The Value of Paper Money

The value of paper money is a discussion that will always be around in one form or another. Everyday we listen to the news and we are told continuously that the value of top world currencies, such as the Yen, Pound Sterling or US Dollar has gone down or up on the day. The gloom of the mortgage mess which has swept America and is about to hit the UK in a bad way makes everyone a bit nervous at the moment.Yet the value of paper money to a collector is a bit different in perspective.

Apart from the fact that there is a universally accepted grading system for paper money in the numismatic world, you also have other historical and market forces that help to dictate the value of each banknote that comes up for sale.

The Universal Grading System
UN- Uncirculated: a banknote in perfect unused condition
XF or EF - Extremely Fine: a banknote in almost perfect condition is the upper grade in this category , the notes has no creases and folds, it may have been used but not extensively. On the lower grade it would come as a very attractive note showing some light handling, with light folds and corners may be slightly rounded, the note should be clean.
VF - Very Fine: This is a banknote showing more wear with several folds vertically and horizontally, it may also have some dirt but should not be floppy with no tears but may be slightly worn on the edges and corners.
F - Fine: This note has been circulated a lot, comes with many folds, creases and wrinkling, it may not be excessively dirty but is soft and the edges show much more handling, with minor tears in the border areas. There maybe staple holes apparent on the note but no holes present which may have been caused by handling.
VG - Very Good: These notes are well circulated may have a hole in the center caused by excessive folding, the paper may be discolored or stained and is usually limp with corners showing wear and rounding.

(My extremely creased 1000 Ghanaian Cedis)
(given to me by a friend who left it in a pair of jeans...)

G - Good: The banknote is well used and circulated and shows damage caused by prolonged circulation. These include creases, dirt, discoloration, center holes, torn edges, rounded corners, pinholes, staple holes or multiple folds.
P - Poor: This is usually a severly damaged banknote with large parts missing.

My collection would therefore be graded as mostly UC and XF with only a few VG and G notes included. Nowhere near a scanner or else I would have attempted to load up a few examples for this post. Will do this as soon as I can get a breather (one of the boys has had a throat infection which has meant no school and no work for me all week.) Anyway once I can I shall put up a full illustrated page on the Paper Money Palace store website.

The Value of Uncirculated Paper Money

Most paper money collectors want uncirculated banknotes for their collection, but to be very honest with you this is over rated and not very realistic. Now I guess a few of you reading this may not agree with me, and as I'm still relatively new at this I stand to be corrected. But in my humble opinion insisting on uncirculated banknotes for almost all collections is quite impossible.

The Historical Perspective

The older the notes you are collecting the harder it will be to get UN or XF notes, this is just a fact of life, and I'm sure a lot of older collectors will testify that some of the banknotes they had previously discounted have now doubled or even tripled in price while they are left with an empty space still searching for that elusive UC banknote!

The Market Perspective

Now if particular banknotes are in great demand but not in great supply, you have the market forces now dictating the price. Lack of supply could be cause by a simple fact that not too many of the very old notes have survived anyway, or it could be a man made scarcity of dealers and collectors hoarding the notes to see if the price will continue to rise so that they can make a big profit at the end of the day!

An Opinion About The Value of Paper Money

My take on this issue is to collect the best of what I can lay my hands on, if I get better notes I can always exchange or sell off the extras. Uncirculated banknotes may be the highest and most desirable grade but I would hate to end up with a fake note just because I wanted an UN one. I hope that as collectors we change our mindset about the value of paper money we collect, before the art of cleaning-up banknotes totally takes over the hobby.