Turning Paper To Gold: Chinese Collectors Spark Postage Stamp Investment Boom
Collecting stamps (like gold) used to be banned in China. No longer -- and Chinese collectors and investors may be creating a postage-stamp bubble.
Fears over inflation have prompted more investors to stash their cash in tangible objects. Gold is an obvious choice, and prices of the precious metal have soared as a result. But gold isn't the only thing catching the eye of investors these days. Some wealthy people – particularly in China – are plunking down big bucks for far flimsier objects: postage stamps.
In China, collecting stamps was forbidden for a long time, as was buying gold. Not any more. Since the bans were lifted, more and more Chinese investors are buying both. For now, Chinese collectors are increasingly focused on Chinese stamps. "Demand is being met by Chinese dealers who buy up Chinese stamps in Europe and send them to China," says Gerd Bennewirtz, general manager of the brokerage firm SJB.
Prices are often not an issue. At a Swiss auction last November, a block of four Chinese stamps featuring an ape against a red background changed hands for 138,000 Swiss francs (115,000 euros). The catalogue estimate was 2,500 euros.
While that is an extreme case, what has become routine is for sales prices of Chinese stamps to double catalogue estimates – and that brings out the inner golddigger in many an investor. Experts warn of the danger of a bubble, however, and advise European collectors to sell their Chinese stamps.
Selling, however, is not investing. "Especially in times of crisis, stamps are a good way of reducing asset volatility," says Bennewirtz. Big spenders will be looking to find unique or very rare stamps, such as the 1847 blue Mauritius that a Singapore collector paid some 5 million euros for in 1993. But for smaller investors, interesting options exist for as little as 1,000 euros – like the 1849 Bavarian "Schwarze Einser" that presently costs anywhere between 1,000 and 3,000 euros.
Not a liquid market
Bennewirtz recommends that potential stamp collectors select a specific theme or historical period so that they can build up expertise in that area and start to be able to recognize the potential of any given stamp as an investment vehicle. "Investors on the stamp market should be knowledgeable when it comes to classification, condition, authentication, the market itself, how to keep stamps properly, and the relevant literature on the subject," he says.
But even if all that is respected, he says, collecting stamps is not entirely risk-free – for the simple reason that any increase in value is always only theoretical. The question is: will that value hold in a sales situation when the collector wants or needs to sell? Will there be people prepared to pay that price?
The stamp market is not a liquid market like the one in shares and bonds, when investors can sell when they want, even during crashes. Which is why, Bennewirtz advises, stamps should never be collected as pure investment: a good dose of genuine interest is needed to make it worthwhile.
*This is a digest item, not a direct translation.
Read the full story in German by Frank Stocker
Photo – Zeitfixierer