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Interesting Investments: Stamps

Rare stamps can be worth far more than anyone would imagine for a piece of paper and adhesive.
Avery T. Phillips is a freelance human being with too much to say. She loves nature and examining human interactions with the world. Comment or tweet her @a_taylorian with any questions or suggestions.
Avery T. Phillips is a freelance human being with too much to say. She loves nature and examining human interactions with the world. Comment or tweet her @a_taylorian with any questions or suggestions.

We’ve looked at collectibles better than gold and trading cards worth more than small cars, so let’s look at another odd collectible. It’s a classic collectible, but stamps can be worth far more than you would imagine for a piece of paper and adhesive.

Collectible or Investment?

Picture this: You, an artist, apply for a position at the post office as a stamp designer. You toil away, designing seasonal stamps, when suddenly you are informed a design from a few years ago has caught the eye of collectors, and, owning a few sheets, you are suddenly going to be rich!

Unfortunately for any prospective stamp designers, this is unlikely to happen. Most collectible stamps are much older than just a few years. Collecting stamps that you think are fine art is also, unfortunately, not a strategy for investment-grade stamps.

Instead, there are five factors for what makes a stamp investment-grade:

  • Rarity: How many are left, or is the stamp unique?
  • Condition: What is the quality of the stamp? Does it have the original gum adhesive? How are the margins? Are there any errors?
  • Authenticity: Unless there’s a certificate of authenticity, and the item preferably has a documented history, stay away.
  • Liquidity: If there aren’t a solid number of collectors who are interested, there won’t be anything to drive up prices.
  • Price: As the saying goes, buy low, sell high.

British Indexes

In fact, it might simply be easiest to invest in the two stamp indexes from British company Stanley Gibbons. The GB250 tracks 250 British investment-grade stamps, and has since 2002. Meanwhile, the GB30 looks at the top 30 British investment-grade stamps, and has tracked their movement over the past 62 years. Returns aren’t shabby, either — a growth of 98.5 percent over the past decade for the GB30, and 133.5 percent for the GB250. That’s 7.1 percent and 8.8 percent per year, respectively.

In 2016, the top 105 stamps in America, priced over $25,000 each, saw a 169.33 percent growth over a decade. Stamps between $1,000 and $5,000 appreciated 40.22 percent over a decade.

The problem for collectors is that, of the US stamps that appreciated more than 50 percent, slightly less than a third were regular-issue stamps, meaning you could, in theory, buy them from your postal carrier. Notice, however, that we are talking about 10-year growth patterns. Stamp investment is not for those looking for a quick buck; it is a slow process, taking time to build.

The Penny Black

The first adhesive stamp ever issued, the 1840 Penny Black, featuring Queen Victoria, is the most expensive, and well-known, stamp. Only 68 million were created. Now, even used Penny Blacks go for hundreds of pounds. An imprimatur, or a stamp from one of the first runs off of the printing plate, is currently being sold for £250,000. At the time, stamps were not perforated — postal servants had to cut each stamp individually. This particular example is from the first plate, in the corner, making it unique.

The Penny Red

The Penny Black, however, is not the most valuable. The Penny Black is third, followed by the Penny Red. The Penny Red, created by the millions between 1841 and 1879. Plate 77, however, had a technical issue, where the perforations did not line up. The entire plate of stamps was destroyed.

Except a few somehow made it to circulation. Four mint and five used stamps have been reported, though the authenticity of these has been questioned. Some have not been seen in decades. One, however, was sold by Stanley Gibbons for £550,000 in 2012, and another for £495,000 in 2016.

The British Guiana One-Cent Magenta

The absolute rarest stamp is the British Guiana One-Cent Magenta. In 1855, a postmaster in Great Britain expected 50,000 stamps from the colony of British Guiana (now Guyana) on the northern coast of South America. Instead, he received 5,000. He improvised, using a local newspaper, the Royal Gazette, to print provisional stamps. One-cent stamps were only used for newspapers, as four-cent stamps were used for letters. As such, not many were saved. The postmaster started taking the non-provisional stamps out of circulation. They were only in circulation between 8 and 10 weeks.

In 1873, 12-year-old Vernon Vaughan of Scotland found one stamp in his uncle’s papers. As was common at the time, he took it to a postal clerk and had it stamped to thwart counterfeiters, suspecting it might be valuable. He sold it for six shillings, about $10 today.

That same stamp is the only known British Guiana One-Cent Magenta. After being passed between French Count Philippe la Renotiere von Ferrary, multiple stamp collectors, and a stamp consortium, it was bought in 1980 by John E. du Pont, recently the focus of the Steve Carrell-helmed movie Foxcatcher and heir to the du Pont fortune. After his death in prison in 2010, it was put to auction and sold for a staggering $9.5 million.

Why Invest?

While the history is fascinating, why should you bother investing in stamps? Let’s go back to the two indexes.

When mass defaults on mortgages caused the 2008 financial crisis, the economy was set into a tailspin. Suddenly, property wasn’t a good investment; businesses that were “too big to fail” ended up failing and needing a bailout, and auto companies asked for government handouts. Everything took a turn for the worse.

Not so with stamps. The GB30 rose by 8.5 percent during 2008-2010, up a total of £125,000, while the GB250 saw 17.7 percent growth, up almost £1,028,000. Stamps not only held their value, they increased. While the SG109 1869 6d Mauve, the best performing in 2016, frose from £35,000 to £37,000, the SG135 1878 10s Greenish Grey jumped from £60,000 to £160,000 from 2006 to 2016.

Stamps are a long game of waiting for value to increase, but the most valuable stamps have seen growth in the past decade. While it’s easiest to invest in indexes, it’s still possible to invest in single stamps, especially the rarest. If you have patience, investing in stamps can earn a tidy sum.