The October 3rd auction of Bill Gross’ U.S. collection represents the first of a series of planned auctions to dispose of his estimated $42 million collection. The sale offered 106 lots and achieved a $10 million sales total, a record for a philatelic auction.
Normally such sales take place when a collector dies, but in this case, Gross is disposing of his collection because he has built the only complete collection of all U.S. issues with many significant rarities and decided to give others the joy doing so themselves.
Since there are few such prominent collectors who have market-moving ability, it leaves the question what his exit from the philatelic market portends. The sale featured numerous highly prized items and can be seen online at Robert A. Siegel Auction Galleries.The catalog will itself become a collectible and it can be downloaded in a pdf version for free. Reading it is a history lesson.
The initial market effect of Gross’ exit from the market was that he has not been an active buyer for the past few years. Some feel this has been a good thing since his buying was dominating and left few things he wanted slip away. By making his retirement formal, it is likely that future auction sales of trophy items will be more competitive and with more worldwide participation.
Previous sales by Gross of his foreign material have raised millions for charity as well as $10 million for a new visitors’ gallery at the Smithsonian’s National Postal Museum in Washington D.C. There was some concern that putting all his U.S. material on sale would depress the stamp market but, judging by the results of the first sale, the effect may be just the opposite.
The expressed goal by Gross for the sale of his total collection is to draw new collectors into the upper echelons of the hobby. This appears likely since postage stamps have reached a level where they have become an attractive alternative to where one can invest millions of dollars with confidence. This means more investment-motivated buyers will be competing where previously only wealthy hobbyists would go.
What has held back investors in stamps is the lack of reliable information and stamps’ low liquidity. This is being improved by the Internet, which provides transparency for an industry where information secrecy has been a key to successful dealing. Catalogs, still the main pricing source, are still overly accommodative to the sell side of the market and provide widely different opinions of value.
What is developing today are information databases that allow for the pricing and evaluation of stamps based on real and current market pricing as well as metrics like those used in the securities business to rate a stamp’s investment potential. In full disclosure, my company StampFinder.com is developing an information and trading system similar to the Bloomberg system so popular in the securities industry.
I know a bit about illiquid markets and databases; for many years my defaulted bond databases have been featured on Bloomberg terminals. The stamp market is finally entering the 21st century. When combined with current blockchain technology, we will soon see a more liquid stamp market where investors and collectors play a much more active role, and not just for trophy items.
So, thank you Bill Gross for helping to increase awareness of the investment side of stamps. Maybe more than just a few rich hobbyists will come to see the attractions of philately as well.