For many years now people have been telling me that stamps are a brilliant alternative investment. For as many years I have been rather ignoring them.
So I wasn’t altogether surprised to see an article by Patrick Collinson in The Guardian at the weekend pointing out that “stamps valued in catalogues at hundreds of pounds are fetching just a few quid on auction sites”. It tells the sad story of the stamp collection of one Paul Sanderson who regularly visited the stamp shops of The Strand in the 1960s and eventually “amassed a sizeable collection of mint or near-perfect British stamps”. He figured they’d be worth a bob or two one day, yet instead not only are his grandchildren almost entirely uninterested in them, but the market is too. His 1902 five shilling King Edward VII – which he saw valued in the stamp collector’s bible, the Stanley Gibbons catalogue, at £175 – sold for a mere £6 when he put it up on an auction site, while a “mint set” of King Edward VII stamps went for £22 rather than the £100 he was expecting.
This doesn’t seem particularly surprising. As John Kay points out in the FT, “the fundamental value of an asset is derived from the cash or earnings or utility the asset generates”. Assets that don’t provide an income still have to provide utility to be worth something. So gold derives its value (such as it still is) from its “beauty and scarcity”, alongside the belief that it is a long-term store of value, while diamonds derive theirs mainly from “the envy of others”. Stamps provide no income. Their beauty is deeply subjective and any envy directed at them can come only from other collectors (unlike large diamonds – we are all envious of large diamonds). What they appear to have had in the past, however, is scarcity: when stamp collecting was a very popular hobby there were more people after the more rare or special stamps than there were available specimens. No more.
It might be, says Collinson, that contrarians would want to invest now, given just howunfashionable philately is. But as one philately society member says, it is hard to see where the demand will come from: “interest is diminishing” as collectors “die off”. There are some very rare stamps that are likely to hold their value always, but in the vast majority of cases stamp collecting is not an investment. It’s a hobby – a great hobby, but sadly one that isn’t as popular as it used to be.