Philatelic

  Investor

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What to Buy

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"What is an investment grade stamp…?"

"What should I buy…?"

These are two key questions a new investor will be asking. There are no simple, straightforward answers but we can offer some important guidelines which will help you make some decisions.

There is no definitive answer as to what makes a stamp or item of postal history worthy of investment. However, there are certain categories of stamps which are more likely to offer a better chance of appreciation than others.

Growth in value is driven by demand. If demand is coupled with scarcity then the conditions for ongoing growth are created. If a stamp is not only scarce and in demand but is also of high quality, then optimum conditions are created. Efforts should therefore be focused on items which have strong demand, where the future demand is expected to be maintained, where availability is limited and where quality and condition is apparent.

A cursory glance through the majority of auction catalogues will show you that the many of the more expensive, in demand items are from the 19th century or earlier part of the 20th century. Very early stamps were generally printed in low numbers (all though this was not always the case) and those where the survival rate was limited are today’s most sought after items.

The higher values in a stamp set will more than likely command a significant premium over those of lesser value. The number printed will have been smaller than the low values and many will have been difficult to afford at the time of purchase. There will usually be far fewer mint (unused) stamps that have survived than those that have been postaly used. Again, rarity will mean that the mint stamp commands a higher premium over the used.

However, these are generalizations and there are plenty of examples that contradict these assumptions. A good example is the Penny Black, the world’s first postage stamp, issued by Great Britain in 1840. Over 68 million were ultimately produced: by no means a rare stamp. But its status and popularity has always meant that it has been in strong demand, despite being a relatively common, low value stamp.

By far the majority of stamps are next to worthless from an investment perspective. Although an older stamp is more likely to be of higher value than a modern issue, there are still plenty of 100 year old stamps which still have little value today.

However, there is one category of modern stamp which does have investment value: the error. The stamp printer’s brief is to ensure that every issue of each value is identical and to the specification of the design commissioned by the relevant postal authority. But mistakes happen. For example, a certain colour may be missing from a design but only affect a few sheets, or less. These anomalies, despite being imperfect, are highly prized by specialist collectors and are strong contenders for an investment portfolio.

In stamp investment, knowledge is king. Individuals will dedicate a significant proportion of their lives studying minutiae and variants in very specific areas of philately. Two stamps of the same issue and value may look identical to the uninformed observer but careful study may well reveal subtle differences in shade, design flaws, overprints etc…and it is often these differences which determine scarcity and the conditions for an investment grade stamp to be created.

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