Philately, the hobby of stamp collecting, is known as the ‘hobby of Kings’. George V was an avid stamp collector who was famous for spending an hour a day with his collection. His 1904 purchase of the Mauritius two pence blue for £1,450 set a new record for a single stamp. The same Mauritius stamp today would cost £550,000.

A courtier asked if he had seen that “some damned fool had paid as much as £1,400 for one stamp”, “Yes” George replied “I was that damned fool”.

Experts believe The Royal Philatelic Collection is now valued at £400m, making it the Queen’s largest single private asset.

The collections of King Faruk of Egypt, Czar Nikolaus III of Russia, and King Carol II of Romania are also well documented.

The most valuable commodity on earth by weight

In 1937 King Carol, also known as ‘the playboy King’, purchased a Swedish stamp ‘the treskilling yellow’ for £5,000. King Carol left Romania soon after in 1940 for exile - in a train laden with Royal treasure. The train contained paintings by Old Masters such as Titian, Rubens, and Rembrandt.

Reportedly hundreds of canvasses, jewels, and even the armour that had decorated the walls of the royal palaces of Peli?or and Pele?. And of course his prized stamp collection - at the time one of the most famous and most valuable in the world.

A death squad of the Romanian fascist party Iron Guard legionnaires (partly financed by the Nazis) fired fiercely on the Royal train near the Yugoslavian border, but failed to stop it. The King and his mistress lay on the floor and escaped injury from the bullets.

The ‘treskilling yellow’ has subsequently become the world’s most expensive stamp, and also the most valuable commodity on earth by weight. It was last sold for $2.3m equating to $86 billion per kilogram.

Whoever said stamps were boring?

Another major world rarity is the 1856 1¢ magenta from British Guiana which was purchased in 1980 by Mr John E. DuPont for $US935,000. Mr DuPont, the eccentric heir to the US chemical fortune was sentenced in 1997 to 40 years incarceration for murder (but whilst deemed to be mentally ill, thus sparing him a life sentence) for the 1996 slaying of Olympic wrestler David Schultz.

The exact present whereabouts of the 1¢ magenta is unknown - but is believed to be in a bank vault in Philadelphia. When this stamp next comes on the market it is anyone’s guess as to its realisation. Mr duPont is now 65 years old and is still incarcerated.

Protecting your wealth

Many of the world’s wealthiest families have recognized the benefits of storing part of their wealth in a rare stamp portfolio. The DuPont’s, Rothschild’s and lately Warren Buffet and Bill Gross, the American bond guru and inflation expert, have all had significant holdings of rare stamps. Bill Gross is estimated to have invested in excess of £50m in the last five years.

The rare stamp market represents a compelling form of alternative investment. Providing sufficient due diligence is undertaken a rare stamp portfolio can offer attractive returns and low correlations with other assets. The market is by nature supply constrained. There are only so many top quality rarities available. A growing interest in the product should support rising prices over the medium to long term.

Stanley Gibbons are recognized as the largest, most famous, stamp dealers in the world. The Stanley Gibbons share price, listed on the Alternative Investment Market at the London Stock Exchange, has shown steady increases from 18.5p to 148.5p in 3 years. This is as a result of increased profits as the stamp market has become more buoyant.

Gibbons quote that they have recruited over 23,000 new customers in the last 2 years. This is an impressive amount of new customers for what would normally be considered a small niche market. Adrian Roose, a Director at Stanley Gibbons (Guernsey) Limited explains:

“The worldwide population is getting older and more people of a certain age are resuming childhood hobbies. Our ideal demographic is the 50+ age group. According to the British Government Actuary Department the 50+ age group is the only growth consumer market for the next 20 years. The interest in rare stamps is also a global interest; we have customers all around the world. There was an influx of wealthy Russians 5 years ago, and we expect similar from China”

Emerging markets

Indeed 10% of Stanley Gibbons’ two million website hits come from the emerging Chinese market where the Stanley Gibbons website is one of few Western websites without censorship. Such a huge interest for a limited supply product offers the investor an excellent diversification from main stream investments which have been suffering of late.

These figures are confirmed by the Financial Times newspaper who state that in the UK over 50,000 people celebrate their 50th birthday every month; the figure is a massive 10,000 a day for the next 20 years in the USA. The world is indeed getting older and niche market businesses are benefiting. Take Hornby for example who sold over 100,000 model train sets to over 50s last Christmas.

And the entry level for rare stamp investment is probably not as high as you would imagine. Take India for example. With a population of 1.029 billion it is expected to exceed that of China within 20 years, yet you can buy a stamp, one of three known examples (The Queen owns one of the others) for £6,000.

Inflation hedge

Possibly the most compelling reason for investing in rare stamps is as an inflation hedge. During the last period of high inflation in the 1970s rare stamp prices rose over 600% in a decade. Unlike fixed income investments the price of rare stamps rises in line with general economic growth and inflation as investors look for tangible assets in times of economic uncertainty.

Add to this an existing database of 30,000,000 stamp collectors worldwide underpinning your investment, plus an estimated 18,000,000 in the emerging China market and you’ll start to see the benefits of rare stamp investment.

So, how do you build a rare stamp investment portfolio? Roose comments: “Focus on quality items with a proven record. As with all antiques the top quality items consistently outperform those with any type of fault. The waiting list to join our rare stamp investment programmes is currently 4 weeks. And the key word here is ‘rare’. Of 3,000,000 stamps Stanley Gibbons has in stock at the moment only 128 are offered for investment. That will give you an idea of the rarity of the stamps included in our portfolios.”

Further information on Stanley Gibbons Investment products can be found at www. stanleygib bons.com/investment