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Thursday 4 December 2008

Stamps are getting dearer

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

Even hardened financial investors are impressed. Bill Gross, director of the fixed-income 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.’

More articles from: Joanna Pitman | this section

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