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Market Grading at Work in Hobby
By Bill Brandimore, Bank Note Reporter
December 10, 2013

This article was originally printed in Bank Note Reporter.
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In the latest Heritage auction at Long Beach all three $5 Demand Notes that were offered were third-party net- or apparent-graded examples of very scarce early notes. Because of their deficiencies, they sold at well below the prices they would bring without notations that labeled them as lesser entities.

These are very fragile notes. The paper quality of the early issues is subject to disintegration with age in notes of lower or middle grades.

How is it that the art community seems to embrace examples that are restored professionally? Foxing repairs on old posters seems to be acceptable, but it kills any note with these almost-to-be-expected impairments due to age.

It would seem to me that our system of lowered prices for age-flawed notes is more realistic. Perhaps because of the brilliant artistic skills of the Old Masters, their art transcends mere foxing or paint chipping. Posters on the other hand would seem to belong with items such as old printed bank notes. Go figure.

Some 1918 $2 Battleship notes seemed a bit soft. If you’re looking for a nice Battleship, keep an eye out for gem examples from districts such as Chicago, Cleveland or New York.

Those notes would now seem to be a bargain in the $2,000 to $3,000 range. I am still lamenting my sale of a Battleship I purchased in the late 1970s or early 1980s. I paid $40 and thought I got all the money in the world when I sold it some years later for $400.

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1918 Aces also seem to be more affordable lately. Look for more common districts and put away a nice choice type note in the $400 to $600 area. Sometimes as middle or lower income buyers, we have to take a realistic approach to our purchases.

It is always wise to buy the highest grade you can afford. But think really hard about paying exorbitant prices for ultra grade notes. This would be especially true for more modern issues. Beginning coin collectors are paying TV sellers huge prices for MS-69 and -70 graded silver American Eagles. If such modern coins are so rare, how can the TV entrepreneurs find so many examples to sell on TV?

Some ultra grades are bringing prices at double the cost of 65 notes. Competitive and wealthy collectors are willing to pay upward of $50,000 for a 68-graded $5 Educational note. Educational notes in the Gem 65 grade are bringing around $20,000 at the present time.

Is a miniscule improvement in margin centering worth that kind of jump? It depends on your affordability status.

I think Gem 66 notes are worth the premium. I also believe 66 notes are really 65 notes of a few years ago.

We are seeing market grading at work in the currency hobby. Is this a good thing or not? I can’t say at this point, but at any rate, don’t pay big premiums for ultra graded modern issues.

Also, if you’re a world note collector, be aware that many countries routinely provide super centering on their notes. Thus ultra grades in the world note arena might not be all that rare.

I think the jury is still out on whether or not world collectors from outside the United States will buy into the ultra grade craze that we are seeing in our U.S. market.

As you read this I will be preparing to take a trip to Orlando. The Florida United Numismatists show is a really big show, as Ed Sullivan might have said. I’ll be looking for elusive Minneapolis $5 Federal Reserve Notes, as well as interesting world notes.

If you’re into topical collecting, take a look at Singapore bird and flower series notes, they are really colorful and exotic. Lower denominations are quite affordable, but expect steep prices for higher denominations which also have a legal tender status and are worth about 65 cents on the dollar in U.S. currency.

Have you been getting into computer bidding at major auctions? If you haven’t you are missing out on a wide range of available notes.

This gives you a shot at cherrypicking, or at least a chance to find notes that aren’t that rare, as such, but not generally seen at small club shows. A lot of folks are saving travel money and bidding at major show auctions from the convenience of their home computers.

Here it is even more important to plan out a strategy in advance. Sometimes you can get a feel for value by how the dealers in the room are bidding. You can’t see who is bidding, however, in computer mode. Sometimes a crazy person is at work and will end up paying crazy prices. Decide ahead of time what you are willing to spend and don’t let the thrill of the bidding action carry you away.

It’s like playing Black Jack at the casino. Don’t take crazy hits, work your system.

Also, keep in mind that you don’t want to be the first successful bidder when multiple items of the same catalog number and grade are offered. The market can be slim on some catalog numbers. Frequently, the third or fourth offering will sell for less.

If you are physically at the auction, be sure to look carefully at the notes before the bidding starts. Remember the old warning and buy the note, not the holder. This is true even with graded notes. Get the brightest color, the best centering, as sometimes notes are under graded as well as over graded. Make sure you buy the under graded note instead of the over graded one. Who knows, with the possibility of grading erosion, the great 64 you select might be tomorrow’s 65.

If you do make a bad mistake, sell the mistake and get your money into a note that will increase in value. If you wait for years for a dog to become a pedigree, you might find yourself waiting a very long time.

While you’re waiting, drop me a line with questions or comments at I always enjoy hearing from you.

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