In an office complex in Chiswick, west London, a group of stamp collectors are picking through books of stamps, looking for rarities. The offices of stamp auctioneers Harmers are open for viewing and a buzz of excitement fills the air.

In the main public room the various lots are stacked up against the wall. I have ordered lots 94 and 143 for viewing. Lot 94 contains some wonderfully bright Australian stamps. I pick up the best specimens with a pair of tweezers and inspect them. Some are so rare, I have never seen them in real life, only in magazines. If I want to buy this lot, I would expect to pay around £1,000.

Because of the high price that some stamps are realising, an increasing number of people are using them as an alternative investment. Firms such as Stanley Gibbons are encouraging people to buy stamps as a secure investment. However critics – including many stamp dealers – regard it as a risky strategy.

According to Dave Flint, valuer at Harmers, there are many reasons to buy stamps: "For enjoyment. They are attractive items. You learn about the world. It can be fascinating. It's a challenge to get the best stamps."

He cites a recent sale. Frank Deakin, a retired schoolmaster, had spent most of his life collecting stamps from Barbados. Last year he sold up and gave the money to charity. The collection raised £300,000. "For this man," said Flint, "stamps were his life."

But Flint advises against using them as an investment. He points to a picture on the front of an old catalogue. It shows a block of four 1840 twopenny blue British stamps in mint condition. "I sold that three years ago for £70,000. If it came back to auction tomorrow, it might only make £65,000. There are no guarantees."

Philately went through a long slump in prices after a boom in the 1970s. One of the best-known British stamps – the 1929 £1 PUC (Postal Union Congress) stamp – cost around £1,700 in the 1970s. It now has a Gibbons catalogue value of £750 (lightly mounted mint) but can be bought at most reputable dealers for under £400.

When Money asked Gibbons about stamps as an investment in an article published in 2002, it was extremely cautious. Reporter Tony Levene visited its showroom to be told: "Stamps are not an investment, they're a hobby. We don't sell books on stamps as a money-making plan or offer advice on how to make gains."

But today Gibbons, which has been through a series of management changes, is telling a very different story. Its website claims that stamps are "Safer than houses, more valuable than gold". It says that rare stamp values have risen 11% per annum over the last 40 years. Stamps are described as a "safe haven investment".

It even offers a number of investment plans. Under the Capital Protected Growth Plan, investors put a set amount of money (a minimum of £10,000) for rare stamps, which are stored in the firm's vaults in Guernsey. After five years, investors can take the stamps away, they can be sold at auction or be sold at 75% of the catalogue value. If a profit has been made, 30% goes to Gibbons.

However – the important part – Gibbons guarantees the entire initial capital. So, if the market for stamps plunges, it will still give back the initial £10,000. The firm advertises: "There is no downside and an unlimited upside when you invest in our Capital Protected Growth Plan."

But this is an investment scheme which is not regulated by the FSA and does not qualify for any compensation scheme.

A Gibbons salesman told me: "It's not a gamble. Most investments have been hit by the credit crunch. With stamps, you can diversify assets and beat inflation."

Many dealers question the sustainability of this kind of investment. After all, it relies on continuous price rises in stamps. If prices start to tumble, Gibbons could be left dangerously exposed.

Critics question the values quoted in its catalogues. They are simply the price at which Gibbons sells particular items: it has a vested interest in keeping catalogue values high.

Mike Hall, chief executive of Stanley Gibbons Group, defends the use of stamps as an investment vehicle. He says the 30 rarest British stamps last year went up 7% and that the world market for stamps is currently $10bn. Since it only sells around £5m a year for investment, he denies that this distorts the market or that the firm will have any difficulty meeting its guarantees.

He describes stamps as a "non-correlated asset class", meaning prices are not linked to the rest of the economy, but are solely driven by rich collectors competing for the best items. According to this theory, house and share prices may fluctuate but prices of the best stamps always climb. "It's a mature hobby," he says. "Our average customer is in his 50s, is worth around £10m and puts around £50,000 into stamps."

Many dealers dispute the notion that prices will always rise, recalling the shock of 50% price falls after the bursting of the 1970s bubble. Stamps have no intrinsic value, and there's a notable lack of younger collectors in Britain. Stamp fairs are mostly full of older men; in 30 years, the market could be dead.

And there are other perils. One dealer told me about an unmarried customer, who had built up a collection worth around £30,000. The dealer hadn't heard from him for about a year, so he wrote inviting the man to an auction of quality stamps.

The dealer received a letter back from his nephew. It turned out that the customer had died. So the dealer enquired after the collection.

Unfortunately, the man had never told his relations that his old albums were worth anything, so the stamps had been put in a skip.

For this man's family, at least, stamps were not "as safe as houses" or "more valuable than gold".Even the world's most sought-after stamp has failed to rise in value over the past 15 years. The Treskilling Yellow, a unique Swedish misprint from 1855, came up at auction in May in Geneva, and although the sale price was kept secret, it is widely believed to have been around £1.6m-£1.7m. If so, it means it provided no return on the £1.6m paid for it in 1996. The rectangular stamp weighs just 250mg, equal to £6.4bn a kilo, making it the most expensive object in the world by weight.

Russian, Chinese and Indian stamps have risen over the past few years as a result of wealthy collectors in those areas. Russians stamps from before the 1917 revolution and Chinese stamps from the 1960s Cultural Revolution period are particularly popular. Indian collectors are buying stamps from Indian Feudatory States.

First-day covers but second-class returns

Millions of people have stamp collections gathering dust in attics, but those first-day covers you bought in the 1960s and 1970s won't pay off your mortgage.

A set of 1969 British ships stamps, including the QEII, currently sells for just 65p. A first-day cover of the 1973 royal wedding is worth 40p, while a pack brought out to commemorate the first flight of Concorde in 1969 makes a grand total of £5.75.

Shipley-based Tony Bray, who claims to have the world's largest stamp dealing website, says that there are plenty of stamps making good money, but you need to know what to look for: "The 1964 Forth road bridge stamps don't make much individually, but packs are very rare and now fetch £300-£400. If you have any of those in your collection you are doing well."

He is not convinced that overall stamp prices are set to boom, but says some have steadily increased in value. "First-day covers celebrating the Queen's coronation in 1953 now sell for £24.50 and have probably doubled in value over the last five years. Stamps from the 1948 London Olympics have done well in recent years as have stamps relating to George VI's silver wedding anniversary of the same year. First day covers can make £245."

Asked what stamps he would buy if he had a few thousand pound in, he says he would go for odd-ball items and iconic stamps. Packs tend to be rarer than stamps and consequently worth more, he says.

He is another dealer fond of the 1929 Postal Union Congress £1, which he values at around £800 in mint condition. One of his biggest regrets is not buying one when it was offered to him as a child for just £6. Miles Brignall