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Thursday, July 29, 2010

General Commentary: The Revival of First Day Cover Collecting

The First Day Cover market may be rising from the dead, due to demographic trends which affect stamp collecting in emerging market nations.

Until a few decades ago, the stamp market was largely based in the "First World" countries. Most of the rest of the world was relatively poor, and therefore most of the world's advanced stamp collectors, being relatively affluent, lived in relatively affluent nations. These were the only countries which could sustain a sizable middle-class, with sufficient wealth and leisure time to devote to the pursuit of hobbies.

Fortunately, the world is changing, and many of formerly impoverished countries, most of which were once governed by plutocratic and/or authoritarian regimes, now have rapidly developing economies and often, more or less representative governments. A nascent, rapidly growing middle class has emerged in these countries, bolstering interest in recreational activities, such as stamp collecting.

In the bygone age of collecting, it was axiomatic that collectors would begin saving stamps as children, put aside their collections for several decades, and then possibly return to them on a more serious basis at the approach of middle age. Of course, of those who collected as children, the majority would not return to the hobby, and the health of a country's stamp market was determined by how many did, and by how much money they were willing to spend on collecting stamps.

In most rapidly developing countries, the current trend does not fit that traditional scenario. Many of the converts to Philately in these countries are entering the hobby as beginning collectors, irrespective of age group. The number of advanced, "serious" collectors is also increasing, and will continue to do so, but the vast majority are beginners (notably including adult beginners), who have little or no experience with stamp collecting.

Consequently, these masses of new collectors are spending their new-found wealth on popular topicals and items with visual appeal. As yet, most of them are not rich enough, or knowledgeable enough, to be interested in valuable stamps or the more esoteric aspects of the hobby, such as collecting of varieties, proofs, essays, postal history, etc.. Their primary focus is topical, with an emphasis on decorating their collections with interesting and visually appealing items.

There are early indications that First Day Cover collecting, which has declined in the "old-wealth" countries over the last twenty years, may be gaining adherents in the rapidly developing world. FDCs with attractive cachets and featuring popular topicals do well in a market dominated by philatelic newbies, and I expect that such may be the case for a while. The rate at which each country's population of "serious," more advanced collectors increases over the coming decades will be crucial to determining the future values of its better stamps, but given the lack of data, it may be impossible to project.

Cheesy, flashy, and topically hot - but would you want a long-term relationship with it?

One way to bet on these parallel trends - the influx of new, beginning collectors, and the inevitable increase in the number of serious collectors - would be to purchase attractive First Day Covers for issues from these countries which have topical appeal, but to focus on FDCs of the scarcer, more expensive issues. Better topical FDCs from the rapidly developing countries have greater appeal to the growing number of serious collectors than inexpensive ones, and are also likely to increase in value as the current "phila-newbie" group attains greater wealth and sophistication. For those who manage to avoid overpaying for FDCs for which the basic stamps are flashy yet insubstantial rubbish produced in huge quantities and solely for the collector market, there are many bargains to be had, especially in the U.S. and Europe, where the demand for worldwide topical FDCs remains comatose.

Not just another pretty face

Tuesday, July 27, 2010

Stamp Investment Tip: Turkey 1914 Issue (Scott #254-70)

In January of 1914, the Ottoman Empire issued a beautiful, long set of scenes stamps (Scott #254-70), of which 15,000 of the high value (Scott #270), portraying Sultan Mohammed V, were issued. Scott '10 values the unused set at $ 784.25, and #270 at $ 550.00. The Porte was soon to conclude a suicidal alliance with Germany and mindlessly sacrifice about 800,000 soldiers and over 4 million civilians in World War I, which would also destroy the empire and lead to the establishment of the Republic of Turkey.

I recommend purchase of either the complete set or the high value, and even examples of the high value with a cut cancellation, which can be had at a fraction of the cost of sound copies (Scott '10 CV= $25.00) , as long as the cut cancellation doesn't badly mutilate the stamp. The set is quite beautiful, and evokes nostalgia for a world forever lost, due to human arrogance and stupidity.

With a population of about 72 1/2 million, Turkey is perhaps the most culturally European of the Islamic nations, and a likely model for their modernization, economic development, and democratization. The country experienced rapid economic growth between 2002 and 2007, with GDP averaging 7.4%, but this slowed in 2008 to 5% and stalled in 2009 to 1%, due to the global financial crisis, from which the country is recovering. While traditional agriculture is still a pillar of the Turkish economy, it is becoming more dependent on industry. Key sectors include tourism, banking, construction, home appliances, electronics, textiles, oil refining, petrochemical products, food, mining, iron and steel, the machine industry, automotive, and shipbuilding. A recent Price, Waterhouse, Coopers report predicts that Turkey will be one of the fastest developing economies over the next forty years. It is likely that in the future, it will benefit from serving as an economic and cultural nexus connecting Europe, the Near East, and the Turkic (formerly Soviet) nations of Central Asia.

Those interested in joining a lively and growing community of "stampselectors" are welcome to join the "StampSelectors" group on Facebook. The group offers the opportunity to meet and communicate with other collectors, investors, and dealers from all over the world, buy and sell stamps, and discuss investment recommendations and the content of this blog.

Monday, July 26, 2010

Stamp Investment Tip: New Zealand 1912 1/2p VICTORIA LAND Overprint (Scott #130d)

One of the most tragic episodes in the history of Antarctic exploration was the Terra Nova Expedition headed by Royal Navy Captain Robert Falcon Scott. Scott's party reached the South Pole on January 17, 1912, only to find that they had been preceded by Roald Amundsen's Norwegian Expedition. On their return journey, Scott and his four comrades all perished from a combination of exhaustion, starvation and extreme cold.

Initially, 1p stamps of New Zealand were overprinted for use by the Expedition, as they had been for Shackleton's earlier 1908 Expedition. However, since the postage to certain countries was 2 1/2p, 2,400 1/2p Yellow Green stamps were also overprinted "VICTORIA LAND" (Scott #130d), making this the scarcest of all of the New Zealand Antarctic Expedition overprints. Scott values it unused at $ 1,100.00 and used at $ 950.00. Covers are rare.

The stamp appeals to both collectors of New Zealand and Antarctic topicals. As it's an overprint, it should be purchased conditional on obtaining expertization.

Stamps of New Zealand are collected both domestically and by British Commonwealth collectors worldwide . The nation has a stamp collecting demographic similar to Great Britain's, and the demand for better material should increase dramatically as population aging accelerates. The percentage of New Zealander's aged 60 and over is projected to rise from 18% in 2009 to 29% in 2050.

Those interested in finding a community of stamp investors, dealers, and collectors are welcome to join the "Stampselectors" group at Facebook. The group provides a useful venue for those who wish to buy, sell, and trade stamps, and discuss philatelic investing and practical aspects of stamp collecting.

Thursday, July 22, 2010

Stamp Investment Tip: U.S. 1909 Alaska-Yukon-Pacific Imperforate (Scott #371)

In 1909, the U.S. issued a stamp in celebration of the Alaska-Yukon-Pacific Exposition (Scott #370), along with an imperforate version (Scott #371), which is far more scarce. Both stamps portray William H. Seward, who, as Secretary of State, purchased Alaska from Russia in 1867 for $7.2 million (about 2c per acre). At the time, some Americans scoffed at the purchase, and called it "Seward's Folly."

525,400 of the imperforate stamps were issued, and Scott '10 prices the stamp unused at $17.50 ($37.50 for NH). I believe that the best format in which to purchase these is as plate blocks of 6 (Scott '10 CV=$225.00 for unused, $350.00 for NH) or as centerline blocks of 4 (Scott '10 CV=$175.00 for unused, $300.00 for NH). As these were issued in panes of 70, only about 7,500 of each of these positional blocks were issued, and many were probably broken up.

This issue is interesting because as an Alaska Topical and item of interest for Alaska memorabilia collectors, it represents a bet on the economic development of the state, America's "final frontier"- rich in natural resources and with vast potential for economic growth.

As with the Hudson-Fulton imperforate recommended earlier, gum bends are a common condition problem with this issue, so endeavor to select blocks that are free of them.

Tuesday, July 20, 2010

Stamp Investment Tip: Poland 1947 Polish Culture Souvenir Sheet (Scott #412A)

In 1947, Poland issued a colorful souvenir sheet honoring Polish Culture, and featuring famous Poles, including Frederic Chopin and Marie Curie (Scott #412A). Only 50,000 were issued, and Scott '10 prices the souvenir sheet at $ 210.00.

With 38 million people, Poland is one of the fastest growing economies of all of the former Communist countries, with annual GDP growth averaging 5.5% over the past 5 years. The nation has steadfastly pursued a policy of economic liberalization, and was not severely impacted by the recent global financial crisis. It is likely that Poland will be one of the world's fastest growing economies over the next several decades. In addition, there are some 10 million Polish Americans with ties to the country.

Better stamps of Poland will rise in value as the country prospers and the population of Polish stamp collectors increases. Interest in Polish history and national pride are important elements in the culture of this oft-conquered people, and I am a big believer in taking into account the thematic interests of a collecting population when assessing the investment potential of an item.

Those interested in joining a community of stamp collectors, investors, and dealers are welcome to join the "Stampselectors" group at Facebook. The group provides an excellent venue for trading stamps with members from around the world, as well as being a forum for discussion of stamp investing and practical aspects of collecting.

Sunday, July 18, 2010

Stamp Investment Tip: Egypt 1956 Scout Jamboree Souvenir Sheets (Scott #B15Note)

In 1956, Egypt celebrated the 2nd Arab Scout Jamboree by issuing a set of semi-postal stamps (Scott #B13-15) and a pair of souvenir sheets (perf. and imperf. - Scott # B15Note) Only 3,800 sets of the souvenir sheets were issued, and Scott '10 prices them unused at $1,500.00 . These scarce souvenir sheets have dual market appeal as Boy Scout Topicals issued by an emerging market country for which I feel bullish about the stamp market. Worldwide membership of the Boy Scouts is estimated at 25 million, and Scouting topicals are extremely popular internationally.

With an estimated 76 million people, Egypt possesses one of the most developed economies in the Mid-East, with a GDP growth rate of 5%-7%. The government is undertaking major economic reforms to further spur development, including massive investments in infrastructure and liberalizing economic and tax policies to encourage foreign investment. Egypt's main challenge in the years to come will be one of social and political democratization - how to assure that enough of the new wealth trickles down to the majority of the population to lessen the problems of poverty and political instability. Nevertheless, barring major political instability, it is likely that Egypt will be one of the fastest growing economies over the next several decades.

Thursday, July 15, 2010

Stamp Investment Tip: Kazakhstan 1996 Butterflies (Scott #161-64)

Many of the new and newly resurrected nations of Central Asia and Europe have issued quite a few stamps and souvenir sheets in very modest quantities, and some of these represent interesting opportunities for speculation for those who wish to "get in on the ground floor." As these countries have only recently begun issuing stamps, their collector populations are minimal, although they are unlikely to remain so, especially if the countries prosper. The best way to play them is to target popular topicals with low issuance quantities, as these will have worldwide appeal, whether interest in these countries' stamps grows significantly or not.

In 1996, Kazakhstan issued a set of stamps picturing butterflies (Scott #161-64). Only 25,000 sets were issued, and Scott '10 values the unused set at $ 3.30. Butterflies are among the most popular sub-categories of Animal Topicals, and that, combined with the inexpensiveness of the set, makes it a very low-risk speculation.

A nation of 16 million, Kazakhstan is known to many outsiders from the somewhat demeaning film comedy "Borat." It is the 9th largest country in the world, with a territory greater than that of Western Europe, although its population density is less than 15 per square mile. Kazakhstan has plentiful reserves of oil, natural gas, uranium, chromium, lead, zinc, manganese, coal, iron, and gold. It also has a major agricultural sector, and is the seventh largest producer of grain. Annual GDP growth has averaged 6% over the last 5 years.

Those interested in becoming part of an international community of stamp collectors, dealers, and investors are welcome to join the "Stampselectors" group at Facebook. The group hosts lively discussions concerning stamp investment and practical aspects of collecting, as is also an excellent venue for those who wish to buy, sell, or trade stamps.

Wednesday, July 14, 2010

Stamp Investment Tip: Madagascar 1884-86 British Consular Mail Stamps (Scott #1-58)

Between 1884 and 1886, the British Consulate in Madagascar, then a French protectorate, produced stamps for use by British citizens residing there (Scott #1-58). At the time, the island was rife with disputes between the two colonial powers and also with the native population which, oddly enough, wished to govern itself.

The Consular Mail stamps were gummed in one corner shortly before they were used, and often torn off of envelopes by postal clerks, as they were not accepted as legitimate postage by the Universal Postal Union. Most of the remaining unused examples do not have gum, and most of the used are faulty to some degree. Estimates of quantities produced range from under 100 for the rarest of these stamps to about 4,000 for the most common, and Scott values range from $ 90.00 to
$ 12,000.-. Covers are extremely rare.

These stamps are highly prized by British Commonwealth collectors, and should be considered a conservative investment. There is the possibility that there might eventually be a demand for them in Madagascar, but probably not for a long while. Were a stamp market to develop there, however, the values for these stamps would soar.

A nation of 20.6 million people, the Republic of Madagascar remains a poor, though rapidly developing, nation with considerable growth potential. It is still heavily reliant on agriculture, although potential sources of growth include mining, petroleum, light manufacturing, and tourism. The government has embarked on a course of financial reform, including aggressively seeking foreign investment. Annual GDP growth has averaged 3% over the last 5 years.

Sunday, July 11, 2010

Stamp Investment Tip: 1922 Malaya-Borneo Exhibition Issue

In 1922, an exhibition showcasing the economic potential of British Malaya and North Borneo was held in conjunction with the Prince of Wales' visit to Malaya. Three Malayan States, North Borneo. and the Straits Settlements issued sets commemorating the exhibition by overprinting regular issues. All are scarce and undervalued, and have dual market appeal to collectors of British Commonwealth and Malaya/Malaysia. I've listed them, along with quantities issued and their Scott '10 Catalogue Values for unused, below:

- Malaya-Kedah- Sc.#3a-33a (8) - 7,358; Scott '10 CV= $ 131.25
- Malaya-Kelantan- Sc. #3a-23a (9) - 1,159; Scott '10 CV = $ 393.00
- Malaya-Trengganu- Sc.#8a-24a (11)- 776; Scott '10 CV = $ 567.00
- North Borneo - Sc.#136a-53c (14)- Est. under 20,000; Scott '10 CV = $ 94.40
- Straits Settlements - Sc.#151d-99d (19)- 3,825; Scott '10 CV = 624.75

A rare error variety exists of one of the stamps of the Kedah set: the 25c Red Violet and Blue with inverted overprint (Scott #13b, with a Scott '10 Value of $ 1,200.- as unused). Purchase it conditional on obtaining expertization.

Also, the Straits Settlements set is of interest to collectors of Singapore.

With a population of over 28 million, Malaysia is an emerging market nation and the 29th largest economy in the world. It has abundant minerals and petroleum, vast forests, as well as a thriving agricultural sector. Nevertheless, over the last four decades, the Malaysian government has committed the nation to a transition from reliance on mining and agriculture to manufacturing, and is moving to conserve its remaining forests and reforest the overcut areas. The government has recently taken steps to make Malaysia more business-friendly, and the number of Malaysians living in poverty has also decreased. As of 2007, average wages were around $34 per day, up from about $9 per day in 1999. Annual GDP growth has averaged almost 6% over the last five years, although the country is taking a hit in 2010 as a result of the global financial crisis.

Those interested in becoming part of an international community of stamp collectors, dealers, and investors are encouraged to join the "Stampselectors" group at Facebook. The group hosts lively discussions concerning stamp investment and practical aspects of collecting, and provides a useful venue for those who wish to buy, sell, or trade stamps. 

Thursday, July 8, 2010

Practical Advice: The Importance of Condition

Condition-grading is perhaps the most important skill that anyone who wishes to engage in the business of buying and selling stamps must learn. Beginners and those outside of the hobby are often surprised to learn that depending upon its condition, a stamp may sell for as little as 2% to as much as 100% of its catalogue value, or more. This is particularly true of U.S. stamps. Due to the current grading fetish (described in an earlier article), some U.S. stamps graded XF or higher have sold for multiples of their catalog values. So-called "condition-rarities," graded Superb or "Gem," have even sold for hundreds of times their Scott values.

Many beginning collectors make the costly mistake of purchasing overgraded stamps - stamps which have been described as being in better condition than they really are. While most stamp dealers and auctioneers are honest, there are some who intentionally overgrade stamps, and some who even alter stamps so that they appear to be in better condition than they are. Most dealers are not blatantly dishonest, but there are many who accidentally overlook defects, or are somewhat "liberal" when grading stamps which they are trying to sell. Also, some issues are notoriously poorly centered, and are graded on a "for issue" basis- for instance, "Very Fine for issue. " To an extent, condition-grading is more of an art than a science.

Average...... Fine....... F-VF........ Very Fine

When examining a stamp, the obvious first step is to look at its front. Centering is the first consideration. Pictured above are four 2c Washington stamps which grade from Average to Very Fine. Note how the perforations cut into the design at bottom of the first (Average) stamp. The perforations clear the design of the second (Fine) stamp, but are still close to the design at left and on the bottom. The third (Fine to Very Fine) stamp is better centered than the second, and the fourth (Very Fine) is the best centered of the four. Two higher grades also exist - Extremely Fine (almost perfectly centered), and Superb (perfectly centered). Unfortunately, the author did not possess XF or Superb examples of this stamp to scan.

Other criteria also apply when examining a stamp, such as whether the stamp has a defect or fault. Defective stamps are known as seconds, because they are the "second choice" of most collectors, who generally would prefer to own a sound, fault-free stamp. Nevertheless, the frontal appearance of a stamp is important in determining its value, even if it is faulty. A second which appears to be Very Fine is worth more than a second which appears worse.

Among the defects which are obvious from the front are faded or oxidized colors. Fading is usually caused by excessive exposure to light over a long period of time. Oxidation is a chemical process which effects certain types of inks, and causes them to rust. Reds and oranges often take on a brownish color when they oxidize. Other considerations include whether the stamp (if used) has a killer cancel which obstructs much of the design, abrasions, pin-holes, short perfs, tears or pieces missing, creases, stains, or inclusions. Inclusions are contaminant particles inadvertently mixed into the paper when it is being produced, and if such particles are large enough to be obvious, they can detract from the stamp's value. When examining old stamps, especially those without gum and for which the catalog value is much greater for unused than used, it is always prudent to look for indications of chemically-removed cancels. These may be difficult to detect, but a UV light will sometimes reveal traces of them.

The next step in the process is to turn over the stamp and examine its back. If the stamp is unused and was issued with gum, then gum condition will be an important consideration. The highest grade for gum is OG NH (original gum, never hinged), followed by LH (lightly hinged), OG (more heavily hinged), HR (hinge remnant) and No Gum. A stamp which is NH, but with disturbed gum, will be worth less than a NH stamp with pristine gum. Sometimes gum will appear brown or toned. Often, stamps which were stored under conditions of high humidity have toned, or tropicalized, gum, and toning can detract from the value of a stamp, especially if it is heavy (dark) or affects the paper as well as the gum.

Another type of defect of which to be aware when examining the back of a stamp is known as a thin. A thin is actually an abrasion of the back of a stamp, usually caused by careless removal of a hinge, or by heedlessly pulling the stamp off of something to which it was partially stuck. In effect, a part of the stamp's paper has been torn off its back and rendered "thinner" than the rest of the stamp. Larger, deep thins detract more from a stamp's value than smaller, shallower ones. The best way to detect a thin is to place a stamp in a black watermark basin (front side down), pour in some watermark fluid, and then observe whether a portion of the stamp appears darker than the rest of it. Of course, if the stamp is watermarked, one must take into account that the watermarked area will also appear darker, even if there is no thin. Occasionally one may also find a stamp for which the seller has attempted to conceal a thin, either by attaching a heavy hinge remnant to it, or by writing over it in pencil.

When purchasing an expensive stamp, the buyer should require expertization as a condition for purchase if he has any doubts whatsoever about either a stamp's authenticity or its actual condition. Most issuers of certificates will comment on a stamp's condition as well as its authenticity, and a few actually grade stamps. While there is nothing wrong with selling a repaired or altered stamp as long as it is described as such, there are dishonest individuals who profit from misrepresenting such stamps as being in their original condition. Repairing stamps is a lucrative business in Europe, especially in Germany, and there are practitioners of the trade who do a pretty convincing job of repairing tears, ironing out creases, filling thins, removing cancels, and regumming stamps. To an extent, developing an instinct or "gut-feeling" about when a stamp's authenticity or apparent condition seems questionable requires time and experience, but hopefully this article will serve as a start for those who are new to the game, and will make the learning experience less of a "school of hard knocks."

Tuesday, July 6, 2010

Stamp Investment Tip: Mexico 1940 Stamp Centenary (Scott #754-58, C103-07)

In 1940, Mexico issued a compound set celebrating the Centenary of the Postage Stamp (Scott #754-58, C103-07). Only 5,000 sets were issued, and Scott '10 values the unused set at $ 141.00 ($ 340.00 for NH). Aside from the fact that this is a scarce set from a rapidly developing country, demand for it is augmented by its appeal as a "Stamps-on-Stamps" topical.

I've never seen a first day cover for this issue, but I'd guess that there are probably a few hundred of them around. If you happen to find one in decent shape, with a nice cachet, and selling for a slight premium over the cost of a used set (or less), then jump on it.

With a population of about 109 million, Mexico has experienced consistent annual GDP growth of between 3 and 5%. It has a diverse and developing economy, but modernization remains a slow and uneven process, and current challenges include addressing income inequality, crime, and corruption, upgrading the infrastructure, and reforming tax and labor laws. Stamps of Mexico are popular among collectors in the U.S. as well as in Mexico, and those who wish to learn more about Mexican stamps should consider joining the Mexico Elmhurst Philatelic Society International (M.E.P.S.I.). MEPSI provides many useful services for collectors of Mexico, including expertizing Mexican stamps.

I have begun a new blog, "The Stamp Specialist", which will feature wholesale buy prices for stamps which I am interested in purchasing. The first such buy list is for Mexico, and includes the set recommended in this article. Viewing dealers' buy lists every now and then is an excellent way to keep current on the vagaries of the stamp market.

Sunday, July 4, 2010

Stamp Investment Tip: Russia 1934 Zeppelin Issue (Scott #C53-57)

In 1934, the Soviet Union issued a strikingly modern set of five Zeppelin stamps (Scott #C53-57), which were intended for use on one of the South America flights of that year. 40,000 sets were issued, and Scott '10 values the unused set at $ 505.00.

The set strongly appeals to both collectors of Russia and of Zeppelin stamps. Zeppelin stamps and covers are extremely popular among "Zepp" collectors and Aviation topicalists, especially in Europe. Those issued by destination-countries which are likely prospects for rapid economic development are compelling investments, in my opinion.

The market for better Russian stamps from the Czarist through the Stalin periods is very hot right now. With 142 million people, Russia is the 8th or 9th largest economy in the world, with vast reserves of natural resources and a highly educated population. Since the collapse of the Soviet Union, Russia has experienced several major economic crises in its transition to capitalism, although annual GDP growth has been strong over the last 5 years, at around 7%. The country is still plagued by corruption and organized crime, making it somewhat reminiscent of America during its "Wild West" and Robber-Baron periods. Nevertheless, the middle class has grown from just 8 million people in 2000 to 55 million in 2006.

I favor all better items of Russia, as I believe it likely that both its economy and stamp collecting population will grow substantially over the next decades.

Thursday, July 1, 2010

Stamp Investment Tip: Hong Kong 1862 Victoria (Scott #1-7)

In 1862, Hong Kong issued its first postage stamps (Scott #1-7). The two high values are particularly scarce, but also pricey. The 48c Rose (Scott #6) had a printing of 31,260 and the 96c Gray (Scott #7) - only 21,600, and Scott '10 prices them unused at $ 3,000.- and $ 4,000.-, and used at $ 400.- and $ 525.- , respectively.

I favor all of the better stamps of Hong Kong, as they appeal to collectors of China, Hong Kong, and British Commonwealth - three growing markets. While these two stamps may seem expensive, it is likely that only a few thousand remain in any condition. If buying them used, ascertain that they have postal, and not revenue, cancels, and obtain a certificate if necessary.

Centering of this issue tends to be poor, so expect to pay a premium for examples with four margins.