Rsa newer issues-to invest or not??

[ATA STAMP CENTRE 42]

HI ALL

I have not really researched this issue thoroughly but will welcome some comments and thoughts on this topic.

Newer issue items (lets say from 2007 onwards) of which many have highface value are subject to a considerable cash layout if you wish to purchase a few of each-Many fdc are now priced at R66 per set and many issues are of airmail or small overseas letter rates at R5.95 PER STAMP and the sheet costs R60 for the sheet of 10.There are also the definitives with R10 and R20 per stamp and a control block set will cost about R1200 or more!!

I would always try and purchase about 10 of each if it is not a special issue so as to try and build up stock looking to the future but suddenly you are laying out thousands or rands which you cannot turnover for a long period so you are tying up cash flow.

I have no doubt many of these items will be highly sought after one day as there were small issues of many fdc and newer issue stamps and most collectors will only buy one or two at most as the face value is so high.

This means that there will never be high volumes of most of these issue entering the market as older collectors pass away and the collection they had then arrives on the market.

Also many collectors will have completed there current collections and will need to expand and will then start looking at the issues they do no have and the demand will then increase for these newer issues.

I have asked one or two elderly(emphasis on old age) dealers as to why they never deal in new material(excludes imperf and varieties etc)and the answer is actually very clear,they do not believe they will be around in 10 years to reap the benefits so they rather pursue traditional stamps which they can sell now and turn an immediate profit,

I personally believe their will be a remarkable return on any outlay now but will take 10 to 15 years for this benefit to be derived,

It all comes down to a balancing act and depends on how much to invest and tie up as to what you can buy and sell immediately and increase cash flow.

Any ideas and thoughts on above?

neil

[dstorm 10]

Hello Neil

 

Thanks for the post.

 

I think that you have summed up the argument yourself: Cash flow and return on investment.

 

The cash flow part is obviously subjective, according to your budget, but most dealers I know, will never tie up R20 000-00 or R30 000-00 in a fifteen year investment. The bank will simply beat this in any case. Myself? I would rather pay off my bond.

 

I could not agree with you more on the scarcity issue. As I have said in another post there are some issues from the mid 1990’s which are just about impossible to maintain. I believe that it is even more severe for the post 2000 issues.

 

The crux of the matter here is the New Issue Agents. They buy substantially from Philatelic Services on credit and at a good discount. What is the use of spending R10 000-00 in cash, while the new issue agent will still be selling the items a year later at face value? What can you possibly gain in the first two years? You are basically competing against a state department salaried by RSA collectors.

 

I would rather buy 5 quality stamps and sell them at a 20% profit after one year (just got hold of a lovely 10/- Kings Head).

 

Keep well and regards

 

Jacques

[DennisPM 10]

I fully agree with both Neil and Jacques - their comments make total business sense to a dealer.

 

To a certain degree, the logic can be applied to the Homeland stamps. When they existed, thousands of collectors subscribed to the Philatelic Services of the day to receive each issue which they hoarded. I am sure the intention was that over time, their value will increase. The result of the frenetic buying (and hence production) is that today most collectors have complete Homeland collections and lots of clean material except for perhaps the last couple of issues which are the "expensive" articles. If we apply the axiom that value is in rarity and rarity depends on the number of stamps issued, then we can understand why many of the treasured collections are in reality not worth much other than as a collection of pleasing and to a degree, "pretty" stamps. One only has to compare the prices for Homelands in the different SACC catalogues and in the current market to obtain verification of the above.

 

I think many collectors who collect for value should remember that a stamp has no value until someone is prepared to pay for it and that value is determined by rarity or scarcity.

 

Ahhh but therein lies the problem - what makes a stamp scarce? Low original issue? Few surviving copies? Varieties? Is mint rarer than used? I guess having to make those decisions is what makes our hobby and stamp dealing so exciting.....

 

Kind regards

Dennis

[ATA STAMP CENTRE 42]

Thanks for the input-some food for thought.

Jacques -i think a few of the newer stamp issues will beat the bank for an investment over 10 years-we can discuss it again in 10 years time.

Heres another trend i have noticed-most new collectors that purchase from me will pay good price on mint or unmounted mint but seem to ignore the used sets which most times have higher c/v than the mint or unmounted mint.Is this a trend in traditional stamp selling as well or just what i have noticed on bob.

Any ideas again??

neil

[morganfarrell 10]

Neil, Jacques and Dennis,

 

I think this is an interesting issue with some interesting responses - from the dealer's perspective. When you put it in business terms, it certainly makes sense that it would be a weak and long term investment to lay aside these new issues in large numbers. From a collector's perspective though, it would seem that these would be the very issues to make sure that they have for the same reasons given above. This would be especially true, I think, for the younger collector. In the end it'll all depend on the condition of the hobby in 10 years time. If it's healthy, there will always be those who want a complete RSA collection. The catalog will then have to reflect the "scarcity" of these very same issues.

Just my two cents worth.

 

Regards,

Morgan

[morganfarrell 10]

Neil - I forgot to comment on your comment on used stamps. Today's commemoratives in SA are and will always be difficult to get. I'm guessing that everyone would agree with this. But from a person who at one time would only buy used stamps, I don't think their popularity will ever match their scarcity for most collectors. Sad.

 

Two more cents.

 

Regards,

Morgan

[dstorm 10]

Hello Morgan

Thanks for your input.

I know that many collectors or dealers might not agree with me, but I see stamps going the same way as most, if not all other collectables: The cheap stuff will get cheaper. The mediocre items will stay mediocre. The TOP ITEMS wil just simply shoot up in value.

But the used stamps are a spanner in the works. Have you ever seen a complete fine used (not CTO) RSA collection? Just imagine if you had one, with all the “a”, “b” and “c” numbers, etc included. You would surely have (perhaps!) the only such collection in the world. Would there be any buyers?

As much as I prefer Fine Used, Unmounted Mint seems the way to go from a pure commercial view point. I have been told by many a collector / investor / speculator that they prefer Unmounted Mint stamps because of its pure aesthetic value.

Regarding the “catalogue”. It seems as if most (if not all) catalogue publishers are still looking at the so-called “formal market” to put values on items. They simply refuse to acknowledge the tremendous impact of online sites. To me, the “catalogue’ is now nothing more than an invaluable chronological listing.

Keep well and regards

 

Jacques

[ATA STAMP CENTRE 42]

Hi Morgan-thank you for the comments-very valid points .

Jacques-thank you for confirming that the mint/unmounted mint is in greater demand currently in the markets we serve.

Case in point i recently had a unmounted mint commonwealth set with c/v R 980 and sold for R630.the same set in superb used was catalogued at R1130 and on the same sale sold for R31.00.

Overall my return was what i expcted on both sets but the discrepancy was huge.

On the sa used the work needed to put together such a fine used collection will never warrant the time required as the return will be so minimal as the demand is not there.

NEIL