In my last article, I shared my top tips for collecting coins. In this article, I want to share my top tips for collecting United States paper money. I have always preferred the designs of classic United States paper money from the 19th and early 20th centuries to that of the coins produced during this same time frame. Collecting classic U.S. paper money has always been a passion of mine, and I even sold off some of my vintage video game collections to finance some of my more prominent purchases. That said, much like the complexity of coin collecting, the market for classic U.S. paper money can be daunting to the beginning collector. The tips listed below have served me well over the years, and I hope that should you begin this exciting journey, my advice will offer you success.
10. Go slow; time is on your side. Numismatics, whether coins or currency, is not something you want to rush into. Only a fool buys something just because it is available. Take your time and understand the market. In the classic U.S. paper money market, large size notes (notes printed up until the year 1923) are generally more popular than small size notes (present size notes produced from 1928 and up). That said, the market is currently in a downtrend, and deals can be had.
9. Understand third-party grading and their vocabulary. Both PMG and PCGS are two of the leading third-party grading companies when it comes to paper money grading. Both have monikers used to describe the originality of the note in question. PMG notes Exceptional Paper Quality (or EPQ) on their grading label to indicate that the note being offered is in original condition and was not pressed or doctored. PCGS uses the moniker Premium Paper Quality (or PPQ) on their holders to designate the same thing. In the past, it was not uncommon for collectors and even dealers to press defects and creases out of notes in an attempt to increase their condition. This practice actually caused a lot of notes to lose their original embossing and paper quality. Hence, the absence of the monikers EPQ or PPQ on the grading label denotes this. Note that in certain circumstances notes without this moniker can have differing market values from those that do.
8. The best deals are usually at auction. At present time, both Heritage Auctions and Stacks & Bowers regularly hold both coin and currency auctions several times a year. It is here where you will find your best deals. Do not allow yourself to fall victim to frantic bidding. Take your time and stick to a fair but set price that you are willing to pay for an item. Much like coins, you can research almost every item sold through Heritage Auctions just by being a member, and it costs nothing to join.
7. Understand the market. Currently, the U.S. paper money market has taken a back seat to coin collecting. Also know that coin collecting has lost some popularity since the 2008/09 financial crisis. This means that deals can be had, but it will take time for the numismatic market to recover, and there is a chance it may never recover fully. If buying for investment, know this going in and buy accordingly.
6. Research, research, research. Much like coin collecting, the patient buyer always wins. Coins tone, and this presents complex market conditions for the uneducated buyer. Paper money does not tone, but you can have two similar notes in the same grade with differing levels of eye appeal. Centering and the overall appeal of a note help determine its value. Use this to your advantage, and take your time at auction.
5. Understand how paper money is cataloged and numbered. Coins have a mint year and a mintmark to help identify them. Classic U.S. paper money, on the other hand, uses something called a Friedberg number (named after the individual who came up with the system) to identify the notes in question. You can have two similar notes produced the same year that look exactly alike, but each with a different Friedberg number to help identify them, due to differing signatures on the notes themselves. Understand that certain Friedberg numbers are scarcer than others, and this can cause certain notes to be worth more. For instance, a Friedberg number 237 $1 large size silver certificate from 1923 can be had for about $200 in gem mint condition, but that same note in Friedberg number 239 jumps close to $1,000 or more due to the scarce signature combination presented on that note.
4. Buy the book before the money. One of my favorite books on United States currency is Kenneth Bressett’s “Official Whitman Guidebook to United States Currency.” The book is usually updated every year or two and contains a detailed listing on every issue from large size currency to small size currency and fractionals. It usually sells for less than $20 and is available at most large book stores or Amazon. It is a must buy for any paper money collector.
3. Specialize and focus. You cannot own it all. If you focus on large size notes in uncirculated condition or even gem mint, you will most likely have to pick an area to specialize in. Some of the most popular categories include silver certificates, gold certificates, legal tenders, and Federal Reserve bank notes. I advise starting with silver certificates, as they are among the most popular of all the offerings in classic U.S. paper money.
2. Be careful with obsolete and confederate currency. Confederate currency is quite popular to collect, but beginning collectors fail to realize just how much of the most common issues are out there. Most of the common confederate notes are popular, but they were overprinted. As such, there is little investment potential in most of these notes even at high grade. Obsolete currency offers something of a mixed bag, as most mainstream collectors stick to currency issued and backed by the U.S. government and ignore most private issues. That said, there is value here, but when you go to sell, be prepared to be disappointed at auction unless you hold only the scarcest obsolete notes. Obsolete currency was paper money printed and backed by private banks.
1. Be realistic about your goals, and have fun. Much like coins, a complete typeset of every note produced by the United States government is a monumental task. Even if you limit yourself to just available $1, $2, and $5 issues of notes in uncirculated or gem mint condition, you are looking at a collection that will cost hundreds of thousands of dollars. Remember, any kind of numismatic collecting should be considered a marathon and not a sprint. Collectors who come into the market and spend a lot of money right at the start of their journey tend to experience burnout and make poor buying decisions. Patience and time in this market are your best friends.