Our Chief Executive reports on the performance of the SG100 Stamp Price Index in 2007

Dear Reader,

Today, I am not trying to sell you anything! If you are already an investor (or collector) in stamps, you can relax; all is rosy in the stamp world. The "credit crunch" hits the world of "greed" not "passion".

This is what makes our market so different. Collecting is an all-consuming passion. That is why the prices of rare stamps show no correlation with the stock market, property prices and other traditional forms of investment.

Bloomberg accept Stanley Gibbons price indices as institutional standard

When I first launched the SG100 Stamp Price Index in November 2002 I thought, "This will be an interesting exercise".

My plan was to create an objective shopping basket of 100 commonly traded stamps from across the world and use them to provide a barometer of the general health of the stamp market.

Five years later and.

On Tuesday 11th of October 2007 Stanley Gibbons price indices became available on BLOOMBERG PROFESSIONAL � service. This move recognised rare stamps as an alternative asset class and legitimate to institutional investors.

What this means in simple terms is that you can now check the prices of stamps alongside that of commodities, stocks and oil.

Stamps recognised as an alternative investment class at last. The index will probably outlive me - I only wish I had called it "HALLS100 Index".

SG100 Index rises by DOUBLE inflation in 2007

The SG100 Stamp Index increased by 8.7% in 2007 compared to 7.6% in the prior year. In other words commonly traded stamps have increased by approximately double inflation.

In theory, I don't expect big rises in the index. After all these are stamps that we sell to thousands of collectors every year. Why should they rise by more than inflation?

Simple, the number of collectors chasing the same stamps (which are becoming scarcer) is growing. This means they are willing to pay higher prices to fill their collections.

The index performance can be broken down as follows:

Stamps from:	Increase (%) 2007	Increase (%) 2006
Great Britain	12.0	11.8
British Commonwealth	4.0	0.8
Rest of World	9.7	7.9

We are finding our home market to be the strongest. New collectors entering the market are sweeping up large quantities of material. Stamp dealers I speak to are always complaining that their key problem is finding stock.

Stamps from British Commonwealth countries did not perform as well. Slightly annoying since this is what I collect!

Top Commonwealth rarities are however fetching record prices at auction created by the new breed of auction-orientated collectors. Such prices are not feeding down into the general market - yet.

Overall the stamp market continues to look strong with a larger number of collectors worldwide and easier trading through the internet creating a liquid market.

The world is getting older and evidence points to a growing number of affluent passionate collectors. Add to this the new wealth from emerging economies including Russia, India and China and we have the perfect recipe for strong conditions in the future.

Let's look at some more statistics

Indulge me, I'm just a sad stamp collecting accountant. You can imagine how popular I am at dinner parties!

The chart below shows the performance of the SG100 index compared to the Retail Price Index (RPI inflation indicator) and UK interest rates from 1999 to 2007:

Now I'm really going to bore you.

What this means is that the average annual compounded return from stamps over the past nine years was 6.9% per annum. Inflation was 2.8% and bank base rates were 4.8%.

Let me stress again that the stamps in the index are not the type of stamps we offer to our investment clients. These are just normal stamps that most collectors have.

A recent Royal Mail survey proved that stamp collectors are more intelligent. 74% of stamp collectors in the UK are university educated, compared with 20% of the general population. The evidence here suggests that they are spending their money wisely.

To put into perspective, a stamp collector spending £1,000 on their collection at the beginning of 1999 would now be sitting on an asset worth £1,823. If they had left that money in a high interest savings account, it would now only amount to £1,494.

Not only that, stamp collectors have beat inflation. Their collection would be worth 2.5 times inflation.

The Proof - Stamps provide a hedge against inflation

The last period of high inflation was in the 1970s, when prices of everything from food to petroleum skyrocketed.

Stamps shot up around 698% during that period.

The global economy is beginning to show signs of another period of inflation ahead. When inflation starts to wipe out gains from equities, bonds, and property. stamp prices start to soar.

So, fellow investors in stamps, we are well placed for difficult times ahead and for that reason, I have earmarked a larger proportion of my savings income to purchase stamps and rare signatures in 2008.

Interesting times ahead in the world of stamps and I am happy to have you on board for the ride.

Sincerely,

Mike Hall
Chief Executive
The Stanley Gibbons Group

P.S. You don't need to have access to Bloomberg terminals to track our indices. We publish this information on our website, monthly for the SG100 Stamp Price Index and annually for all other indices. You can view our indices now on the links below:

SG100 Stamp Price Index - compound return of 6.9% per annum over past nine years

GB30 Rarities Index - compound return of 10.7% per annum over past nine years

COM30 Rarities & Errors Index - compound return of 9.7% per annum over past nine years

Frasers100 Autograph Price Index - compound return of 13.5% per annum over past ten years

Background on SG100 Stamp Price Index The SG100 Stamp Price Index provides a definitive measure of overall price movement and performance in the stamp market. The index is based on actual prices, either retail or at auction for 100 of the world's most frequently traded stamps and includes selected items from all major collecting areas. The index is weighted towards the most frequently traded and higher value stamps. A review of its components is conducted annually to ensure that the "shopping basket" continues to reflect a fair representation of the total market. The index provides a monthly indicator of the health of the stamp market as a whole but not of the market in rare stamps which we offer to our clients for investment purposes. It is however a useful barometer to investors providing evidence of the strength of the overall market in stamp collecting ensuring the foundations to a secure investment.

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Not already an investor? Contact our Investment Director, Adrian Roose on the number below for further details on our stamp investment products:

+44 (0) 1481 708 277

email investment@stanleygibbons.co.uk

TOLL FREE from the USA 1 866 644 6146