No licking stamps as a safe cache for cash
INVESTORS seeking protection from the damaging impact that quantitative easing and low interest rates are having on their wealth should put their money in rare stamps and coins, according to a report.
The collectibles are now a serious investment class insulated from problems afflicting equities, says the alternative investment report from Intelligent Partnership.
It found that such unconventional investments have outperformed many of the traditional sources of return, and growing demand means they are now increasing as a viable option.
The “passion assets” are usually high-value or luxury items whose supply is fixed or scarce, and they do not provide an income stream.
However, according to the report, they provide safety in ways that traditional assets do not.
“Companies can fail, rendering equities worthless, and bonds can default, but rare stamps or coins will remain rare — nobody can go back in time and mint more coins or print more stamps,” it said.
Guy Tolhurst, managing director of Intelligent Partnership, said: “Stamps and coins present investors with one way to beat financial repression: the low interest rates, money printing and silent currency war that central banks are resorting to in order to stimulate the economy. They can be a hedge against — and protection from — inflation, devalued currencies and punitive taxes.”
The report, sponsored by stamp and coin dealer Stanley Gibbons, said that over the past decade the annual growth rate of investments in coins had been 12.75% and in stamps 11.43%, outperforming the FTSE 100’s 4.31% rate.
The market is also being driven by new interest in the sector, particularly stamps. This is shown by the $9.5-million (about R113-million) paid at auction by an anonymous collector for a British Guiana magenta stamp in 2014, more than double the highest price paid for a single stamp.
China’s growing middle class is also boosting the viability of stamps as an investment. The report found that with the global philately market worth $3-billion a year, there are 60 million collectors worldwide of whom a third are in China, where 17% of wealthy investors hold some of their investments in the form of stamps and other alternative assets such as coins, wine, art and jewellery.