The stamp, a nondescript dirtily marked "used" octagonal magenta British Guiana 1 cent stamp of 1856 was estimated to make between $US10 million and $US20 million.
The BG stamp is the ultimate trophy by old standards for even the Queen does not have one and there was a suggestion she might even buy it for her collection.
But with so many pieces of art selling for $10 million plus these days its trophy power may have been deflated.
The bank note was a the first 10 shilling note of 1913 which was publicised as a $3.5 million offering but sold for a declared sum of around $A1 million in a private deal organised by Melbourne coin dealer Belinda Downie.
The estimates on the stamp do not include the buyers premium, so the top bid of $7 was well short of the lowest estimate.
It was sold in New York by Sotheby's who said the buyer wished to remain anonymous, which, of course, does not mean that it was not still bought as a trophy. Most trophies tend eventually to be brought out over dinner parties or shown at exhibitions where even anonymously they are brought to the attention of an inner circle.
The stamp has continued its record of of setting a new world record for a stamp each of the three times it has been sold at auction, including its purchase and re-offering for an Australian collector.
The unique stamp has an exciting history being rediscovered by a 12-year-old Scottish boy living in South America in 1873.
It was offered in the latest sale from the estate of John du Pont - its most recent purchaser, in 1980.
Some of the proceeds go to the Eurasian Pacific Wildlife Conservation Foundation, which du Pont championed during his lifetime but the charitable aspects of the sale are not thought to have any marked influence on the auction.
The stamp came into Australian ownership in 1940 when it was purchased from the philately department of Macy's department store in New York City for $40,000 by Fred "Poss" Small, an Australian-born engineer from Florida.
A Queenslander, Poss (which stands for Possum) went to the US with his wife Molly in 1924 when he was transferred to supervise production of synthetic fibres in a Celanese Company plant in Maryland.
He decided to go into serious collecting when World War II came along, he told Australian Women's Weekly in 1970, returning to his schoolboy passion.
When he heard the stamp was being sold by the widow of Arthur Hind, the big American collector, his New York agent bought it from Macy's.
"I had first heard of the one cent magenta as a boy and had always been fascinated by its history," he said.
He sold it for $US280,000 to a group of Pennsylvanian investors who more than tripled their money with its sale to John du Pont, an heir to the du Pont chemical fortune, who died in prison in 2010 at the age of 72.
Du Pont was serving a murder sentence for the shooting of David Schultz, a champion U.S. wrestler, in 1996.
In the world of stamp collecting the stamp has long had enormous celebrity and glamour.
David Redden, director of special projects and worldwide chairman of Sotheby's Books Department, has emailed:
"It has always been the world's most-famous stamp. It is one of these objects around which a huge mystique has grown up over the years," he said.
The previous record auction price for a single stamp was 2.87 million Swiss francs (about $2.2 million).
It was set in 1996 for the Treskilling Yellow, a Swedish stamp that is a misprint of an 1855 shilling stamp in the wrong colour.
But the laurels now return to a stamp with a lot of mileage behind it.
The bank note sold by Downie went on sale in May last year for $3.5 million.
It had been purchased by Pettit five years earlier for $1.9 million but his company went into voluntary liquidation two years ago with losses over five years totalling $2.4 million.
Pettit’s company had stock it valued at $34 million, but which administrator McGrathNicol valued at $16.97 million, The Australian Financial Review reported at the time.
The bank note market was subsequently shaken by further failures including the administration of the Rare Coin Company in Perth.
The sale of the note should help stabilise the market in at least covering expenses of the administrators.
The banknote was printed on May 1, 1913, and presented to Governor-General Thomas Denman's daughter Judith by Labor prime minister Andrew Fisher.
Downie said that although reports had been circulating in the trade, the latest figure paid was closer to $1 million than the $775,000. She declined to elaborate on the question of the commission.
She said she did not think that iconic objects in the art market were subject to similar pressures as they were more frequently husband and wife purchases whereas coins and bank notes tended to be individually bought by men and the occasional woman.
She dismissed suggestions that bank notes and art shared the same downward pressures wrought by the reduction of tax benefits for super.
She said that it had been too easy for market observers to call on the super changes as an excuse for the downturn.