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Topic: 2014 26th Edition Charlton Replacement Results 2 of 3  (Read 2677 times)
Mortgage Guy
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« on: July 18, 2013, 06:25:32 pm »

I hope you enjoyed this so far but there’s more, much more.


The reason I have developed Indexes has been out of sheer interest and fascination with regards to pricings. Over the years trends have become more evident and cycles clearly defined. A trend could span several years with cycles spanning decades. Below I will go threw several of the metrics I have developed. They serve to put into perspective various editions results. Threw this forest of numbers a picture starts to emerge. For better or for worst they are what they are, snap shots.

When you look at the initial results they look relatively fine. Nothing big seems to jump out but now take a closer look. Once we factor inflation the decliners and advancers look much different.

Inflation

Total Replacement Note Index (TRN)***adjusted for inflation 26th Edition
Total Ranges      799   100%
Total Decliners   699   87.5%
Total Advancers   100   12.5%

This Year over last Year (gain/loss)

To start we have to remove all of the first time entries from 26th Edition to get a better picture of this year’s general trend.  Here are the numbers
Total Market Cap TRN Index 25th Edition     $343,148
Total Market Cap TRN Index 26th Edition   $343,438   ***Minus new entries
New Additional Value          $290      

This represents a total gain of 0.08% for the 26th Edition’s TRN Index.

Average Replacement Note Costs

Below is a 10-year look at the average price of a replacement adjusted for inflation.

10-Year Averages
26th    $470    
25th    $515    
24th    $533    
23rd    $564    
22nd    $629    
21st    $700    
20th    $780    
19th    $875
18th    $859    
17th    $862    

This tells us several interesting pieces of information. The obvious starting point is the 19th edition’s staggering average price. This is the highest of all the Editions history and clearly defines a top. The 19th Edition is one of major historical significance. The first reason as mentioned is the fact that at that time bank note collecting was in its “Roaring” years. The demand outstripped supply, the masses accepted a notion that if a note can go up 50% in a year why won’t it continue perpetually? the demand was there. Market peaks always seem to create some sort of push to unlock additional perceived value. When the 20th edition came along the entire landscape had drastically changed forever.  With tremendous upwards pressure on prices the 20th Edition came out but this time we had something else to digest, 3 sets of Unc? How does that work? First when buying an Unc note prior to the 20th Edition one would assume it was the highest grade available, right? I currently assume my G.Unc notes are the best out there.  Now the 20th Edition is telling you that the Unc is definitely below the highest grade possible, which has now been replaced with a “Gem” Unc. The obvious is that “Gem” Unc grade notes were not first discovered in 2007, they have always been around. The 19th Edition TRN Index showed a rather modest gain of 1.8%, or did it?   The truth was that one of the largest price increases had occurred for the 20th Edition without changing the pricing. Let me explain. The Unc values of the 19th Edition look much like the Unc values the 20th Edition. That means the price point for the new grades didn’t go from Unc (19th) to “Gem”Unc 20th Edition and worked backwards but rather created 2 new higher grades with significant increases to price. All of this at the highest point ever! Isn’t it always the way?  This also created the groundwork for huge growth in the TPG industry. One has only need to look at the many examples that illustrate how strong demand is for such services. When one pays $20 in fees to get a note valued at $10 professionally graded clearly indicates the industries popularity.  With the introduction of additional grades, a blossoming TPG industry and a slowing in demand has created huge price discrepancies relative to book. The fact that most notes found in the TRN Index can be had at 50% of book is a negative to prices and will take many years to adjust. Part of that adjustment will simply be achieved by leaving ranges flat for years and have inflation work out the pricing kinks. This year alone this approach affected 82.7% of the 26th Edition’s TRN Index and managed to make a small -0.74% dent. The “G”Unc prices have been a hard one for the general collecting community to accept with auctions being quite revealing. First, many are TPG. Secondly, they are priced at book and at times above. Third, many of the same notes have been available for years.

2014 26th Edition Charlton Canadian Government Paper Money Replacement Results 1 of 3
http://www.cdnpapermoney.com/forum/index.php?topic=13752.msg60326#msg60326
2014 26th Edition Charlton Canadian Government Paper Money Replacement Results 2 of 3
http://www.cdnpapermoney.com/forum/index.php?topic=13753.0
2014 26th Edition Charlton Canadian Government Paper Money Replacement Results 3 of 3
http://www.cdnpapermoney.com/forum/index.php?topic=13754.0
« Last Edit: July 19, 2013, 08:42:08 am by Mortgage Guy »

Always Buying Any Replacements and Special Serial Numbered Notes In C.Unc+ Condition
mmars
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« Reply #1 on: July 19, 2013, 11:44:37 pm »

I don't understand the point of indexing catalogue values to inflation.  What is the point of adding that variable to the mix?  All that does is make it painfully clear that investing in paper money is a losing proposition over time, much the same way that investing in slot machine gambling is a losing proposition with the odds that you'll end up in a deficit situation increasing as you continue to wager over time.

Quote
The demand outstripped supply,

I would dearly LOVE to know when this blessed event ever took place in Canadian numismatics.  I know the discussion is centred on replacement notes, but in general, Canadian paper money has always been way behind the markets of other countries simply because the collector base for Canadian notes is so small.

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