What's Driving Global Demand for Rare Stamps?

The first—no surprise here—is demand from wealthy Chinese collectors and investors. Speaking simplistically, he says, many of them have accumulated sufficient "bling" assets and are seeking something "a bit more considered and less flashy."

One reason for this cohort's interest in stamps was Chairman Mao's ban on stamp collecting as bourgeois and the resulting pent-up demand. "Since the late-'70s, early- '80s, the Chinese have come back to stamp collecting with a vengeance," he says.

The price performance of stamps varies at different times among the different national markets, which can create pockets of opportunity for investors willing to shop globally.

In India, Heddle says the market is booming. However, since the country has closed its borders to stamps going in or out, access to investment-grade stamps is very limited.

The European market is flat, he says, as are segments of the U.S. market. The market in Great Britain has slowed to single-digit growth.

When it comes to rising prices, rarity is the driving force, and consequently the market for rare Chinese stamps is very strong.

"The modern market in China has started to flatten out a bit whereas the rarity market is showing growth of about 20% still year on year," Heddle adds.

Asked whether stamp prices have moved to levels that diminish their potential returns, the expert remains optimistic for at least the next two to three decades.

As Baby Boomers age and withdraw from the investor-collector market that could reduce the number of rare stamp investors, he says, though the basics of supply and demand should still support higher prices.

The nature of stamp investing also favors steady growth, he maintains.

"Stamps are not a hugely aspirational trophy asset the way that fine wine is or art is… it's not a bling asset. So you don't get people piling into this market; you get a steady growth of investors and also collectors," Heddle explains.

Plus, "You've got a finite asset, which means you get supply-demand pressures and a gradual increase in price. We have seen that consistently in the top investment grade stamps for decades."