Stamp market grows up

Old style stamp dealing has its merits

By Mike Verdin BBC News Online business staff

Worried about the value of your shares? Concerned at reports of renewed economic downturn?

Solace may lie as near as the back of your broom cupboard.

For, thanks to recent stock market mayhem, stamp collections are rising in value, the world's largest dealer, Stanley Gibbons has reported.

We have 1,200 dealers signed up. All they have to do is pay £1,000 each and we are in the money

Mike Hall, Stanley Gibbons

"In the wake of the stock market's recent poor performance, together with current low interest rates and inflation, there is a renewed consideration of stamps as an alternative investment," the firm's chairman, Paul Fraser, said.

That stamp album, forgotten since youth, could have gathered not just dust but a sizeable book value.

"It is from these collections where we often find the rarities to fill gaps in the top buyers' collections," company finance director Mike Hall told BBC News Online.

And Stanley Gibbons is hoping to cash in on the growing interest in philately to create the first world market in stamps, complete with its own index.

Market measure

Recent share falls will have acquainted you all too closely with the FTSE 100, Cac 40 and S&P 500 stock indices.

Now prepare for the SG100, or some such, which will measure the value of an album of 100 benchmark stamps.

The Hong Kong jubilee stamp: Part of the SG100

Included in it will be Britain's penny black and tuppenny blue, the Falkland Islands 1933 centenary set, Hong Kong's 1891 jubilee issue, and the US 10 cent stamp from 1847.

"We are not talking about the most valuable stamps, which only change hands once every three years, but commonly traded stamps which reflect the health of the market," Mr Hall said.

The make-up of the index will be reviewed once a year.

As for calculating its value, Stanley Gibbons will rely on returns from traders which will use an enhanced version of the firm's Stampsatauction.com website as a global shop window.

Small cut, big volume

The site will, by matching buyers and sellers worldwide, increase transparency and liquidity in a market that is currently highly disparate.

Most traded stamps

1: Penny black, UK, 1840

2: £1 Postal Union Congress, UK, 1929

3: 5 shilling Falkland Islands centenary, 1933

4: 2 cent jubilee, Hong Kong, 1891

5: 5 cent stamp from large dragon series, China, 1878-83

Source: Stanley Gibbons

"There are established businesses such as ours. But there are also hundreds of people trading stamps from their front room," Mr Hall says.

While it is estimated that the global market boasts 30 million collectors, and turnover of £10bn a year, he admits the trade's diversity makes such figures hard to verify.

What Mr Hall is sure of is that Stanley Gibbons stands to make a mint from the creation of the stamp world's answer to Lloyd's of London, the Nasdaq or, er, Enron's web-based energy exchange.

"Rather than being a primary dealer, and taking a large cut on fewer trades, we will facilitate trades between dealers and collectors, and take a small cut on a large volume of trades," Mr Hall says.

Information advantage

Isn't he worried that dot.coms are these days as fashionable as whalebone corsets?

"The website will cost almost nothing to run. We have 1,200 dealers signed up. All they have to do is pay an annual subscription of £1,000 each and we are in the money."

The Mauritius
2 penny blue

At £2m, the world's most valuable stamp

Only four known to remain

Dates from 1847, when 350 were printed to send out invitations to the governor of Mauritius's fancy dress ball

And what is to prevent a front-room dealer setting up a rival operation, and perforating such dreams of web-based fortunes?

"We have the world stamp catalogue," Mr Hall says. "When people buy stamps they refer to our numbers, beginning with the letters SG."

Stanley Gibbons' database, around which its marketplace will be based, is so large it took two years to scan and prepare for web publication.

"For someone else to catalogue all the stamps ever produced... well, it would take for ever."

Indeed, Stanley Gibbons is so certain of the site's success it is already considering plans to trade other collectibles.

"Coins is the obvious market, but perhaps antiques too," Mr Hall says.

Expensive error

Call the firm ambitious and Mr Hall points to a Japanese customer who spent £13,000 in one surf in June through Stanley Gibbons' web operations.

"We contacted him to ask why, and he said it was an investment," Mr Hall says.

Indeed, large profits can be made through single trades, as Stanley Gibbons itself found in June when it sold for £71,000 four Mauritius stamps bought at auction eight years ago for £18,000.

"One of our expert dealers spotted spelling mistakes which no-one else had seen, and made the stamps extremely rare."

Downside risks

Not that the market is immune to the occasional hiccup.

According to an official Stanley Gibbons' statement: "Sales in Great Britain philatelic dealing have suffered this year due to the loss of top spending customers."

Mr Hall tells of "five key collectors" who cut their spending earlier this year.

"One had a large tax bill. A second stopped collecting. And three others were just affected by all else that has gone on in the world."

The firm's solution? To bring extra stamps to market through "improved networking initiatives".

Old-fashioned networking, that is. Phone calls, letters. Even face-to-face meetings.

How impressive is the power of the internet, the PC and the latest handheld mobile device.

But for getting wind of that penny red stash, discovered after decades hidden under a bed, sometimes there is no better alternative to the greasing of the occasional palm.