Effects of the Recession on Paper Money Prices

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The following editorial was published in the May 2009 issue of "US Paper Money Market" which is a trends type of price guide that comes with the American monthly Bank Note Reporter magazine. Although this article relates specifically to the US paper money market I personally feel that the overall conclusions are equally applicable to the Canadian paper money market.

Major Canadian rarities will remain relatively unaffected (if you can find 'em) but the middle-of-the-road commodity type of material has definitely seen a downward price adjustment in recent months. It will be interesting to see what if any changes are incorporated into the next edition of the Charlton standard catalogue.

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No one commented on the above editorial that appeared in a recent American paper money magazine! I was wondering if the lack of commentary is connected with the fact that we rarely if ever encounter negative market reports in the Canadian numismatic press. However, we often forget that the paper money market is just that, i.e., a market, and as we are all painfully aware these days markets can (and do) go down as well as up. There's little doubt that we are now in a "buyers' market" as opposed to the "sellers' market" of the last few years. This is further confirmed by the following editorial that appeared in the May/June 2009 issue of the bimonthly American publication "Paper Money: Official Journal of the Society of Paper Money Collectors".

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Thanks Ottawa

Two very interesting articles concerning paper money and the effects of the recession on the market. I think I've mentioned it before that the market declined somewhat during the last recession in 1990-91 and that was reflected in the Charlton catalogues of the early 1990s.

It will be interesting to see how the Charlton pricing panel addresses changes in market and if it is reflected 'accurately' in the upcoming catalogue.  I know in previous years maybe more than 7 years ago the catalogue came out much later in the year seems to me maybe close to the September/October. The same may happen this year to reflect any significant changes in the market to reflect the impact of the recession.  I would assume the Charlton pricing panel has a lot more work this year than in the recent previous years.

That's my two cents worth...

Ottawa

I always enjoy reading your posts and the articles you bring forward. I thank you for taking the time to do so.

Cheers

Jason

A couple of years ago I thought that investing in collectible paper money was a very smart and easy way to get a good return.  The reasons?  I considered the sheer numbers of baby boomers entering retirement, bringing with them the biggest mound of cash any group of retirees had ever seen, and all looking for something to do to fill their newly found free time.  It seemed like a perfect recipe for a bull paper money market for years to come.

But then, nobody predicted that pension funds would take as big a hit as they did.  So much of that cash that the soon-to-retire thought was secure just evaporated. 

It'll be interesting to see when prices go back up to where they were just a year ago.  I have a feeling it will be a very, very long time.

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Prices will decline and continue to decline for a decent amount of time.

I'm just wondering ...have many members found that exceptional recession bargain?  I don't see dealers at shows giving anything away, and even private sellers don't want to give notes away at bargain basement prices.  I still tend to think that unless one is truly in a desperate financial crunch, most people try to hang onto what they have and wait until things are better.
Only my opinion from what I have personally noticed?

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The last show that I had attended was just weeks ago and I found that the prices of the dealers were no cheaper then any other times I have been to a show.  I personally expected to see some better prices on some notes but I didn't find anything that jumped out at me and shouted Bargain!  I did notice that the attendance numbers were way down in comparison to any other past shows and sales.  In talking with others in this hobby they all agreed that the crowds were down any where from 30-40% of what past events had shown.

So maybe the fact that there is not the people coming out to see what is available is a reflection on ones financial circumstances in these specific tough times?  You think that one would see larger crowds out and about when people think that there may be some deals out there.  But it appears that not many have a surplus of that beautiful thing called money!  I look forward to see what prices the Torex show and sale has to tell us, it will be a great tell tale of what's yet to come?


 Bugsy

You think that one would see larger crowds out and about when people think that there may be some deals out there.

I think that people realize that dealers aren't giving things away any cheaper so why waste your time looking for something that doesn't exist.  If you have the money, there is always something to buy...if you don't .....

The last show that I had attended was just weeks ago and I found that the prices of the dealers were no cheaper then any other times I have been to a show.  I personally expected to see some better prices on some notes but I didn't find anything that jumped out at me and shouted Bargain!  I did notice that the attendance numbers were way down in comparison to any other past shows and sales.  In talking with others in this hobby they all agreed that the crowds were down any where from 30-40% of what past events had shown.

So maybe the fact that there is not the people coming out to see what is available is a reflection on ones financial circumstances in these specific tough times?  You think that one would see larger crowds out and about when people think that there may be some deals out there.  But it appears that not many have a surplus of that beautiful thing called money!  I look forward to see what prices the Torex show and sale has to tell us, it will be a great tell tale of what's yet to come?


 Bugsy

I have found much of the same results as Bugsy. Speaking mostly on chartered and earlier Bank of Canada, the material on dealer's price list and many of the auctions result have not suggested that it is yet a buyers market. I have seen some deals but nothing astronomical that did not have an odd occurrence even when it was a sellers market.

I have noticed that there is a lack of great material currently available and perhaps this is helping to sustain our market as it's keeping the demand steady.

Overall I think we still have a great group of active collectors and do not see the price trends take any substantial dive.

This is just my 2 cents but as the world financial situation is starting to correct itself I have yet to see any indication to suggest our Paper Money hobby has been or will be in any trouble.

Cheers

Jason

>the material on dealer's price list and many of the auctions result have not suggested that it is yet a buyers market.

The list price, or the dealer's asking price, matters a whole lot less that what the notes are actually selling for.  What the buyer pays, and not what the dealer asks, is what determines the market.  Dealers all over could raise the asking price of each note in their inventory by 20%.  That does not mean that the actual collectible value of those notes has gone up by 20%. 

If a dealer paid $500 for a note, I highly doubt if the dealer will sell the note for any less than $500.  He'll keep it in his inventory, with a profit-making asking price, until somebody offers enough for him to turn a profit.  In the current market that could take a long, long time.

I dont think that prices on many notes are going to fall, but some that will probably go down a bit are 1954 modified notes, (They are very high, and very common) Multicoloured notes, bird series notes and some common Journey notes as well. (When I say I think these notes are going to drop in price because they are common, I don't mean replacement notes, or changeover notes). I dont think that prices of scarcer notes will fall because of the constant demand for these specific notes. They might not go up as much as people are expecting due to the recession, and alot of other notes will probably stay around the same value.

Just my thoughts

I've reproduced below an interesting article that was published in the July 2009 issue of that great American monthly publication Bank Note Reporter.

Prices in the US are continuing to soften, as they are here in Canada, and the market is still trying to "find" itself. There are some interesting comments in this article relating to "sliders" (i.e., overgraded notes) and problem notes (i.e., notes with holes, stains, edge damage, etc.). There are also some interesting comments regarding the new "But It Now" feature at Heritage Auctions.

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I think the so-called recession has only a little to do with prices softening.
If you recall, multicolor for example was soft before the recession, prices were'nt being realized and the charlton even reflected that by keeping prices the same and  dropping others.
The only areas that increased were chartered, 1935, osbornes, devils, and select tougher prefixes.
These are the same areas that remain strong during the recession. The only effect is a tightening
of expendable income, so its placed more selectively.