Investment
Rare stamps for investment Marco Kaster Investment Director for Stanley Gibbons (Asia)
The bidding stood at 2 million dollars and all eyes were on me. One of the Chinese dealers was the highest bidder. I nodded to the auctioneer. “2.1 million,” he announced and a murmur ran through the room. My rival shifted uncomfortably in his seat. This was already a record price, and more than what he wanted to pay. “2.1 million,” the auctioneer announced again, looking at the dealer. He shook his head. The hammer came down to a round of applause. A couple of collectors came up to shake my hand. I had just paid more than HK$2,000,000 — for a stamp!! I was buying the stamp on behalf of an investor – we had already put together a portfolio of rare British stamps, which would form the basis of his portfolio. He also wanted some key rarities that would have enduring appeal to collectors worldwide and so he had instructed me to buy a stamp featuring Dr Sun Yat-sen. But what makes this stamp so valuable — the normal stamp is very common and sells for around HK$8 — is that the portrait of Dr Sun is inverted, with only one sheet of just 50 stamps ever printed and put into circulation.
To illustrate this, US investor Bill Gross, the co-founder of PIMCO, who manages hundreds of billions of dollars, amassed a complete collection of 19th century US stamps, a feat accomplished by only two other collectors in the past. In 2007, Gross’ collection of British stamps, purchased during the preceding decade for about US$2.5 million, sold at auction for US$10.5 million. “It’s four times profit,” said a delighted Gross. “It’s better than the stock market!”
China 1941 $2 Dr Sun Yat-sen Note that the black portrait is inverted in relation to the blue frame.
Investment-grade stamps Whilst stamp collecting has been around since the middle of the 1850s, investing in rare stamps is a relatively new phenomenon. The distinction between collectible and investment-grade stamps must first be understood: Collectible stamps are collected by people who are interested in philately; they collect for the joy of it. Investment-grade stamps, on the other hand, are stamps identified as having the potential to grow in value based on rarity and certain other characteristics. Only an infinitesimally small fraction of stamps are likely to increase in value and investors use them for diversification and as an anchor for wealth preservation. Rare stamps are also uncorrelated to other asset classes and largely unaffected by economic events making them a very viable and stable alternative asset class with significant growth potential.
US investor Bill Gross probably the most prominent collector in the world today with a display of part of his stamp collection.
The GB250 Rare Stamp Index Now of course, most people are not in the market for a 2 million dollar stamp or able to amass a collection worth millions. Some have young families and are looking to invest for their children’s education; others may be approaching retirement and wish to protect their pension and yet again others are looking for portfolio diversification.