Banknote "Values"

Novice collectors often believe that the Standard Catalog of World Paper Money represents the last word on banknote values. Experienced collectors and dealers know better. While the various catalogs are invaluable guides (I recommend them for all serious collectors), they are not the definitive word on pricing.

The catalog and market values for notes often differ for many reasons:

• Out-of-date: Each catalog takes months--if not years--to produce, and by the time of publication, much of the information contained therein is already outdated. Furthermore, listings for most notes are unchanged from one edition to another.


• Conflict-of-interest: The "values" listed in the catalogs are obtained by surveying a small group of dealers and collectors, some of whom may purposefully undervalue notes so that they can replenish their inventories inexpensively, and others who may overvalue notes they intend to sell.


• Estimates: Even if you give the catalog contributors the benefit of the doubt and assume they're all doing their best to provide honest values, the fact remains that they are not reporting actual sales, but rather simply providing estimates of the value of notes that they may not have handled or sold in years, if ever.


• Unrealistic: Modern issues are often valued at an unrealistically small mark-up to their current exchange rate. Since dealers must pay their sources a premium for uncirculated notes, absorb the carrying cost of inventory, and try to make a profit, a good rule of thumb is to price modern issues at twice current exchange rates.


• Incomplete: As collectors who specialize in particular notes will confirm, there can be dramatic differences in the market values of various signature combinations and/or dates, but often the catalog doesn't distinguish between these varieties.


• Inaccurate: Every catalog edition has been riddled with egregious errors, such as missing notes, incorrect images, and unlisted date/signature varieties. With such a dubious track record, how much confidence can you place in published values, especially those which inexplicably rise or fall from one edition to the next?


• Rarity: Collectible banknotes are not commodities readily available on a retail market at a fixed price. True rarities may come on the market only once in a lifetime, and even so-called "common" notes are often impossible to find at any price.

So the next time you find a note selling above or below the catalog "value," keep the above points in mind before you assume you're being ripped off or are getting a bargain.