Investing In 19th Century US Stamps

a simple question which I have not seen addressed on this forum.
i am interested in starting a used u.s. stamp collection of 19th century u.s. stamps in used condition. I see on some auction sites that the five cent scott number 1 in used condition goes for about 300 dollars. are the prices on the auction sites such as "stamp wants.com" close to what a stamp dealer will pay for the stamps?
also if I buy 19th century u.s. stamps used, in average condition, will they appreciate in value five percent or so a year?
thanks in advance for your response.

Investing in stamps is a dangerous proposition. In terms of collectibles, an investor would be better off sinking his cash in something with inherent value such as gold or silver bullion, or even bank notes. It's likely that there will always be a demand for classic US but I would be more satisfied with breaking even upon sale rather than chasing dividends. I do hope my stamp collection will turn into a nice payday when I'm retired and need the cash to pay a doctor's bill, but I'll be happy if I had an acceptable return from a lifetime interest.

We have a guy in our club that brings in a stockbook of $50,000 of U.S. 19th century duplicates..he sells to us at 20 percent of catalog and makes a profit....pages of "hardships of immigration" and "indian hunting buffalo" he buys collections at auction and gets them cheap..the only one who makes money on stamps are possibly the dealers..buying is fairly easy...trying to sell is not so easy !

thanks for the info. it has been something I have been thinking about for quite awhile. apparantly stamps is a poor investment proposition.

In my opinion, you can never buy stamps now and then sell them to dealers at any time in the foreseeable future as a strategy to make money. You'll go backward 99% of the time. Maybe more often than that.

Dealers are going to pay a small fraction of catalog. You aren't likely to have a reliable source that will sell for less, and if you do, you should become the dealer.

You're essentially going to have to become the dealer when it comes time to sell, anyway, because seeking a return on your investment won't allow for a middleman, other than (perhaps) an auction house.

Leaving aside the economics, from a practical point of view buying investment grade 19th-century stamps (if there is such a thing) requires knowledge built up over years, and a newcomer is likely to be fleeced over and over.

My stamps are priceless. But only to me; to a dealer, they're worth 5% of catalog, tops.

A sailboat would be a safer investment.

My two cents.

Cjd

No offense meant to any dealers...I love you guys, and everyone's got to eat...

As many long time collectors have seen the stamp market goes up and down. If you were looking to invest in stamps as an investment the dollars you would need to spend to be in the safe range is insane. I personally would only invest in stamps in the multi thousand dollar range. But, if that was feasible I most likely would not need to invest in anything! Collect quality stamps because you enjoy it. That is a much safer investment. It is an investment in pleasure. If you make a few dollars later all the better!

there's a reason we call it "collecting" and not "investing" :} :} :}

yes we r philatelist not investment stampers :)

I've said it before...Once you start worrying about how much your hobby is worth, or am I going to be in the black when and if I sell, it's no longer a hobby. If you think you're going to pay a doctor's bill with them, you better hope it's no more than a hangnail.
Allan

Yes thank goodness for dealers, if the internet is the only place you can buy..ok, but its a cold sterile place...i spent 6 hours at a stamp show Sunday and really enjoyed talking with dealers..they were all sociable and informative whether I purchased from them or not..i can appreciate the hard work they put in...just travelling and setting up at a show..and these guys are no youngsters..if a dealer works alone he is working day and night..finding and sorting new material..no one wants to see the same old stuff at your table..you can swap stamps with your friends..but when you want that "nice" item for your collection you go to a dealer !!

I totally agree Phil

Though I've only ever been to one show It was an amazing experience. I learned lots (and bought lots) The dealers were amazing and treated me very well, especially once they new I was a new collector.

Dianne

Agree with Knudson: investing in stamps is risky at best. Assuming that stamp collecting remains a hobby one to two generations from now, if you got back anywhere close to your original investment, and in the meantime enjoyed the pleasures of the hobby, you would be coming out way ahead. You have to figure that dealers are going to mark up their items for sale from 30-100%, otherwise they could not remain in business. Therefore you cannot expect to buy stamps at the same price as them nor can you expect them to pay the same price as another collector for your items when it comes time to sell. Average condition stamps have very little prospect of appreciation in the future and should only be bought for your enjoyment or to fill a void in your collection if you cannot afford better. If there is any profit to be had in stamps in the future, it would be with either the very fine or better condition stamps or the rarities. And even these are not a given. HOwever, these would be the stamps most promising to attract collector interest.

i figured that if I bought at auction on the internet for , say 100 bucks,then the next day if I put the stamp up for auction I would get around 100 bucks from another auction buyer,no?
i notice the mystic stamp catalog has the used stamps I find at internet auctions at much higher prices. the internet auction prices seem to be closer to what the dealers pay for stamps,no?

The difficulty with your approach, Acorn54, with going into and out of auctions, is that there would be a huge amount of "vig" that you would have to pay. As the seller, it is not unusual for you to pay the auctioneer a 20% commission and then as the buyer, yes, you pay another commission, again, sometimes 18/20%. So, your round trip would be really really expensive.

If you want to see an example of someone who has made a great deal of money investing in stamps, there is the example of Bill Gross. But, not only has he spent millions in his pursuit, but in his spare time, he is one of the absolutely foremost fixed income investors in the world. He runs PIMCO.

Investing and making money in stamps is not realistic unless you are prepared to commit hundreds of thousands, or perhaps even millions of dollars in very very high ticket stamps.

Any collectible is ultimately only worth what someone is willing to pay for it. Your $100 investment today might very well bring you riches in 20 years from now, but could also have you eager to sell for whatever pennies you can scrape together from a buyer. Short term sales could be viable but carry an equal risk. You might be interested in the item now, but is there a stable enough market who will seek you out tomorrow? A dealer is in the business of making a profit for himself; he won't be paying fair market value amounts if he's to succeed in business. Dealer offers will be considerably lower than that of another collector as he likely has a store to run, bills to pay, employees on the payroll etc. and has to invest his own time into finding collectors who would be interested in his purchases from the original collector.

Like I said, I hope my collection releases cash in old age when I need it most and can't physically enjoy collecting anymore, but even if I took a loss I would still be happy looking back on my interests and what I gained on a personal level from the hobby. The memories of social interaction here on SCF and other web forums, the excitement of the stamp fairs, and the trolling of Wikipedia to piece together a historical timeline of my country collections are priceless to me. I'm here because I enjoy diving into the material and seeing the good in our often gloomy world. I can't put a dollar value on that.

Be careful with the Mystic Stamp Co., they are way overpriced on mostly all the stamps they sell. I buy mounts from them to keep on their list for a free catalog. The catalog I use for quick referencing.



Butch