Middle Eastern investors turn to stamps

Middle Eastern investors turn to stamps
05 February 2012

DID you know that the world record for a sheet of rare Chinese monkey stamps was broken four times in 18 months between 2010 and 2011? The sheet’s final price was HK $1.49 million ($192,000) – a 186% increase in value since January 2010.

Prior to this, the record price for a Chinese postage stamp doubled from $333,862 to $712,500 in the space of just three months in 2010.

What can we learn from these examples? Well, most people are aware of art and fine wines as alternative assets, but what about rare postage stamps?

Multi-million dollar hobby

You might not realise it, but the hobby of collecting rare and valuable postage stamps is being taken up by more and more Middle Eastern investors. They are joining the likes of Warren Buffett and Bill Gross, both among the world’s richest men, by embracing this very rewarding hobby.

Gross in particular is a big advocate of stamps as investments. After selling part of his Great Britain postage stamp collection for $10.5m – he’d bought it for around $2.5m seven years prior – he commented: “Four times profit, it’s better than the stock market.”

In fact, stamps have achieved historical returns of 9.5% per year over the last 50 years and are outperforming traditional investments like shares and savings accounts.

Booming market

As my fellow cashy contributor Thomas Kelly wrote back in 2010, postage stamps date back to the issuing of the Penny Black by Great Britain in May 1840. The formula was copied all around the world and first taken up in the Middle East by the Ottoman Empire (present day Turkey) in the 1860s.

Fast-forward to the present day, and the overall current stamp market is estimated to be worth some £6 billion per year. It is a massive worldwide hobby, with an estimated 48 million collectors worldwide (and more than 18 million in China alone). Stamps are also the third most traded eBay category.

Increasingly, the hobby of postage stamp collecting is being taken up by Chinese, Indian and Middle Eastern collectors. This growing interest from around the world is driving up values for the rarest stamps, as more and more collectors compete for them at auctions.

“Stamp collecting ... enlarges our vision [and] broadens our knowledge,” said the famous stamp collector President Franklin Delano Roosevelt. Because philatelists love geography and history, postage stamps have great global potential as assets.

Top investment tips

As with any type of collectible, it’s vital that you know what you are doing before entering the postage stamp market. Fortunately, thanks to the internet and web forums, you can easily get familiar with terms like ‘mint’, ‘die cut’ or ‘tête-bêche’. And stamp enthusiasts are among the most informed and helpful collectors out there.

Reading auction catalogues is a great way to learn which stamps carry value, while also educating yourself about the philatelic markets. Choose a dealer your can trust. British auctioneer Spink, as an example, takes great pride in its sale catalogues, including detailed information and images.

Spink’s 2011 sale of the Chartwell Collection in London, for instance, offered two 1847 Mauritius 2d deep blue stamps. One was listed with a £30,000 ($46,592) pre-sale estimate, the other was estimated at just £250 ($388). Why? The answer is down to rarity, quality and appearance.

Another factor which determines a postage stamp’s value is its presentation. The stamp should ideally be unused with its adhesive gum intact. Its design should be well-centred with even margins on all sides.

Middle East: the market to watch

Sales like Cherrystone Auctions’ recent Santa Fe Collection of the Middle East suggests that 2012 will be a great year for Middle East stamps and collectors.

Do your research and treat it as a long-term investment, and rare postage stamps could be the best and most rewarding hobby-meets-investment that you’ve never considered before.

Do you invest in stamps or are you thinking about it? Share with cashy...

Comments

No comments.

If you are registered you need to log in to comment, if not, please sign up.

Author
Collectibles expert and dealer
Facebook Feed
Related articles