Article courtesy of © Moneyextra.com - 04 July 2008
The credit crunch has thrown the entire investment market into turmoil. Property no longer seems 'as safe as houses' and the stock market is demonstrating all the sings of a classic bear market. However, the GB Rarities Index demonstrates there is a more secure and potentially lucrative alternative investment opportunity in the form of stamps. The Index, now in its 10th year, is produced by Stanley Gibbons, a well-known name in philately and collectibles.
Despite the global credit crunch, the GB Rarities Index shows stamps have increased in value by 38.6% (2007: 10%) and the Index shows no sign of slowing. Rare stamps from Great Britain have significantly outperformed run of the mill investments. One stamp sold in 2004 had increased in value from £65,000 to £125,000 - a 92% increase in just three years.
The compound 10-year return of the Index since inception in 1998 is 245.2%, showing stamps have out-performed gold, the UK housing market and returns on investment on the FTSE 100. The increase correlates to an average annual compound return of 13.2% over the last decade. Rare stamps and autographs provide a consistently secure investment opportunity because the market is driven by passion rather than fear and greed.
Michael Hall, Chief Executive of Stanley Gibbons said, "Over the past year, like most people, I have watched my traditional investments in property and the stock market destroy my wealth. Fortunately, I can take some solace from the fact that I have protected some of my wealth from the current economic meltdown. My investments in rare stamps have continued to show above average compound returns and I am sure will provide an excellent family heirloom to my descendants.
"Not only that, historically rare stamps have increased the most in periods of high inflation. The last period of high inflation in the UK was in the late '70s. Rare stamps increased by 698% during that period. So, not only does investing in rare stamps provide diversification and security it also provides a hedge against inflation."
The world's first stamps
The Penny Black and the Two Penny Blue were issued by Great Britain in May 1840. Several million copies of these stamps were printed, so single used copies are relatively common. However, most were used on letters, obliterated by heavy postmarks and are generally in poor condition. But stamps in unused condition, with their original gum, and large multiples or "blocks" are rare and much more desirable to collectors.
The illustration shows an unused block of four 1840 2d Bright Blue with original gum. Much rarer than the Penny Black, this is a block of four Two Penny stamps, with corner letters HC-ID, and good to large margins on all sides. The stamps are unused with almost pristine original gum, and only the merest hint of a hinge on one stamp. Believed to be the only surviving block in this Bright Blue shade, it is valued at £325,000!