Thursday 28 Mar 2024
By
main news image
This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on August 8 - 14, 2016.

 

Heddle says a number of prominent businessmen in Southeast Asia are significant collectors and the investment market is beginning to grow as investors in the region look at intra-generational family investing. “With the London 2020 stamp show on the horizon, this could be a good time to buy British stamps. As for Chinese rarities, they continue to break records at auctions,” he adds. 

Billionaire bond manager Bill Gross is a well-known stamp collector who has made significant returns over time. He recently sold a sizeable chunk of his stamp collection, netting him US$4.5 million. According to The New York Times, he had spent more than US$100 million accumulating stamps since the early 1990s. The proceeds from the auction were donated to the philanthropic arm of his former employer, Pimco Foundation; The New York Times Neediest Cases Fund; and other smaller charities.

Like many avid collectors, Gross was not one to boast of his stamp collection. It was reported that he remained an anonymous collector until 2004 when acquaintance and philatelic adviser Charles Shreve compelled him to go public to help liven up the dying hobby. Stamp collecting was once the world’s most popular hobby. 

 

Quality and condition are everything

Investment-grade stamps are identified and assessed based on five key factors — rarity, condition, authenticity, price and liquidity.

“Generally speaking, it is the rarest stamps and coins in the best condition, with guaranteed authenticity — beware of forgers — that you buy at the best price and where there is a market of collectors and/or collector-investors to sell to that make investment-grade stamps,” says Heddle. 

Philatelic Society of Malaysia president Datuk Anuar Bashah Mohd Sohore says that while stamp collecting is no longer as popular, it is still thriving as its reputation as a viable alternative investment is growing.

“The Penny Black, issued in 1840, is the oldest stamp in the world, but it is not the most expensive because millions of it were printed. But Penny Blacks that are cut perfectly and are kept in mint condition in blocks of four or six are bound to fetch a high price,” he says.

“The challenge is to get a Penny Black that is perfectly cut. The first stamps came without perforated edges, so to get four beautiful edges is a challenge. That is why when valuing a Penny Black, a philatelist will use terms such as four or three edges.” 

Anuar started his collection when he was seven years old and has amassed more than 17,000 stamps, including some rare, early British Crown Colony gems as well as 5,000 mosque and 5,000 orchid-themed pieces. He considers himself a stamp hobbyist and has refused to put a price on his collection.

Condition, scarcity and errors are some of the important factors when determining the price and fair value of a stamp. Collectors are obsessed with quality. When buying a stamp for investment, few compromises are made unless a stamp is unique or very rare.

To ascertain the condition of a stamp, Anuar says one should look at how faded the colour is, how the edges are holding up, the state of the gum on the back of the stamp and the authenticity of the stamp. He adds that avid collectors should look at getting the right type of paper to hold their stamps to ensure that the gum is not glazed or tropicalised. 

Anuar says stamps used during the Japanese occupation in Malaya, on which are printed Japanese words or the year, are among the most sought after in Malaysia. 

He warns amateur collectors to be wary of forgery, especially when the demand for a particular stamp is high. He says forged stamps can be found using scanning tools, and recommends engaging professional help if necessary. 

Anuar says some stamps are judged for their special factors, but it essentially boils down to supply and potential demand. “For instance, philately is not just about the stamp … sometimes, the stories on envelopes bearing the stamps and of the trials the letters have been through will also fetch a high price.”

Some of the most valuable stamps, he says, are from the two World Wars. Envelopes with censor marks, especially those sent out during the Holocaust, and letters salvaged from Zeppelin Mail, which was shot down over England in 1916, are also sought after.

Japanese stamps are now in vogue. Everyone seems to be collecting them. Even the Japanese are collecting them, says Annuar.

“As for new stamps, an interesting or wrongly printed watermark is something that raises their value among collectors. When a new stamp is released for sale, you should see the antics of some collectors. They would be squinting so hard at the stamps to look for special features or defects,” he adds.

Anuar says stamp catalogues give us an idea of how much buyers are willing to pay. “But some people will pay anything to complete their collection, even if it is not a rare stamp. Say, Pos Malaysia prints 10,000 stamps, and only 10% to 15% of them survive, as the rest are used, destroyed, discarded or misused. As the number of stamps reduces, their value goes up. 

“There are occasions when commemorative philatelic covers are issued. Post offices in the country open at 9am and by 10.30am, they are sold out. In a couple of hours or so, you will find them being sold on eBay or similar sites at a higher value. It is important to note that these are not rare stamps, nor do they have an antique status, yet people queue for hours to get them so they can sell them online.” 

Anuar says catalogue values are good for spotting investment buys, but they may not always be the best guide to how much one should pay for the stamp. It boils down to the condition and quality of the stamp.

When the commemorative cover issued to mark the diamond jubilee of Queen Elizabeth II and the visit of Prince William and Kate Middleton to Malaysia came out in April 2012, the queue at Pos Malaysia’s headquarters in Kuala Lumpur was more than a kilometre long, says its stamp and philately unit head Diyana Lean Abdullah. 

A quick check on online trading platforms reveals that a mint collection of the commemorative cover now costs between RM50 and RM60. The miniature sheet was initially valued at RM5 while the stamps, bordered with silver ink, were priced at RM1.50.

People who vie for such stamps are not only the hard-core collectors but also the fans of such celebrities. Seeing their enthusiasm, Pos Malaysia often issues unique commemorative covers that are gold plated or come with things such as embroidery or foil stamping, says Diyana.

But despite their attractiveness, passion assets are not comparable to investments such as equities and bonds, Heddle points out. “There is no direct comparison. That is like trying to compare mangoes to bananas — they are both fruit and can be eaten separately, but to make a good, balanced and flavoursome fruit salad, you would want to have both mangoes and bananas in there as well as a selection of other fruits.

“The key difference is that most mainstream investments are very liquid and subject to volatility, investor sentiment and market whimsy. They are also correlated. So, when they drop, they all drop together.”

   
   
The investment value of stamps (Pt 1)

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.

      Print
      Text Size
      Share