Stamp News June 2004
Will covers outperform during the next 50 years? (Part I)
No pretty pictures this issue, hopefully just something to think about for those prepared to consider alternative collecting concepts.
I always enjoy reading fellow Stamp News columnist Simon Dunkerley’s articles. Simon’s recent ‘50 years of Prices’ for Kangaroo and KGV issues was for me a particular eye opener. Always one to be mesmerised by figures, the revelation that during the past 50-year time span specialised Kangaroos and KGV have increased in value by average multiplication factors of 292 and 243, respectively, I found absorbing information indeed.
Few would not be impressed by such statistics, and I for one cannot help but speculate upon whether the next two generations of philatelists might enjoy such phenomenal increases in philatelic values, and if so for what type of material. Perhaps specialised Kangaroos and KGV will continue to perform spectacularly during the next 50-year time frame. Coming off such a relatively high base as that of today it must be regarded as unlikely. The mind boggles for instance at the possibility of the famous KGV 2d tête-bêche pair, which Simon shows increased in value from $600 to $250,000 in 50 years, appreciating in value by the same factor (416 times in its instance) in the next half century. I recall breaking out in a cold sweat when I paid just $4100 for this item at auction in 1971!
Do I believe any Australian philatelic material 50 years hence will be worth 200 to 300 times what that same material is worth today? Sure do. Through the semi-opaqueness of my crystal ball I see candidates for such glory coming from within the ranks of Australian (and the same applies to overseas countries) covers (commercially used only) and Postal stationery. The latter will have its day when a specialised catalogue, in the tradition of the Brusden-White series for Australian stamps and booklets, makes its long overdue appearance. Wise philatelists are quietly building their Stationery collections in anticipation of the inevitable appearance of a specialised catalogue. Meanwhile, such enlightened folk are enjoying the thrill of collecting something different, with the likely bonus down the track of having material which will outperform as an investment.
Let us return however to commercial covers, which it should be no surprise to regular readers of this column are my personal passion in philately. Unlike with stamps, booklets and Stationery, no two commercial covers are likely to be absolutely identical. Valuing commercial covers is therefore generally a more subjective exercise than is the case for valuing those other categories of philatelic material. Perhaps covers are more closely aligned to the art market, where valuations for a given artwork may vary considerably from valuer to valuer. With commercial covers considerable variation in opinions when valuing is more the rule than the exception, and this often works in favour of the informed buyer. To obtain an indication of how a given artwork has performed over time, experts generally have the luxury of citing prior auction or documented private sales when a change of ownership of that artwork has occurred.
Such historic comparison is also ideal for positively gauging how a given cover has performed over time. However, most of the types of commercial covers which I believe have the potential to outperform in the longer term are presently valued at such modest sums that it is not viable for them to be offered as individual lots at public auction. This situation is changing and in the past few years or so I have noted many covers, which once would barely have rated a single lot in a mail auction, suddenly graduating to public auction status, often replete with colour photo!
By way of indicating the potential inherent in commercial covers I will provide two case examples, at opposing ends of the valuation scale. In an earlier column I mentioned the rather sudden ‘discovery’ by the market of the rarity as a solo franking of the otherwise most humble 1952 KGVI 4½d red. That story is worth repeating here. This stamp was issued primarily as the postcard rate to Foreign countries. In the late 1980s Richard Breckon, a pioneer student of the then almost unheard of study of postal usage of Australian stamps, mentioned to me that he had yet to see an example of this stamp used on postcard. I took up the challenge and after seven years of searching eventually turned one up. It is fair to say that 15 years ago this item would barely have made it into a dealers’ ‘Dollar box’. A few years ago another example of a 4½d on postcard realised $725 (plus buyer’s premium) in a Sydney auction. Better even than our requisite target 200/300 times factor and in well under 50 years!
The rarity of this item has now been recognised by the market and I do not necessarily suggest that it has the potential to outperform in the future, coming as it does from such a relatively high base. The fact is that there are many hundreds (yes hundreds) of comparable examples of unrecognised rarities amongst Australian stamps on commercial cover, and most of these can presently be had for very modest sums by those who are willing to think beyond the square, and take to the thrill of the chase. Many examples of items with potential have been illustrated in this column during the past couple of years. Fun and potential profit in philately – irresistible!
Our other example of a cover with potential is the one I let get away. At New Zealand 90, the international exhibition, I was offered a £2 Kangaroo (CofA watermark) on a commercial cover. The price was A$750, or three times the price of a comparable quality used stamp off-cover. At that time I was more interested in 19th century covers and confess to not being particularly well informed concerning the rarity of this item (a classic case of lack of knowledge costing). I declined the offer on the flimsy basis that the premium for the cover was too great at three times the price of a used stamp. A more courageous dealer colleague bought the item and promptly resold it for $1250. By the mid nineties I learnt that the current owner would sell and was asking $5000. A grand sum indeed thought I. A well known collector obviously disagreed and bought it.
I didn’t learn of the existence of another £2 on cover (there are a small number about on tags from gold bullion packets which are desirable although not as valuable) until the late nineties when an example, sadly with a significantly rounded corner, reputedly sold for $11,000. On the basis of that sale price the owner of our subject cover told me that his must now be worth $30,000. Given my appallingly poor judgement record insofar as this item is concerned I thought it prudent to decline to comment. In view of what I regard as amazing prices presently being realised for KGV rare inverted watermarks, approaching $20,000 with the ‘add-ons’, and that for a category of error which is not one of your more highly visible from an exhibition perspective, perhaps the present owner of our £2 cover is not so much the optimist that I first thought. If his valuation is realistic (I’m warming to it!) then this cover would be worth 40 times the amount it was when offered to me nearly 15 years ago. Not bad. Meanwhile, the used off-cover equivalent stamp we mentioned can still be had for around the same $250. ‘Woodchips’ are not what they were.
Next issue, in the final part to this commentary, I will provide a few illustrations of my ‘Will this item be worth 200/300 times its present value in 50 years?’ selections of the month. Hopefully you will be amongst those fortunate enough to be around to pass judgement on my selections!