Limited editions from an investment point of view

Limited edition covers viewed as an investment

There are many privately owned firms who produce their own commemorative covers and first day covers (FDC). Whatever philatelic "purists" may think of such products, there is clearly a strong and thriving public demand for them; for one thing, if there were not such a demand, then the producer firms, hardheaded and commercial one and all, would have cut off the supply line many years since. That they are so popular can be no surprise, since they are well thought out, well designed and attractive; they appeal to a far wider clientele than to straightforward philatelists.

Such covers can be straightforward FDCs, or "coin" covers (that is to say with a medal or coin inserted into a hole in the cover), or hand painted, specially woven, flown on an aircraft, carried by ship, train, lorry or submarine, signed by someone known or unknown or any other permutation or possibility you can think of. Just as often they are numbered and sold as Limited Editions.

There are two ways of limiting an edition. The first is by announcing at the outset that there will only be x of the item produced (and it sells out or it doesn't). The second is by producing the same number as are ordered. Covers have to be prepared in advance, so they are nearly all limited in the first way.

It is in the nature of all marketing that the product being sold should be presented in the best possible light. The colour of our black kettle is known to one and all; our adverts highlight our optimum features. That said, there is little or nothing inherent about a Limited Edition that makes it necessarily financially worth any more than it would have been, were it available in nominally unrestricted, though finite numbers.

Consider that, once withdrawn from sale, everything from stamps to nodding dogs, water butts to wellington boots becomes a limited edition. There are this many of them and the number will only ever get smaller. The vast majority of all stamps, young and old, at one time freely available and now limited editions one and all, are not worth very much by any means. For example, we can supply you with as many made-up collections of 50,000 different stamps of the world, or 30,000 different stamps of the British Commonwealth as you want for less than £3000 per collection (= < US $6000 or 4500 euros), a mere 5p (10c/7c) or 10p (20c/15c) per stamp each on average, including profit margin, tax and delivery.

Consider further the parallel trades of fine art and books. Every painting is a limited edition, for it is unique. Most paintings will end up in a skip or on a bonfire; they will not be sold for squillions of pounds/dollars/euros. Valuable books are usually (limited edition) first editions. But every book has a first edition and most second-hand books are next to worthless. The American(?) firm of Franklin produced collectibles of just about every sort imaginable, all in limited editions. Yet you would hard pressed to find a buyer of anything they sold for anything like the new issue price – indeed, for the philatelic merchandise at anything like even 10% of the new issue price.

My point is that the price you pay for a new issue is based to a large extent on the cost of manufacture and not much else. With a book you pay for the author's fee, production cost plus wholesale and retail mark-ups divided by the number the publishers hope or expect to sell. With a painting you will pay for the commission, essentially whatever the artist chooses to demand. With an FDC you pay for the stamps, plus the cost of the cover and servicing, plus producer's profit margin, plus Vat at 17.5%. In all cases, it must be said, these are perfectly reasonable charges to make.

Second-hand values – what you will get on re-sale – have absolutely no connection whatsoever with the "new" price. Unlike a second-hand car, where you can expect to get plus or minus 10% of x% of the new price after y years and with z miles on the clock, goods in the "antique" trades rise or fall in value exclusively in line with demand. For any given (philatelic) article, I don't pretend to know what that demand will be. I will confidently predict that where there is strong demand the price will rise and where there is weak or no demand, the price will fall.

There may be someone out there who is planning to buy up untold numbers of limited editions of all sorts and if there is and he or she does, then there are windfall gains awaiting hundreds of thousands of people. Until that sunny day, when you are buying them, consider only the aesthetic and philatelic aspects; for profits, where there are any, will most likely be made by the others (not you).


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