What enraged me was the steady din of well meaning but ignorant comments from collectors and dealers alike who were trotting out the same tired lie: catalogue values are meaningless and the real market value of stamps is only 10-30% of Scott. It enraged me because it is so completely devoid of truth, and in most instances is completely self-serving. Some dealers and some collectors in this hobby are incredibly greedy and entitled, wanting something for nothing. To get it, they convince themselves and others that the hobby is in decline and that the market is depressed. The unscrupulous dealer does it so that he can look the widower that comes to him with a valuable collection straight in the eye and say: "I'm sorry sir/madam, it is a really beautiful collection that your wife/husband built, but you see, the market is not what it used to be and stamps really don't sell for more than a fraction of what your wife/husband paid. But I can offer you $X". The collector does it so that he or she can bully the dealer into selling him or her a superb never hinged Bluenose for $150 when it is really a $500-$600 stamp. What is unfortunate though is that the echo-chamber effect within the hobby means that well-meaning philatelists who aren't greedy, but who want to collect sensibly are misled into adopting a belief system that has no basis in reality and this negatively impacts their collecting and the hobby as a whole. In the rest of this post I will explain why and how this is so, as well as why this idea that catalogue values are meaningless is a lie.
So why is it a lie? For the following reasons, each of which I will explain in detail:
- There is no "one" stamp "market.
- Condition is everything.
- The internet has reduced demand for some stamps and increased it for others.
- Correct identification is also everything.
- Most collectors only buy when they are ready to. Price is only one factor in their decision to buy.
- There are retail stamp markets in which individually priced, identified and graded stamps are offered for sale individually.
- There are wholesale auction markets in which both individually identified and larger lots are offered for sale to the highest bidder.
- There are E-bay auctions, in which items are offered to the highest bidder, but which only receive 7 days of very limited publicity and exposure.
- There are local show and bourse markets.
- There are markets at local stamp clubs.
The Retail Dealer Market
Another very specific fact is that Scott changed its pricing model in 1989. Prior to that, Scott values were inflated by as much as 100%. It was common practice when I was a kid, for a dealer to charge you anywhere from 40% to 100% of catalogue depending on what you bought. If you went and bought $5 worth of stamps with your allowance, you got little if any discount. But if you spent a significant amount with a dealer, you would get a large discount. But in 1989, Scott adopted a retail pricing structure, which meant that prices for most things were slashed by up to 50%. It caused mass confusion within the hobby with a lot of collectors abandoning the hobby in disgust because they thought that the value of their collections had just dropped by half. Of course that hadn't happened. The new Scott values were supposed to represent actual retail prices so that dealers wouldn't offer large discounts anymore. Consequently, many of these large discounts did indeed stop. But unfortunately many older collectors did not adjust their thinking and many still expect discounts of 40-60% from Scott, and so many spaces in their albums never get filled.
The Auction Market
- Descriptions for large lots are usually very brief. Very little if any photos are provided and generally any lot containing more than 10 stamps is usually not returnable under any circumstances. So if you aren't in a position to inspect the lot, you are relying completely on the reputation of the auction house, their description, and their estimate to decide if, and how much to bid.
- There is very limited right of return on individual stamps too. You have to make prior arrangements for certificates and if you don't, you are SOL in most cases.
- Auction houses usually require you to buy at least once a year in order to continue receiving their catalogue. If you don't buy, they cut you off, because their catalogues cost a lot of money to print and mail.
- If you want information about specific stamps in a lot or have any kind of general philatelic question, you won't find many auction houses all that receptive. Most will be quite terse and will tell you that they don't have time because they are selling thousands of lots.
- Material listed at auction, which is a very small percentage of the total listings on E-bay. Auctions usually represent less than 10% of the total listings in the stamp category.
- Material listed as retail "buy it now" or "buy it now or best offer".
Condition is Everything
Within collecting circles much has been said about the importance of condition. Despite this, there are many collectors and sellers who either do not understand how critical it is in determining value, or they conveniently ignore it in the hopes of being able to sell stamps for more than they otherwise could. If you look at realizations by long-established and reputable firms like Robert A. Siegel, Shreeves Philatelic Galleries and Mossgreen, you will see hundreds or thousands of cases where a difference of less than 1/4 of a mm in centering can mean a 300-400% difference in price and where hinged versus never hinged can command similar premiums. With graded US stamps, there are professional grading firms that issue certificates for stamps graded over XF-85, that I doubt the average collector could tell apart at first glance. For a lot of common US stamps that are worth 10 cents in XF-85, the same stamps in SUP-95 can be worth $30-$40, $200-$250 in SUP-98 and $1,000 and up in GEM-100.
Therefore, it makes absolutely no sense whatsoever to talk about stamp values without discussing condition in detail. Anyone who tells you that they know the market value of a stamp because they have averaged 10 separate auction realizations had better have physically examined the stamps themselves and otherwise ensured that the grades are truly the exact same. Otherwise their analysis is completely meaningless.
The Effect of the Internet on Demand For Stamps
This same Ryan fellow asserted that the internet had reduced demand for stamps by showing people how utterly common most stamps are. While that might be true for certain very common items, it is definitely not true for scarce material. If anything, the internet has increased demand for material by allowing collectors to form very specialized, in-depth collections that would have been almost impossible to form quickly 30 years ago.
For example, for 5 years I collected Nigeria and its component territories before 1914. I bought everything I could find online, from every source that I could find. So I know, that I have probably one of the largest holdings of Nigeria in the world. I don't have everything of course, but I doubt that there would be more than 2 or 3 other collectors in the world with the same amount of Nigeria as me. 30 years ago, when stamp buying was limited to making written and telephone inquiries of dealers it would have taken a lifetime to buy the amount of material that I was able to amass in just over 5 years.
Why does this matter? Well because one of the killers of a collector's interest is the inability to grow a collection. 30 years ago, many areas were so hard to find material for consistently, that they never became popular among the general collecting population. The result was that people stuck to countries and topics for which material could easily be found. Those tended to be countries for which the material as a whole was not scarce, and these collectors tended to cast a very wide net being generalist collectors, because it was the only easy way to collect back then.
But now, with the internet, you can find the most obscure items imaginable. You can decide to collect 1950's postmarks from Armstrong, BC and actually form a decent collection in a relatively short period of time. You can decide to collect one single stamp from one issue and form the most extensive collection ever put together. That holds a great deal of appeal for ambitious philatelists who want to meet a challenge and express themselves through their hobby.
The result is the decline of general collecting, and with it some softening of market values for general, run-of-the-mill material, and at the same time a tremendous upsurge in scarce and specialized material that would have been very cheap 30 years ago.
Correct Identification is Also Everything
This is a hobby of details. Small details can make a huge difference in value. Some examples:
- Small differences in perforation, as small as 1/10th of a hole, can make hundreds of dollars difference in value (the 5 shilling George VI stamp of Jamaica). The 3c Small Queen of Canada perf. 12.5 x 12.5 instead of just 12, is worth over $1,000 for a VF used example compared for just $2-3 for a perf. 12 example.
- Differences in paper can also be worth hundreds of thousands of dollars - like the 2c Large Queen on laid paper, which is worth about $200,000-$250,000 versus just $20 or so for a VG used example on the commonest wove paper.
- Watermarks - can make a huge difference in value also. Take early US or Great Britain as an example.
- Grills - both size and the presence or absence of can translate to hundreds of thousands of dollars. The 1c blue 1862 Franklin stamp from the US with the Z-grill is worth close to $1 million versus about $20 or so for a common example without any grill.
- Postmarks - A penny black with a yellow Maltese cross cancel is worth over 2000 pounds versus just 100 pounds for a common red Maltese cross cancel.
- Specific rare colour shades can also make a huge difference. The common 3c rose Washington from the same series as the Z-grill above, in the standard rose shade is a $2-$5 stamp in average condition. But there is a specific type of pink called the "Pigeon Blood Pink" that is worth over $1,000. Identifying this colour requires experience because there is no way that the average collector could possibly know what pigeon blood pink looks like without it.
- Plate differences can also be worth thousands or hundreds of thousands. The 1c Franklin stamp from the early 1850's can be found in several "types". The cheapest type is about $100 or so for an average used example, while the scarcest one is over $200,000 last time I checked. In between, are other types that while not as high as $200,000 are several hundred dollars or several thousand. The differences between these types are extremely minute.
Most of these attributes cannot be ascertained by looking at a scan, unless it is a high resolution scan, and even then, in most cases positive identification is still not possible. This also does not cover areas that are rife with re-prints and forgeries that can only be identified by referring to very minute details that are described in either Serrane or Earee. These areas include German and Italian States, many Portuguese colonies and most early issues of Europe.
This is why stamps that are not fully identified and described do not typically sell well on sites like E-bay.
Most Collectors Buy When They Are Ready
While some collectors buy whenever they see a bargain, most collectors only buy stamps when they are ready to buy them - either because their budget allows it, or because their interest has motivated them to seek the stamp out. I know this because I am a collector too and I cannot recall a single instance in which I have responded to the dozens of unsolicited e-mails I receive every week from dealers announcing % off sales on their stock. As a dealer with an anchor store on E-bay I have tried to run month-long 30% off sales in which I still allow customers to make offers to get even better deals. The effect on my store traffic and sales? Almost zero. The only time that offering an extra discount really tips a collectors hand is when he or she is close to spending their budget and that one extra stamp or set would push them over and you give them enough of a discount that makes them say "Oh alright!" and buy it.
So while collectors like discounts and will buy wherever is least expensive when they are ready to buy, offering discounts will not usually induce them to buy when they weren't planning on doing so anyway, unless those discounts are so steep that they feel they would have to be crazy not to.
So for all of these reasons, the idea that catalogue values are not a realistic indication of value is at best an inaccurate over-generalization and at worst, it is an outright lie. It is generally very accurate in a retail market - the very market that catalogues were intended for. They are not accurate in the auction markets, but they don't need to be, because those markets rely on the auctioneer's historical experience and professional judgement. They are not accurate in the E-bay auction market, but then again, because of how inadequate most e-bay auction listings are, no pricing data that you could compile based on prices realized would ever be meaningful unless you carefully inspected every lot and controlled for differences in condition and identification. Even then, all it would be is a pricing guide for E-bay penny auctions and not stamps in general.
So why am I so passionate about this and why do I care so much? Several reasons:
The first reason is that it represents an extreme threat to the continued health of the hobby. I can hear you asking, "but isn't it a good thing that stamps are getting cheaper and the market is getting softer?". Well, no. Not in the long run. The only incentive to preserve objects is a sense of historic and sentimental value to those who are interested in that thing. But to others who possess no inherent interest in that thing, economic value is then the only factor that will motivate them to preserve that thing. Having access to an endless supply of cheap stamps is a boon for the current generation of collectors. But what about when those collectors die? What happens when the relatives are going through the deceased's belongings? I can just hear the conversation: "Hey Jane, I found this large collection of stamps of Dad's, are you interested in them? No? Let's see if they are worth anything.". Then after they find out that they have little commercial value, they throw them out because neither of them are interested in collecting stamps, and those stamps are lost forever. That will happen on an absolutely massive scale in just 2 or three generations if that attitude is permitted to take hold. Consider this: given how ugly and faded the British Guiana 1c magenta stamp of 1856 is, do you think it would still exist today if it was only worth a $1? Probably not.
I happen to care very deeply about the survival of philatelic material, and of this hobby in general. I am on the autistic spectrum and stamps have literally provided my life with direction and purpose, while being a friend to me when no one else was willing to be.
The second reason is that it represents a huge economic threat threat to three groups of stakeholders:
- Existing collectors who have spent more on their hobby during their lifetimes than they can really afford to spend on a hobby that will have no financial return. Most dealers in the trade respond to my comments by saying that collectors should only collect for enjoyment and should not expect any financial return. They love to use the analogy of golf as their example. But the reality is that golf is only affordable for the very rich and that most collectors can only afford to spend $100,000-$200,000 on their collections over a lifetime if they can expect to be able to recover 25-50% of that amount when they get old and are ready to sell. But what happens to these people when the time comes and all they can get is 5-10% of what they paid or even less?
- Existing professional retail dealers who have invested very significant financial sums of money and time in building their retail stocks, and now cannot sell their stamps at a profit sufficient to make a living. Those dealers either go out of business over time, or they are forced to discontinue many of their offerings, focusing only on the more expensive stamps so that stamp collecting becomes a hobby that is only for the rich.
- Existing collectors and new collectors. As entire areas of philately become unprofitable to sell on a retail basis, the number of dealers offering the material will decline to the point where a collector's only option for acquiring material is from other collectors, which is cumbersome, and in bulk from auction houses. While this may be suitable for some collectors, it will not be suitable for most, and certainly not for the duration of their collecting lifetimes.