Smart Stamp And Coin Investment
The fact that there are far more stamp and coin dealers than
stamp and coin brokers, that few wealthy people hold portfolios
of these collectibles, and that few hobbyists ever live long
enough to get rich from their knowledge, tells us something. It
tells us that this sort of investment, one of the most
accessible for the average person, one of the most potentially
lucrative and one of the safest, pales in comparison to most
other investments in return and is too complex for most people
to attempt. But there seems to be widespread curiosity about
this fascinating topic, and as one who profited from a hobby
collection and learned much about the field, I feel qualified to
give you a good introduction to collecting as an investment.
There are two ways to go about investing in collectible
portfolios
The first is to be a hobbyist yourself. You should be ready to
spend a lot of hours to learn to enjoy the hobby, get involved
in clubs, study catalogs, attend exhibitions and auctions, and
be as smart as possible about your field of interest.
The second way is to make friends with an experienced collector,
which you'll have to do anyway, who can advise you on special
items with promise or long-term security.
In the case of coin and currency collecting, the market is
fairly strong in all segments of the field and trends are
generally established and well known to collectors. So while it
may have long term growth potential than stamp collecting,
windfall profits are rare. Gold and silver coins have intrinsic
value in their metal and tend to fluctuate in price with the
metal markets, which in turn vary with value of the US dollar.
The Krugerrand and the Canadian Maple Leaf one-ounce coin are
the mint coins available offering substantial intrinsic value,
but it is generally agreed that the bullion is a better overall
investment. Neither the Maple Leaf nor the Krugerrand will be
prized for their rarity.
Silver coins at current silver prices, using $5 US per ounce as
a benchmark minimum price and $10 as a maximum, are excellent
long term bets when investing in coins for metal content. Few
bargains in vintage collectible. Coins are ever available, and a
good portfolio should only be selected with the aid of a
qualified counselor. Always opt for the best condition you can
afford, even if it means purchasing a less-scarce coin, since
the mint and proof coins are always in most in demand from
collections and can be disposed of the most quickly when
necessary. For both stamps and coins, it is wise to specialize
in items from your country of residence. They will be the least
cost-effective to purchase, but they will always be the easiest
to liquidate.
It is felt that the market for collectible paper currency will
show better growth than coin markets over the next 20 years. As
this segment of the collectible market gains more public
exposure, catalog values are bound to rise in response, in many
cases out of proportion to actual value. Paper money specialists
are hard to find and most agree that the market is so unstable
that only established issues of value are worth long-term
investments. We advise collecting issues of substantial value,
three figures and higher, which have not shown sharp increases
in book value in the last five years, and again we stress
collecting only the best condition possible. These issues should
provide the best overall long-term growth and best odds on
substantial short-term gains.
Stamp collecting is a much more varied field than most amateurs
realize, and for investment purposes, it is always, always best
to specialize from the start. There is no sense cluttering your
mind and your closet with facts and figures for low-value
foreign issues. They don't pay off and take too much time and
space
The best bet is to specialize not only in your country of
residence, but a specific aspect of that country's history of
issue. You have a lot of choice there. Even specific decades,
types of stamps (commemoratives, definitives, revenues, air
mails, types of perforations, stamped envelopes, first day
covers, plate blocks, etc.) provide wide fields.
Among the best performers are classic series of definitives,
commemorative issues before 1930, varieties and errors in
printing and lately revenue stamps, the types used for liquor,
tobacco and other commodities and excise customs documents,
are getting rosy forecasts from experienced collectors because
they comprise the lowest-priced of the extremely rare issues. They
are low-priced at the present time only because they are not
widely sought by collectors but since there are only so many
rare stamps to go around, anything scarce in a popular field,
whether in antiques or records or stamps will eventually show a
book value comparable to its scarcity. Demand on these issues is
definitely going to increase.
Varieties of certain issues are the second-best bet for
investment. The reason is the work involved in discovering many
of them. It is often possible to find a rare variety of a common
one cent stamp in collector's and dealer's penny-a-stamp boxes
worth twenty to two hundred dollars, and the more you know about
varieties of common stamps, the more frequent these finds will
be. They don't tend to grow in value at rapid rates, but they
provide the best overall chance at windfall profits.
Classic stamps of values over $100, especially in superior
condition, provide the best overall return on investment and
tend to outrun inflation as a rule. The more popular the stamp,
the better it will appreciate, and popularity can be determined
by comparing the catalog price to an actual selling price. When
auction prices regularly go over catalog price, the catalog
prices rise accordingly and if the cycle continues, the issue
will show excellent gains.
As a rule, items such as plate blocks, first day covers,
commemoratives of recent issue (50 years or less) and souvenir
items are not good investments. The visual beauty of these items
tends to artificially inflate catalog prices which in turn
inflates the selling price. They don't tend to show reasonable
advances in value over the long term.
Large lots of cheaper issues can look attractive, especially at
auction where their prices will seem especially attractive, but
when you look around and understand that dealers and serious
hobbyists bid fairly low for these lots, and dealers figure
their profit margins into the buying price, you'll realize that
they are best left to hobbyists more interested in having fun
than making money.
For the same reason, it is wise to steer clear of purchasing
entire collections from former hobbyists. You'll be paying for
the cheaper issues that you won't easily liquidate in addition
to the better issues, and that's a headache and an unnecessary
expense.
It is, however, wise to seek out hobby collectors who are
retiring and selling their collections for income. Frequently
they have already consulted dealers about values and prices and
will frequently offer the private individual a deal comparable
to what a dealer would pay for that little bit of extra profit.
A few investment syndicates dealing in rare stamps and coins
have surfaced from time to time and provide the naive investor
with ready-made portfolio These can work out in your favor in
the long run, but the cost of marketing and acquiring the items
must be figured into the syndicate's selling prices, making the
overall investment higher in proportion to real value than you
could probably make on your own.
Many more syndicates offer "collector's items" custom-made by
the factory, including special coin mountings, metal stamp sets
in gold, silver and platinum and fancy exhibition pieces that
require substantial investment for completion of the series.
Some of these have turned put to be top performers, but many
haven't kept pace with inflation. It makes no sense to put money
into these manufactured collector's items unless you have a
strong sense of trends and collector's demands. When in doubt,
steer clear.
A good rule of thumb is that the collector, not the
manufacturer, sets the true value, and predicting future values
for these items are too extremely risky.
Once you've got a good sense of market values and determining
factors, you might want to consider speculating in new issues
from time to time. Certain items come out of the post office
every few years and shoot up in value phenomenally over the
first year or two. This usually happens because of the oddities
in printing method, limited runs, varieties or errors too
insignificant to result in recalling the issue, or major errors
that result in massive recall of particular issues, making those
in circulation of substantial value almost immediately. If you
can spot these as they come onto the market and invest
substantially in large numbers of the desired item, you can
literally make a killing over a two or five year period.
Investment of this sort does require some skill, however,
because most recent issues actually drop in value since their
face value at time of purchase is higher than their face value
after five years of inflation, and resale at higher than face of
a common item will be virtually impossible on items less than 30
years old.
When investing in either stamps or coins, a safety deposit box
is almost always a must. Stamps especially are subject to all
sorts of damage from environmental changes and a stable
atmosphere especially such as that in a bank vault will provide
the highest degree of protection.
