The psychology behind price movements is interesting. When something is scarce on the shelves, we all move to buy it. When it is abundant, we all wait. The gold market has been a classic example of this. Philately, too, has had its speculations, price run-ups, and periods of quiescent markets, and as with other markets, many collectors sit quietly on the sidelines in quiet periods, only to wish that they had been more actively adding to their collections after the market has moved.
There have been four major price cycles in the philatelic market since our hobby began. The first in the 1860s, corresponded with the nascence of our hobby. There were virtually no collectors before about 1860; so the early Timbremaniacs, as they were called (after the French word for stamps “Timbres”), created a demand where there had been none before. The effect was electric with thousands of men and woman combing old correspondence and desk drawers for stamps that the new collectors might need and deem valuable. The period of the 1870s and 1880s were quieter as collecting became established and the main emphasis of collectors was on creating and establishing stamp albums and catalogs and studying stamp printing records to discover what rarer varieties might exist that collectors didn’t yet know about. The literature of the period is very compelling with constant admonitions for collectors to be on the lookout for this or that rare and still under-discovered stamp.
The 1890s saw the second great price increase in stamps. For reasons for which I have never been able to completely discover, philately had a real boom in the 1890s. Worldwide economic growth was strong during the decade, sure, and philatelic price appreciation always needs good economic conditions, but this only explains part of it. Perhaps the “next generation” effect was a part as well— collectors always seem to gravitate as adults to the stamps that were issued and collected when they were child collectors and which they couldn’t then afford. These reasons and others created a large philatelic price boom, and philately for the first time made it into public consciousness and became respected as a mainstream hobby.The 1925-1940 period was the next great price appreciation period. Originated in the fortunes made on Wall Street in the 1920s and the glamor and feckless extravagance of philatelists like Ned Green, philately became very popular and price rose quickly. When the Great Depression began, stamp prices held up and the legend of philatelic material as a storehold of value was further established. Millions of new collectors entered the hobby during this period. Prices continued to rise during WWII as well, but this was an artificial rise caused by price controls exempting stamps. Price controls, as they always do, caused shortages just as long hours at factories producing war related goods increased wages. Some of the money that couldn’t be spent elsewhere went into stamps.
The next great price rise in stamps was 1965-80 and was really two overlapping phenomena. Prices began to rise in 1965 largely because the devastation that had kept European philatelists out of the market began to end. By the late 1960s, the middle classes in Germany, Italy, and the Netherlands had enough money to start to collect the stamps they had missed during and after the war. Prices rose fast, and most of the supplies of these stamps came from America which had been the only place where collectors had had enough money to buy these stamps when they were issued. Rising prices for European material and increased cash in American philatelic hands increased demand for US stamps too. As this cycle was beginning to wind down in the early 1970s, the world had the first oil shock followed by rapid inflation and currency controls in Great Britain which pushed huge amounts of money into stamps.
It has now been nearly thirty years since the last philatelic price boom, about the average period between each of the previous four. The question is, will we have another? Certainly the demographics and wealth are there. The baby bloomers are entering retirement, which has always been the age at which collectors spend the most on their hobby. Money is plentiful for many, and, more importantly, many others will need to supplement their retirement by working which is what part-time stamp dealing is perfect for. Each stamp dealer soaks up tons of inventory putting further pressure on prices. But maybe the basic economic underpinnings of our hobby have changed. Maybe philately isn’t so appealing anymore, and this time there will be no boom, even though each of the last four times before the boom happened philatelic pundits were making the case that it would never happen again, and each time it did. But really, the only honest answer to this question is, “Stay Tuned; we’re sure to find out.”