The investors were tempted to place their money in what were essentially "pyramid" schemes by the promise of high returns of between six and ten percent and further guarantees that the stamps they bought would not depreciate.
Consumer groups advised investors affected to contact them and draw up a cash recovery battle plan a day after police arrested nine directors of two philately organisations - Afinsa and Forum Filatelico.
As investors fumed, the general director of Caja Espana bank, Jose Ignacio Lagartos, warned against such "high risk" schemes whose promoters "are not financial entities and are not covered" by state-guaranteed bailout funds.
According to consumer groups, some 350,000 people typically placed between 10,000 and 100,000 euros (A$ 16,500 and 165,500) each investing in a sector worth up to 35 billion euros nationally.
Spanish Prime Minister Jose Luis Rodriguez Zapatero attempted to calm investor fears they would never see their money again by insisting that "the judiciary and all public administration are working to guarantee to the hilt interests of small savers."
The ADICAE consumer protection group for financial small investors told victims to get in touch and said it had received "thousands of calls" from worried clients of the two companies.
ADICAE added it did not know the extent of the two firms' assets but the newspaper El Pais quoted sources close to the affair as saying they had identified a 3.5 billion euro investment hole - 2.4 billion for Forum Filatelico and 1.1 billion for Afinsa - which would leave the firms bankrupt.
In addition, El Pais reported there was an additional 1.75 billion euros outstanding in tax evasion relating to the affair.
The High Court was not able to speculate on the extent of the alleged fraud, and the interior and finance ministries also would not comment.
"We are trying to get data from the victims to put together a defence," said ADICAE, adding that "we are hoping for government intervention."
Those arrested - five from Afinsa and four from Forum Filatelico - included the former's managing director Vicente Matin Pena and the latter's chairman Francisco Briones, according to the Spanish newspaper La Economista.
Afinsa placed a message on its website telling clients the affair was "a tough blow - but one which we will overcome with the help of all of you."
It insisted it was "cooperating with the authorities with total transparency," that all its assets were insured and that "all the stamps which Afinsa buys and sells are authentic."
Afinsa, one of the world's biggest stamp dealers, is also specialized in investing in art and antiques, while Forum Filatelico focused on the sale of stamps and distinctive furniture and property.
The firms are now suspected of fraud and insolvency and money laundering.
Afinsa is the majority shareholder in the US firm Escala Group, whose share price plummeted 52.75 percent Tuesday on the US Nasdaq index.
The viability of a "pyramid" scheme depends on the constant chasing of new clients whose investments fund those of clients who jumped on board before them.
The high returns go to early investors but the money is paid from funds received from later investors, meaning liabilities exceed assets from the start.
Once the scheme starts to lose its attraction it collapses under the weight of the money owed to earlier investors.
Pyramid scams caused huge controversy a decade ago in Albania, mushrooming to a paper value of almost half the national GDP before collapsing amid major rioting which led to hundreds of deaths and the fall of the government.
What is different about the Spanish scheme is that with the stamps a tangible product is involved.