Opinion: From the 1c Magenta to Crypto Stamps

On 8 June 2021, one of the world’s rarest and most valuable stamps was estimated by Sotheby‘s to be sold for USD$10-15million. When the hammer hit, it achieved only $7million*. Within hours of being sold, Stanley Gibbons, one of the world’s oldest stamp dealers, announced it had purchased the stamp. Further to this announcement, they then announced they would democratise the stamp.

Stanley Gibbons

Stanley Gibbons has previously dabbled in ‘investments.’ The company set up a subsidiary business (Stanley Gibbons Guernsey) as an investment scheme where investors could purchase “rare” postage stamps on the guarantee of a “buyback” that promised either 75% of the stamps’ present market value or 100% of the price that they had paid for them. The scheme guaranteed customers at least 75% of the book value of their stamps at the end of a given period. However, the scheme was not approved by the UK financial authorities and the group stopped offering these buy-backs to customers in July 2016.

The Guernsey-based subsidiary was in possession of £12.6 million worth of rare stamps but had about £54 million of liabilities relating to the buyback guarantees, plus a further £11 million in undefined liabilities and £6.5 million it owed to the parent company. The subsidiary went into liquidation.

In 2018 a fund manager, Phoenix Asset Management UK, took over Stanley Gibbons PLC through a £6.2mln share subscription after a disastrous attempt to establish a website that nearly destroyed the company.

- - Stanley Gibbons thrown a lifeline by Hornby owner

With a market cap of £13.94m, the purchase of a USD$7m stamp equates to nearly a third of the total value of Stanley Gibbons. In order to acquire the stamp, Phoenix has provided a five-year interest-free loan to Stanley Gibbons. This raises a question of how Stanley Gibbons will be able to repay the loan after the five year period?

The Financial Times reported after the sale of the 1c Magenta:

” the company [Stanley Gibbons] was a dealer, rather than collector in its own right, although would hope that the stamp would appreciate in value under its ownership. Plans were already under way to sell “shares” in the stamp to philatelists, he said, describing it as a “huge transaction” for a relatively “small business”.

Within a day of acquiring the stamp, Stanley Gibbons launched 1cMagenta.com offering the public the opportunity “to own your very own piece of the British Guiana 1c Magenta.”

Do stamps make good investments? If you consider that that Stuart Weitzman purchased the stamp in 2014 for approximately USD$9.5 million, Weitzman has made a large financial loss – that is if one considers what Weitzman paid plus the interest earned on the amount from 2014-2021, had the money been placed in an interest bearing account instead.

Alternatively, if he had of invested in Bitcoin in 2014 (USD$550), he would have sold that investment for nearly $653 million today ($37,811). Which leads to the next ‘stamp’ part…

Crypto Stamps

Now we are into the 21st century, another investment that has appeared is Crypto Stamps by Österreichische Post. The Crypto stamp is a physical postage stamp that has a “digital twin” in a blockchain.

“With the Crypto stamp 2.0, the Austrian Post has launched the stamp that can also be saved as a digital image within the Ethereum Blockchain. This guarantees the complete trackability of every former owner of the stamp and its digital image. What is more, the use of Blockchain technology naturally means that you can continue to trade the Crypto stamps. Crypto stamp 1.0 was issued in June 2019 with its unicorn motif. Crypto stamp 2.0 is available from 25.6.2020 with its honey badger, llama, panda and doge motifs. The physical stamps bearing each of these motifs look the same, while the digital images have different colours with different degrees of scarcity from black (the most common) via green, blue and yellow, through to red (the rarest type).”

Österreichische Post states “As well as access to your virtual collection, you also receive a genuine, sticky-backed stamp than can be used to post letters and packages.”

Another version is Non-fungible tokens (NFT). A non-fungible token is a unit of data stored on a blockchain, that certifies a digital asset to be unique and therefore not interchangeable. NFTs can be used to represent items such as photos, videos, audio, and other types of digital files.

These NFTs are now available as ‘stamp collections’. CryptoStamps.Art states: Over the years blockchain has proven to be a truly revolutionary technology that will disrupt the status quo. The goal of Stamps is to memorialize the values and culture of blockchain, as well as imagine a decentralized future…The Stamps follow the ERC-721 standard and, as such, can be transferred freely amongst Ethereum wallets.

You can check out a current stamp collection HERE.

Conclusion

As Stanley Gibbons returns to investing in stamps, stamps are taking on a new dimension outside of the traditional piece of paper. Investing in stamps should be treated as a high risk investment and the lessons of the 1980’s boom bust should be well heeded. That is, be prepared to lose money. Personally, I would stick with Lego investments rather than stamp investments.

*This price excludes the additional fees charged by Sotheby’s.

June 30th – Details of the SG Email

It’s been three weeks since our successful bid for the world famous 1c-Magenta and I am keen to let you know the progress we have made in our goal to make ownership of this historic item available for all.

In addition to finalising shipping arrangements (and of course payment) for the stamp, we have begun commissioning the display at 399 Strand, including a bespoke and apparently bulletproof display case — we don’t intend on testing it. We hope that many of you will be able to come and visit us once it is ready and we will also be arranging a number of advance viewings and special events, COVID protocols allowing of course.

For those of you who are unable to visit us in person, and indeed those who are, we have also been working on how best to make this a seamless and wonderful online experience for everybody.

We have seen a huge level of interest in the concept of fractional ownership and will be sharing more about what this will look like in the coming weeks.

As we hope that many of you will become part-owners of the stamp, we’d also like to ask for your opinions about it. Anybody completing our short questionnaire, will automatically be entered into a draw to attend a private viewing before the item goes on display. This will include an overnight stay at the nearby Savoy and all travel costs – again COVID protocols allowing.

Making sure we get it right takes a little time, but we will keep you up to date every step of the way and rest assured, the team are working exceptionally hard to put it all together as quickly as possible.

By complete coincidence, we have a sister stamp of the 1 cent Magenta, the 4 cent, going under the hammer in our next auction although we don’t expect it to sell for quite as much!

Thank you for your continued interested. It won’t be long until the stamp arrives and we can begin to paint the town red…or magenta.

Graham Shircore
Stanley Gibbons CEO.

1. The stamp has a long history of owners signing the back of it. Should we continue this tradition and sign the back of it?

You’ve got to keep the tradition going – Sign it
It’s an historical artefact – Don’t even think about it
I really don’t mind

2. What additional benefits of ownership would be most important to you?

A physical certificate of ownership
Access to exclusive viewing sessions and events at 399 Strand
Having a say in the future of the item
Digital representation of ownership
Exclusive discounts on other Stanley Gibbons products
Other (please tell us)

3. Do you think that only those purchasing part of the stamp should be able to view it free of charge?

No, it should be available for everyone to view
Yes, it will make it feel more special
I don’t feel strongly either way
4. What most interests you about the chance to own part of the world’s most expensive stamp?
I like the idea and want to be a part of it
I think it would make a fantastic gift
I’m a stamp collector so of course I’m interested
Financially it could be an interesting proposition
Other (please tell us)

5. How important would it be to you that you’d be able to sell your stake in the stamp quickly?

Very
Somewhat
Marginally
Not at all
6. Does the idea of building a collection of pieces of unique, valuable treasures interest you?
Yes
Yes but only if they are philatelic in nature
No
Possibly
7. What is your view of the use of blockchain technology as part of the digital offering?
Great – It feels more secure
Don’t use it – It would make me nervous
I don’t mind – As long as the service is secure and efficient
8. Please share any other comments and preferences you may have…