Take Advantage of Stable Paper Prices

By Bill Brandimore, Bank Note Reporter November 21, 2011

This article was originally printed in Bank Note Reporter.
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Paper money prices seem to be relatively stable at the present time. I suspect we will see fairly stable prices continue over the next several years. Now is probably the right time to do your homework and become a careful buyer of all the notes you’ve been dreaming of – if your finances can abide it. I expect to see a feeding frenzy and skyrocketing prices when we finally break out of our poor economic situation. It is better to get the notes you need now rather than chase them at ever higher prices later.

The “Apparent” and “Net” grades used by PCGS Currency and Paper Money Guaranty third-party grading services create some interesting options at the moment. In almost all cases where those notations are used, the note will sell well below its catalog price were it not branded with those scarlet letters.

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Such notations are obviously meant to alert the buyer to a condition problem. However, the notations have been taken to mean the note is a tainted entity. Clearly when a note has been doctored it is important to identify that condition.

However, when the defect on a note is merely a small margin tear or a foxing mark, there is really no attempted fraud going on. It should be noted, but I don’t think such notes should be lumped in with altered notes. Do you? That in essence is what is happening. Potential buyers are downgrading all such notes as tainted. These notes will then sell well below the normal price range of the numerical grade even though the defect might be very small.

An example of this price effect is seen in the Heritage Long Beach catalog of this past September. Two $500 1918 Federal Reserve Notes were auctioned. The Very Fine-20 graded note sold for $16,100. The Apparent Extra Fine-45 graded note brought $12,600. In this case, the notations explained that the top edge was restored and replaced. I think restorations and replacements are serious enough to warrant a big financial adjustment. When a note is repaired notice should be taken.

The thoughtful buyer will closely examine auction lots before the auction begins and determine if he is willing to take on a small, or large problem in a note. If a note is really scarce, he might even be willing to take on a restored note. The main thing here is potential buyers know all they need to know about a note if the note has been graded by a third party. In that sense the graders are providing a valuable service to our hobby.

As I take notice of Net and Apparent graded notes I also see notes that are missing the EPQ (Exceptional Paper Quality), or PPQ (Premium Paper Quality) notation on a graded note label. This doesn’t mean that there is something special about the note. It means that the note is original. It has not been pressed or otherwise manipulated to reduce the effect of folds or minor handling. This does not seem to be as problematic. I would certainly opt for PPQ or EPQ given similar prices. So keep this in mind as well as you go about purchasing your notes.

I enjoy hearing from readers, so if you have a question or a comment, or think I’m off the mark on something in this guide, email me with your comments. I look forward to them. Reach me at billbrandimore@charter.net. As a retired police officer, I can assure you that my skin is pretty thick. Take care out there and if you’re going to the Michigan State Numismatic Society show over Thanksgiving weekend, look for me, I’ll be there Friday and Saturday.