The sale of Picassos Women Of Algiers last month for $179.4m (£116.8m, €159.4m) illustrated just how far the collectibles investment market has come, but its not just rare paintings that are pulling in astronomical sums of money.
The market in stamps and rare coins, typically viewed as the preserve of anoraks, is seeing an increased level of interest, particularly from wealthy Chinese investors.
Stock market listed Stanley Gibbons, the largest collectibles merchant in the world, connects individuals with the stamp and coin market. IBTimes UK caught up with Keith Heddle, managing director of the 159-year-old firm, to talk about the how collectibles play a part in long term investment planning.
What price a stamp?
The worlds most expensive stamp was sold last year for $9.5m. In comparison [to the Picasso], it pales. But actually, if you do a size to value ratio, it would probably make the Picasso worth something like $15bn in proportion, Heddle says.
While there is a perception that the high value collectibles market is only accessible to the ultra-wealthy, Heddle explains there is no such thing as a typical investor. Pensioners, entrepreneurs and young families planning their legacies are investing in the growing market.
It really covers the gamut of investors. If there is a truism, they tend to fall between either the very risk averse that love the tangibility and the uncorrelated nature of it, or the more entrepreneurial that have built a business by doing things which are a little bit more left field and are now looking at this and saying: stamps, coins, thats quite fun, which is something quite unusual, Heddle adds.
Investors are often buying a piece of history. A block of Penny Blacks, the worlds first stamp that bears the face of Queen Victoria, can fetch up to £120,000, depending on condition. A coin minted by Alexander the Great is worth about £4,000.
One of the most interesting coins Heddle has is one showing Charles I clasping a sword, ready for battle with Oliver Cromwell. It is the biggest British gold coin ever struck and is worth between £80,000 and £100,000.
With over 60 million stamp collectors globally and about $600m changing hands in each year on eBay, there is no dearth of interest.
Stanley Gibbons typically sees returns of anything between 7% to 14% per year, but some longer term investors have seen their returns swell to 202%. Interest in the market has grown substantially over the past five years and since the global financial crash.
You can see those types of returns as long as youve got a diversified portfolio, have a long term perspective and youre focused on capital appreciation buy and hold. Theres been a common theme running through investors: fundamentally to protect the wealth they have sweated over for a lifetime. Or they have inherited from a generation of people who were taught to save, Heddle says.
The booming stamp and coin market in China owes a debt of gratitude to Chairman Mao. The late communist leader banned stamp collecting because he viewed it as bourgeois.
Since the ban was lifted in the 1980s, the Chinese have splashed the cash and there are now around 20 million stamp buyers in China.
Since the eighties, the Chinese have come back in their millions, not just to claim a part of their own heritage but also with increased freedoms and increased wealth, a kind of reverse imperialism: we have the money and power now, well have a few of your Penny Blacks and your gold coins thank you very much.
Risk and reward
Despite the rewards, as with all investments, there is a risk, something that Heddle readily admits to.
Theres no guarantee. Its a very stable market because its relatively illiquid and its uncorrelated, low beta, so investors like it for the long term. Clearly if your financial situation changes and you need to get out quickly, it take more time to liquidate a rare stamp and coin portfolio, anything between three weeks and three months, than it does to dump your stocks.
The key to investing in rare stamps and coins is expertise. Stanley Gibbons employs a team of experts that essentially pick the stocks, or stamps.