Collectors Bid Up Scarce Nationals

By Bill Brandimore, Bank Note Reporter June 28, 2011

This article was originally printed in Numismatic News.
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This month I have spent a fair measure of time on pricing large-size type notes. As I reported in the June issue, the Heritage auction at the Central States Show in Chicago was very strong. There were more bidders bidding, more fiddlers fiddling. More notes sold than in any Heritage auctions over the last two years. $500 and $1,000 notes showed modest gains. Scarce Nationals were strong, especially notes from areas that are seriously collected by a number of aficionados.

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This leads me to expect even stronger demand at the Memphis show coming up in June as this issue of Bank Note Reporter closes. If you haven‘t been to a Memphis International Paper Money Show yet, you need to go and experience it even if it is only to enjoy the ribs at Rendezvous. Lyn Knight makes an excellent host for the show.

World paper currency remains strong, as do large-size type and better Nationals. Fractionals and Colonial notes continue tepid. That makes this a great time to load up on these historical treasures. The 150th anniversary of the onset of the War Between the States should increase interest in Confederate, Encased Postage and Fractional Currency.

If you are computer savvy, look into Internet auctions by major auction players.There are buys out there. This is particularly true for bundled, or so called dealer lots. Perhaps this would be a good club idea. Look for bundled lots that the club can buy and distribute to participating members.

When you are buying a raw note, pay particular attention in grading the note. Look for tiny tears in the margins, repaired or otherwise. Look for pin holes. Be particularly fussy, as missing a defect on a note can cost you serious dollars. The professional graders are catching any and all problems.

If the problems are at all meaningful, you are likely to get a grade described as “apparent” or “net,” with the defect spelled out on the holder by the grading service. At auction, buyers are shying away from problems on notes that are spelled out in that fashion. Expect to see as much as a 25 percent discount on these notes. I recently received bad news on two notes that I had purchased quite a while ago. One was, I thought, a beautiful extra fine Porthole $5 note. It came back as an “apparent 35.” The defect was a small cut into the bottom margin of the note, perhaps 1/8th of an inch. It had been smoothed out with some sort of foreign substance. That will probably cost me $300 or more if I want to sell it. The second note was a First Charter Lazy Two. It was graded “Apparent 25, interior tear.” The tear was two punctures from a staple that had become enlarged in a very superficial manner. I suspect the financial damage will be $300 to $500. Ouch. The lesson is clear. Look carefully for pinholes or tiny edge tears. Prospective buyers will be very wary of “net” or “apparent” labels. Use a magnifying glass or loupe to avoid what I just described.

As painful as these revelations might be, it is better to know them as soon as possible rather than to be surprised by them when it is time to sell them.

I continue to recommend collectors work on small-size Federal Reserve Notes in addition to whatever else they might be doing. I think small-size notes are bargains now, but will catch on as large-size type notes get pricier and pricier. As always, I look for your feedback. Share your questions or concerns with me at billbrandimore@charter.net.