The unimaginable has begun to happen. After growing at rates approaching 100% per year the last few years, the market for better People’s Republic of China stamps has cooled, and prices are down as much as 30% in the last few months. There are several reasons for this. First, the Chinese economy has definitely slowed this year with growth rates half of what they were in years past. In part, this is because the Chinese economy is being impacted by the worldwide recession which the Chinese have been fortunate enough to avoid up until now. Second, the Chinese property and stock markets have fallen back, and much Chinese money that was coming into stamps was speculative money that had been made in the stock and property market. But the most important reason for the fallback in price in PRC stamps is simply that the stamps had gotten too high in value. Speculators always forget that commodities like stamps have no intrinsic value and are only valuable because collectors want them for their collections. When prices rise faster than incomes plus the number of new collectors entering the hobby, then prices can’t be sustained and prices will fall. This is what is happening now with PRC stamps.
But I don’t think the PRC philatelic market is a true bubble. When the US graded stamp speculation broke a few years ago, I counseled collectors to stay out of the market even at dramatically lower prices as I thought there was no real long term collectors market for these stamps. This is not my feeling about the better issues of PRC. The Chinese are great stamp collectors, and there are an enormous number of them. The better PRC issues are truly scarce, and the demand for them is worldwide. I would use this downturn in price to add some of these stamps to my collection.