One of the more mysterious aspects of stamp collecting is how stamps are graded. Grading can make or break the value of a stamp, yet it is left up to human assessment. Understanding stamp grading can help the average collector make an informed investment in a stamp.
Stamps are graded by considering:
- Rating Factor
- Rating Categories
- Devaluing Factors
- The Role of Rarity
The subjective nature of that criteria can lead to confusion and disagreement. Understanding how each item on the list works arms the collector with knowledge. Here is what you need to know about the evaluation process to ensure you always make informed and accurate purchase and sales decisions.
Why It Matters To The Amateur Collector
There are two main reasons the grade of a stamp should matter to every stamp collector:
- To help ensure they are getting the best value for stamps they sell
- To make sure what they are paying for a stamp is a fair and accurate value
For the vast majority of stamp collectors, the grade of a stamp will not matter or only rarely matter. Most stamp collections are exercises in the interests of the owner of the collection, not investments. Occasionally, however, valuable stamps do make their way across the desks of amateur collectors.
It might come in the form of a stamp put on a letter during World War II and found in a stack of old envelopes and letters of a deceased loved one. It might be that rare “investment” stamp that gives a collection a little bit of value. It might be part of an inherited collection.
Regardless of origin, valuable stamps do occasionally make it to the open market. Because of that, every collector should understand how stamps are graded and how values are estimated.
How Stamps Are Graded
A stamp’s value is set, in part, by two criteria: Grade and Condition. Each has its own criteria and rating and, when merged, the relative value of a stamp is identified.
1. Rating Factor
The first measurement in determining the stamp’s value is its grade. Grade is usually determined by evaluating the centering of the stamp design between its perforations and the cancelation.
The stamp grading system ranges from Poor through Superb. In between those two are five other ratings. Each one has a specific meaning. To determine a rating, a set of criteria is applied to the stamp. That criteria assesses the following:
- Overall condition
- Coloration (fading or shades)
- Cancelation marks
This is self-explanatory. The condition a stamp is in, with the sole exception of rare stamps, affects the ability of a dealer to sell the stamp to a collector.
The gum on a stamp is the glue on the backing that fixes the stamp to an envelope. This used to be a glue that was licked. Now, stamps have adhesives put on stamps at the production level. How much gum is on a stamp can affect its value.
The margins of a stamp are the white gaps between the ink perimeter and the perforation, or, with stamps that have no border, how the image in the stamp is centered in relationship to the perforations.
These will usually devalue a stamp, but not always. Some stamps have errors or imperfections that are rare, and the rareness of a stamp is a major factor in determining its value. Some errors and imperfections can increase the value of a stamp significantly.
Whether the colors are faded or crisp, broken or smeared, each helps determine the condition of the stamp and its value.
Cancellation marks play a major role in determining value because a cancellation mark means the stamp was in circulation. The older and sharper the cancellation mark, the more valuable the stamp will be.
2. Rating Categories
Poor (Grade P)
The stamp is not worth much beyond face value. Issues could be related to centering, perforation imbalances, thick cancellation marks, smearing, blurring, tears, creases or thin gumming.
Average (Grade A)
This is similar to a P grade, but the stamp is in slightly better condition. With A grade stamps, the design might be uncentered or the perforation might be skewed. Other issues include smeared or heavy cancellation marks.
Fine (Grade F)
An F grade means that the perforation on a stamp is slightly off but doesn’t cut into the stamp design. The margins are also unbalanced horizontally or vertically. These types of stamps usually are only worth face value although a rare stamp with an F grade can be worth a little more.
Fine To Very Fine (F-VF)
The F-VF grade indicates that the stamp design is slightly off-center, horizontally or vertically, but the perforations are correct.
Very Fine (VF)
This means the stamp design is well-centered, and three of the margins are balanced. Any cancellations are lighter in color as well as crisp and readable. Finally, the perforations are within an acceptable margin of error.
Extremely Fine (XF)
With an XF grade, the stamp is close to perfect. The design is centered, and the margins are balanced. The perforations are clear of the design and any cancellation marks are light and neat. Additionally, the gum on the back of the stamp is original.
S is the highest grade a stamp can get. It means the stamp is as close to perfect as is possible. It is perfectly centered, the perforations are exact, any cancellation is crisp and readable and there are no blemishes on the stamp. These types of stamps are rare, especially if the stamp in question has been in circulation.
3. Devaluing Factors
As with any collectible, the condition of the stamp is very important. If the stamp is in bad condition, collectors will not be willing to pay much for it, unless it is very rare. Here are some things that can devalue a stamp:
- Color changes
- Non-Postal cancellations
- Gum issues
- Heavy cancellation marks
- Tone spots
- Evidence of repairs
For the most part, these devaluing terms are self-explanatory. Non postal cancellations refers to older stamps that were cancelled by hand, back when postmasters often made their own cancellation stamps.
Gum issues generally come in four forms:
- The stamp has no gum
- The original gum is missing
- The gum is uneven or part of it has worn off
- The gum has been reapplied
Depending on the gum flaw, the value or grade of the stamp may suffer.
Bends are obvious marks on a stamp that indicate the stamp has been bent in two. A stamp that is bent can decrease a stamp’s value by 10 to 15%.
Thinning is when a stamp shows wear in the form of the stamp surface being worn away. This can happen to stamps when hinges are used on them. Creasing happens when hinges are used on stamps for a long time. The stamp adopts an almost “two-staged” surface.
Tone spots happen when a stamp has its design disfigured. This is usually done by poor storage and shows up as brown marks. Toning issues can devalue a stamp by up to 50%.
Not all faults are the same, however. In some cases, a flaw has no effect on the stamp’s value. This is particularly true with rare used stamps and stamps that were used during a historical occasion.
World War II soldiers, for instance, often had odd restrictions on mail and stamps so the British and US military could protect the whereabouts of troops. Some commemorative stamps are worth a good bit of money and a little wear will not affect their price.
4. The Role Of Rarity
With few exceptions, the one factor that cancels everything else out is the rareness of a stamp. When a stamp is rare, all other faults, errors or blemishes reduce in importance, mainly because a rare stamp might be the only stamp of its kind in existence.
That means that a little wear and tear or discoloration doesn’t matter as much. What drives the value of a rare stamp is that it is not common, not that it has few flaws. The one thing that can devalue even a rare stamp is when the stamp is defaced. This can happen because of exposure or neglect or even just from being in circulation.
When a rare stamp is discovered, the best strategy is to minimize the risk of any possible wear and tear and get several assessments on its value. This way, you can play each assessment off the others, helping to eliminate collectors that are low-balling the price of the stamp.
Understanding stamp rating factors, grade definitions and methods a stamp can be devalued will help the average collector to accurately assess what their collection or a single stamp is worth. As always, however, getting a professional opinion from a dealer or appraiser is the best way to go.