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The Penny Black: Always My Top Tip
Whilst other asset classes continue to flounder in the current worldwide economic chaos, the world's most collected stamp went up in value this year by 9%. I think this is just the start...
Here are my top reasons why:
§ Huge new demand from China has completely changed dynamics of market
§ Recent realisations at auction have been around 20% higher than average
§ Constant stock shortages reported by many traders for "fine quality" examples.
Simple economics drive prices: demand exceeds supply. Supply cannot increase, demand seems unrelenting = price must go up.
Everywhere I go, I'm always telling people that the safest investment I can think of right now is "the Penny Black". Throughout history (since 1840 when it was first printed), the Penny Black has proven one of the safest ways to store and grow wealth.
Despite this fact, you won't find many money managers telling you that this is where you should invest your money. It remains an investment for the well informed and those more creative in how they manage their wealth. I don't mind that...
I am much happier watching collectors drive prices in our market, not investors. Investors in the stamp market account for less than 1% of the total market size and have minimal impact on prices.
The Penny Black remains the most coveted and most traded stamp in the world. The first stamp printed will always be the first.
9% growth in 2011
The average price of a "fine used" example of the Penny Black went up from £275 to £300 in 2011.
Increased prices were, to some extent, driven up by the massive demand from China as we literally watch thousands of Penny Blacks leaving Britain to go to China this year.
In various interviews with the financial press and on my appearances on Channel TV and CNBC in recent months, my advice has remained consistent:
"I can think of no safer investment right now than a fine quality example of a Penny Black. It is a tangible asset with a value embedded in history and with consistent liquidity created by the romance of owning the world's first postage stamp".
Worldwide demand for Penny Blacks is higher now than I have ever witnessed. Furthermore, I cannot see the Chinese appetite for Penny Blacks subsiding anytime soon.
Despite having viewed thousands of Penny Blacks in my career, I still feel the same sense of excitement when I find one (even though most are worth very little, i.e. those in poorer quality). Millions of people worldwide share my emotional attachment to this stamp.
The Penny Black is like the "market barometer" of the stamp world. Generally, when the Penny Black shows strong growth, it is a good indication of liquidity and demand in the stamp market as a whole.
Over 68 million printed but very few survive in "fine" condition.
One of the most common misconceptions in the stamp world is the assumption that the Penny Black is a rare stamp. There were actually over 68 million printed. However, the survival rate is estimated at only 1.3 million.
A Penny Black in "fine" condition is much rarer. The condition factors, which most influence the value of a Penny Black, are:
§ Physical condition - faults in the condition such as thinning, tears, creases and stains are common due to the age of the stamp. A Penny Black without these faults is more valuable.
§ Margins - as Penny Blacks were not perforated, they were cut by hand from sheets. As a result, most Penny Blacks do not have all margins intact. A Penny Black with four good-sized margins is therefore much rarer.
§ Quality of postmark - many postmarks obscure the image of the stamp completely or are simply not aesthetically pleasing. A Penny Black with a neat cancellation is far more desirable.
§ Plate number - certain printing plate numbers are rarer than others are and consequently more valuable. Some collectors only collect the rarer plate numbers. The rarest plate number is plate 11.
Mint examples (unused for postage and with original gum intact) are considerably rarer and more valuable. To put into context, we rarely handle more than one or two mint examples in any given year. A mint Penny Black with all four margins and original gum would set you back £10,000.
If you want to read up on condition in more detail, I would recommend reading our illustrated guide to stamp values produced by our stamp specialists.
Price History: Boring is Good
When it comes to investing, I think the saying "boring is good" has never rung truer than it does today. With such market volatility, exciting investments carry huge risks.
The Penny Black isn't aware of any economic chaos. The Penny Black doesn't panic when the media get excitable about "the end of the world as we know it" scenarios.
Take a look at the price performance since 1998:
As you would expect, an unused example - being the rarest - shows the best performance with an average annual compound return of 11% per annum over the past 13 years.
That said the price growth for the used examples and examples appearing on cover (ie. on an envelope posted) is still attractive in the current climate. This shows that decent returns are achievable at even the lowest entry level.
You will also note that some years show zero growth, although are compensated by the growth in other years. This illustrates why we promote rare stamps as a medium to long term investment only.
Boring means "safe and predictable". I can handle that right now.
By Stanley Gibbons CEO, Mike Hall
