Friday, February 13, 2009

The Value of Your Banknote

Many of the collectors are interest to know what is the value of their banknote collections. Of course, as we all aware, the value of a banknote is very much depending on its grading. In other words, an uncirculated note (UNC) has a higher value than a fine (F) piece. Also, theoretically the older banknote has better value compare to the current issuance. Another factor needs to be taken into consideration is its availability in the market or its rareness. The higher of the number of issuance generally will reduce its collection value.

I always feel that the trading of banknotes is one of the imperfect market. What I mean is that the value of a single piece of banknote can not be easily determined by a single source. Unlike share market where we can easily find the price of a counter before you can purchase it. The information of the past transaction in share market is so easy to be traced. However, the value of a banknote is very much depending on the buyer and seller themselves. The determination of the price most often will fall under their hands.

Due to this imperfect market condition, sometimes you might wonder why there is a sudden jump in banknote price which has directly created a lot of opportunity for traders to make their profit. As long as the hobby of collecting banknote is inherited, the value of your collection will be sustained.

There are many guide books in the market providing the indicating market price for a piece of banknote. I sometimes wonder what are the factors or considerations in determining the market price of a piece banknote. Eventually, this has to tied into the fundamental economic theory of supply and demand force. It is just like a piece of art, if you like it so much then you are willing to offer higher price to add it into your collection. In short, there is not such market price of a piece of banknote, it all depends on how much you are willing to pay to buy a piece of art collection of course with the present of a seller whom willing to accept your offer price. Nevertheless, the price that you pay shall not less than the face value of the currency that your purchase.

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