely to be depression value items rather than investments. In a 2007 interview, Mike Hall of Stanley Gibbons estimated that "About $1 billion of rare stamps trade annually in the $x billion-a-year postage stamp market."^[2] The number of collectors worldwide was estimated at 30 million in 2004.^[7] In 2009, Adrian Roose of Stanley Gibbons estimated the figure at 48 million including xviii one thousand thousand in China. It is non known how many of these are serious collectors.^[8]

Historical data [edit]

While in that location are long term records of retail stamp prices, the showtime catalogue being prepared in 1862, in that location is little objective historical information nearly the past performance of stamps as investments. No long term indices similar the Dow Jones or FTSE Index exist, although some figures accept been compiled by Stanley Gibbons and Postage stamp Magazine in the UK.

From 2002, Stanley Gibbons compiled a SG100 Stamp Alphabetize based on retail and auction prices for the "acme 100 most frequently traded stamps" in the world. The index appears on the Bloomberg Concluding but was discontinued and given heritage status. In 2004 they also launched an alphabetize of 30 rare British stamps.^[9] In 2012 the company launched the GB250 Rare Stamp Alphabetize 'to provide a broad view of the investment market for United kingdom stamps', listing the blazon of stamps they would recommend for investment purposes. The GB30 and GB250 indices are listed on both the Bloomberg Professional service and Thomson Reuters. According to Stanley Gibbons, rare stamps have averaged an annual compound return of 10 per cent over the past fifty years,^[ten] withal, it is important to call up that this figure has been calculated using backtesting as postage price indexes are a recent innovation. In addition, the prices in the indexes are based in part on Stanley Gibbon's own retail price lists and oft traded but low value stamps have been excluded from the alphabetize.

Stamp catalogue prices are not considered reliable as they are naught more estimates at the top end and represent a retail selling price at the bottom end of the market place. Auction realisations may be more reliable just are hard to use as the investor has to personally analyse the realisations from many auctions over a long period of time in lodge to come up to any useful conclusions. While virtually trading in shares is on a recognised stock commutation and takes identify transparently in public, that is non the case with stamps where only auction transactions accept place in public view.

Selling stamps [edit]

There are a number of ways to sell stamps, equally in that location are to buy, and each has its own advantages and disadvantages.

• Auctions may achieve the highest prices simply the costs are too loftier.
• Dealers may be able to act quickly or pay greenbacks but are likely to offer a toll at least one 3rd below the normal retail auction cost for the stamp as the dealer needs to brand a profit on the transaction. Some dealers aim to double their coin on every transaction.
• Private sales. Many sales have place between collectors, however, an investor who is non a collector is unlikely to take the personal contacts to secure such a auction.

There is no equivalent of the stock exchange for stamps.

Risks and disadvantages [edit]

Investing successfully in stamps requires a high degree of specialised noesis. This takes time to acquire and at that place are many pitfalls for the inexperienced investor. Some of the risks and disadvantages are:

• The return is not guaranteed.
• The cost of buying is loftier compared to nigh other forms of investment.^[4]
• The cost of selling is also relatively high.^[4]
• Purchases may be liable to a sales tax, for instance VAT in the European Union,^[four] which the buyer may not be able to reclaim.
• Stamps may need to be expertised, for a fee, to ensure that they are what they announced to exist.
• As tangible items, stamps may need to exist insured and are at take chances of physical impairment or deterioration.
• The future market for the sale of philatelic items is uncertain. The demand for philatelic items comes principally from collectors, not investors, and the majority of collectors are anile over l in western countries. There are relatively few younger collectors in Europe and North America that would be expected to be the buyers of the future,^[11] although anecdotal evidence suggest that may not be the case in Republic of india, China and other developing countries.
• In the longer term, the futurity existence of postage stamps may be in doubt every bit people employ electronic communications more than and more than and send fewer letters. If stamps are no longer sold for postage they may cease to exist collected and if they are not collected, the vital collector demand that underpins the investment marketplace may disappear.
• Stamps have lilliputian intrinsic value, they do not accept the raw material value of a gilded coin, they do not represent a share in a business like equities, and they unremarkably lack the indelible visual appeal of a groovy work of fine art.
• Stamp investment is relatively unregulated compared with, for case, investments in a common fund and investors may have little protection if things go wrong.
• The size of the philatelic marketplace is small compared to the value of the stock marketplace and vulnerable to aggressive buying past speculators, which may distort prices. This happened in the 1970s when a speculative bubble was followed by a collapse in prices.^[12]
• Stamps practise not generate any interest or dividends.
• It may be impossible to determine the electric current market value of the stamps without selling them.
• Stamps packaged as "investment portfolios" may be charged at prices higher than their normal market value.
• There is very little reliable and independent historical data well-nigh the performance of stamps as investments.
• A long term view is necessary. A quick purchase and sale is unlikely to be profitable.^[4]
• When more traditional investments are doing well, interest in alternative investments like stamps may quickly wane.
• Special instructions volition demand to exist given to spouses or executors in the event of the possessor's incapacity or death every bit they may exist unfamiliar with philatelic items.
• Stamps may take time to be sold unlike cash, equities or mutual funds which tin commonly be realised with minimal delay.

Advantages [edit]

• Stamps are not highly correlated with other forms of investment^[xiii] and may therefore represent a valuable diversification inside a wider portfolio.
• Stamps are highly portable stores of wealth and are hands transported over national borders.
• An ageing population in western countries means that investors approaching retirement may resume childhood hobbies, thus increasing demand.^[13]
• At that place are millions of enthusiastic stamp collectors around the world creating a global marketplace.^[4]
• There is a finite supply of classic stamps.
• Stamps are not a financial asset and so may perform ameliorate than cash in times of high inflation.
• As a tangible nugget, a postage cannot get out of business similar a company quoted on the stock market.
• Stamps are a relatively confidential investment. Unless bought at a public auction, ownership is private and at that place is no public annals equally at that place is for many investments in equities.
• The investor is able to hold and adore his investment, and savor its aesthetic aspects.
• Many stamps take an interesting historical background.

Regulation and investor protection [edit]

Stamps purchased for investment do non commonly have any special regulatory protection for the purchaser. In the United Kingdom there is no regulation of this area at all from the Financial Conduct Say-so.^[fourteen] Rules elsewhere may vary. Where investment is collective through a mutual fund there may be some regulation of the activities of the fund depending on its location.

Stamp investment scandals [edit]

There take been a number of scandals in this area over the years.

In Ireland in the 1950s, Paul Singer, a Bratislavian Doctor of Philosophy, ran a Ponzi scheme under the name Shanahan Stamp Auctions. The scheme collapsed when a mysterious robbery took place at the company's office on nine May 1959, the eve of a major auction, when more than than £300,000 worth of stamps went missing. Vocaliser was charged with fraud, only was acquitted and vanished.^{[fifteen] [xvi]}

In the 1970s, the bursting of a speculative bubble left investors unable to realise their investment at the price they had paid. Prices took decades to recover.^[12]

In 2006, two Spanish firms Afinsa and Forum Filatelico complanate and left around 350,000 investors with investments worth every bit little as 10% of the toll they had paid.^{[14] [17] [18]}

In November 2017 it was announced that Stanley Gibbons' postage stamp investment subsidiary in Guernsey had been placed in administration. The company was reported to take £12.6 million of philatelic stock but over £70m of liabilities, made up of £54m of "buy-dorsum" guarantees, £6.5m owed to its parent company, and £11m of sundry liabilities.^[19]

See also [edit]

• Alternative investment
• Traditional investments
• Listing of most expensive philatelic items
•  Philately portal

References [edit]

1. ^ Levene, Tony (2005-01-22). "Philately won't get you anywhere". Money. The Guardian. Retrieved 2010-02-23 .
2. ^ ^{a b} Sandler, Linda (2007-06-08). "Bill Gross's British Stamps Outperformed Pimco Fund (Update1)". Bloomberg.com. Retrieved 2010-03-04 .
3. ^ "Final post for stamp collectors?" Patrick Collinson, The Guardian, 13 April 2013. Retrieved 18 March 2015.
4. ^ ^{a b c d east f} Colin Such, Warwick & Warwick, quoted in "Highlight: Investing in stamps" by Anthony Beachey, Investment Adviser, eighteen January 2010. Archived 21 January 2010 at the Wayback Auto Archived at WebCite hither.
5. ^ A Precipitous Centre on collecting Usa Classics (Sharp Photography Publications, 2021) ASIN B091MBTGJ7 (read online)
6. ^ "First course returns for alternative investments" by John Greenwood in The Telegraph, 6 October 2008.
7. ^ "Postage your rare individuality" by Nigel Bolitho in Financial Adviser, Financial Times Publications, 25 March 2004, p.56.
8. ^ "Alternative Investments: Stamp of blessing" by Adrian Roose, Investment Adviser, FTAdviser.com, xxx March 2009.
9. ^ GB30 Rarities Alphabetize. Stanley Gibbons 2011. Retrieved 21 September 2011.
10. ^ "Back to growth" by Vincent Bevins in The Fiscal Times nineteen Jan 2010.
11. ^ Can stamp collecting deliver profits? Emma Wall in telegraph.co.united kingdom, 21 January 2012. Retrieved 30 April 2013.
12. ^ ^{a b} "Stamps lick the contest" by Mark Robinson in Investors Chronicle, fifteen August 2008, pp.40-41. Archived version at WebCite.
13. ^ ^{a b} "Investing in the 'hobby of things' " in Professional Adviser, 28 September 2006, p.19.
14. ^ ^{a b} Levene, Tony (2006-05-13). "Will postage-buyers come up unstuck?". Money. The Guardian. Retrieved 2010-02-25 .
15. ^ Joyce, Joe (1962-01-25). "Stamp auctioneer's epic fraud case ends in acquittal". The Irish gaelic Times. Retrieved 2010-02-25 .
16. ^ Egan, Rory (2006-11-19). "Shanahan Postage Auctions". Irish Independent. Retrieved 2010-02-25 .
17. ^ Hotten, Russell (2006-05-13). "Spanish scandal hits 350,000 investors". Daily Telegraph. Retrieved 2010-03-04 .
18. ^ Bown, Jessica (2006-05-21). "Spanish fraud rocks UK postage investors". The Times. Archived from the original on 2010-04-08. Retrieved 2010-03-03 . {{cite news}}: CS1 maint: bot: original URL status unknown (link)
19. ^ "Scheme proves philately won't get you everywhere", David Brownish, The Times, 23 November 2017, p. 51.

Further reading [edit]

• Datz, Stephen R. (2009) Stamp Investing. General Trade Corporation. ISBN 978-0882190297
• Temple, Peter. (2010) The Handbook of Alternative Assets: Making Money from Art, Rare Books, Coins and Banknotes, Forestry, Aureate and Precious Metals, Stamps, Wine and Other Alternative Assets. Petersfield: Harriman House. ISBN 9781614770763

External links [edit]

• A.Southward.D.A. The Stamp Dealer'south Obligations and Responsibilities When Selling Stamps equally an Investment.
• Investing in Rare and Valuable Stamps by Jan Kosniowski. Archive here.
• Robert Murray article on stamp investment.
• Stanley Gibbons Investment Indices
• Portfolio Diversification benefits of Investing in Stamps by Chris Veld, University of Stirling. (Incomplete showtime draft)
• The Selection of Investment Form Stamps by Gary Watson, Prestige Philately.

bealsawn1996.blogspot.com

Source: https://en.wikipedia.org/wiki/Philatelic_investment

Share this post