The Lemon Fool

Seven years ago we took out a couple of "Guaranteed Return" contracts with Stanley Gibbons.
The way it works is that you get 5% p/a return after 10 years. This means that they offer to buy back the stamps at roughly 50% premium to the selling price. The stamps are held at SG's secure facility.

Now it seems SG may not last until 2020. Having reread the contract there is no early exit option. I am considering asking them if they might negotiate a repurchase. Of course the stamps are ours come what may, but if the market maker goes bust I suspect prices may fall for all but the rarest and finest items. A recently obtained valuation suggests we are well in profit but without the Guarantee from SG disposal is by auction and the result is uncertain. Retention of the stamps may be possible but would require safety deposit storage which is an additional cost. I am also unclear as to storage environment and the likely deterioration of items in a bank vault.

Clinging to the hope the firm will stay afloat beyond 2018 seems naïve.
Anyone else in the same boat?
Polite suggestions welcome.

Smallholding wrote:A recently obtained valuation suggests we are well in profit ...

Was the valuation an independent one or one produced by SG? And if it was independent are you sure the valuers didn't just rely on SG quoted values?

When I was looking into them recently - viewtopic.php?f=33&t=7667#p85261 - I got the distinct impression that SG catalaogue values are far higher than actual auction prices, and that SG have to keep the quoted values high to placate the people who bought their `guaranteed return' investments and prevent them redeeming, with a possible flooding of the market and a collapse in prices.

Clitheroekid wrote:

Smallholding wrote:A recently obtained valuation suggests we are well in profit ...

Was the valuation an independent one or one produced by SG? And if it was independent are you sure the valuers didn't just rely on SG quoted values?

When I was looking into them recently - viewtopic.php?f=33&t=7667#p85261 - I got the distinct impression that SG catalaogue values are far higher than actual auction prices, and that SG have to keep the quoted values high to placate the people who bought their `guaranteed return' investments and prevent them redeeming, with a possible flooding of the market and a collapse in prices.

Thank you CK.

Hypothetically, if one were to have an estate seeking to have HMRC grant probate, which contained a stamp collection, would HMRC determine the value of the stamps with reference to SG valuations or on an 'independent' that didn't rely on SG?

Bink333 wrote:Hypothetically, if one were to have an estate seeking to have HMRC grant probate, which contained a stamp collection, would HMRC determine the value of the stamps with reference to SG valuations or on an 'independent' that didn't rely on SG?

HMRC wouldn't do either. They rely on the valuation submitted by the executors of the estate, and provided it came from an apparently reputable dealer it would almost certainly be accepted without question.

If it's a taxable estate it may be sensible to avoid having the valuation carried out by SG, so as to keep the value low.

On the other hand, if it's not a taxable estate and CGT may be payable on a future sale of the stamps it probably would pay to have SG value them, in the confidence that the prospect of any capital gains from that valuation would be extremely remote!

Clitheroekid wrote: ...
On the other hand, if it's not a taxable estate and CGT may be payable on a future sale of the stamps it probably would pay to have SG value them, in the confidence that the prospect of any capital gains from that valuation would be extremely remote!

For an Estate that hasn't been subjected to IHT, the valuation submitted has most likely not been investigated by HMRC and may not therefore be deemed to be an agreed open market value for future CGT purposes. There's some interesting articles on the subject explaining this aspect in greater detail than I can do, somewhere or other, but I don't know how often the point is taken nor how often taxpayers are aware of it.

Further, in Bink's hypothetical situation, he'll no doubt be aware of the chattels exemption, which may be relevant to a future hypothetical disposal:

https://www.gov.uk/government/publicati ... s-tax-2015

The valuation obtained was SG based. It is I believe , true that as market maker SG can sets the prices as they think fit. It will be interesting to see what happens in 2018. I suspect the banks are hoping for a buyer before the current covenants are subject for review.

At that time if they pull the rug out then the entire stamp market will be in turmoil. I once thought the SG brand itself was worth buying but if it has become tainted then the company is up the spout along with the market - and of course me.

Interesting that HMRC rely on administrators to supply a plausible valuation. I shall look for a source of independent valuation possibly Southerbys or Christies?