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Thursday, November 8, 2012

Stamp Investment Tip: El Salvador 1929 20c Deep Green Airmail, Red Overprint (Scott #C1a)

In 1929, El Salvador issued its first airmail stamp (Scott #C1), by applying the black overprint "Servicio Aereo" to a portion of its 1924-25 20c Balsam Tree stamps. However, a single sheet of 100 was overprinted in red instead of black (Scott #C1a), creating a very scarce stamp. Scott '13 prices the unused stamp at $850.00 .

In my opinion, the stamp's gross undervaluation results from its having been neglected because it's a Latin American issue, because it's a visually "boring" overprint variety, and because of the inconvenience of obtaining expertization, which is necessary when buying it since fake overprints exist. The first of these factors is gradually losing validity as the Latin American stamp market grows, and I believe that the others will also fade in significance. The stamp is at least as scarce as the U.S. Inverted Jenny, represents a market that's growing much faster, and may be had for about a thousandth of the cost.

Over the last decade or so, a "stealth bull market" has developed for better Latin American material, especially for scarce issues with wide topical appeal. Supplies have been gradually depleted, and many items which formerly retailed for about 20%-30% of Scott are now selling for 60%-80%, and their catalog values have substantially increased as well. Frequently, Michel Values, which are usually much higher than Scott for Latin America, are used by auction houses when listing this material. As the region has cast aside its authoritarian dictatorships and become more democratic, it has experienced healthy economic growth and the concurrent development of a middle class.

El Salvador, a nation of 5.7 million, is a poor though steadily developing economy, which has experienced annual GDP growth averaging just over 1% over the last 5 years. There has been a recent deceleration in economic growth due to the global financial crisis. In addition, there are between 500,000 and 1 million Salvadorans in the U.S., most of whom immigrated during El Salvador's "Dirty War" of 1979-92. Salvadorans in the United States are among the hardest-working immigrants, and send about $800 million back to their families in El Salvador every year. Although Salvadoran Americans currently toil in the lowest-paying sectors of the American economy, they work long hours, save a great deal, and are gradually becoming more prosperous.

While I believe it may take a while for a significant stamp collecting population to develop among Salvadorans, this is mitigated by the fact that many collectors of Latin American stamps collect the region generally, rather than specializing in a particular country.

I have begun a new blog, "The Stamp Specialist", featuring my buy lists for stamps which I wish to purchase, including many items from El Salvador .Periodically viewing dealers' buy lists is an excellent way to remained informed about the state of the stamp market.


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