Restarting my Banknote Collecting Hobby / Investment

A fine example of a major error where the banknote was folded during the printing process. The printing process goes through different printing stages resulting in the back design appearing on the front of the note. As a result, some portion of the back design was omitted on the back of the note. The note was the first error note acquired in the 1980s when I first started collecting. It was from a small little banknote dealer shop in the Peninsular shopping centre. 

After laying off for quite a few years in banknote collecting, I decided to restart my banknote collecting and trading. The number of banknote collectors have obviously increase in number over the years. Old collectors whom I knew now are senior collectors / traders. Familiar dealers are still around. Some have passed away especially the really old ones. Some are in semi-retirement stage, reaping their years of collection by selling them off and live comfortably.

The world has become a smaller place with the help of internet. Selling and buying through various portals has made it easier for trading. Information flows freely which it never happen when I first started collecting my banknotes in the 1980s. Something has also change. No longer, collectors / dealers are relying on self grading to grade their collections. With the opening of PMG branch in Hong Kong, we see a trend for collectors around this region to have their banknotes graded based on an International grading body, PMG. PMG is based in USA. Sending your banknotes for grading is not cheap. It is even more expensive if you are not residing in Hong Kong or USA ( How I wish they have one PMG branch in Singapore to serve the entire South-East Asia). You need to pay for the insurance, shipping and other expenses to get your banknotes delivered to the grading company. It is a two way shipping. One advantage is that with international grading, there is no dispute on the grading of the banknotes. Otherwise, seller will always want their banknote to be graded higher and buyers felt it should lower in grade. Grading affects the value of the banknote. Whatever is the grade, this will increase the note value since the seller will need to factor in the grading cost. The question is, should we grade our banknotes ?

I started collecting Straits Settlements banknotes and coins. In those days, Straits Settlements banknotes are very much in demand especially for high grade ones. Today, the supply of these high grade Straits Settlements banknotes have dried up. Most of them have already been locked up in the collectors' collection. Unseen and unheard. If they do surface in the market, they are going to cost a bomb. Only the serious collectors will gun them down especially for those new collectors where money is never an issue. There is really no market pricing for the rare or scarce banknotes whether in type or grade. It is the mutual agreement between buyer and seller. If you refer to auction market pricing, then it is only for common banknotes which appear quite often in auction.

Straits Settlments 1925 $5. Extremely rare in grade. Original AU / UNC. Acquired this in 1987 at the Singapore International Coin Convention. 

Collecting banknotes for investment can be quite tricky. Keen knowledge on the scarcity of banknotes is important. Areas of keen investment collection include first prefix, last prefix, as well as the mintage of the notes. Some banknotes have very short circulation. An example is the Singapore Ship series $2 in orange colour. As there were complaints on $2 having the same colour as the $10, the Currency Board decided to withdraw the $2 and replaced with a purple coloured $2 note. Based on this fact, the orange coloured $2 should be a favourite collector's banknote but unfortunately it is not so since there are abundance of them collected by collectors. That can be quite tricky as well. In Singapore context, Orchid, Bird and early Ship series solid number banknotes tend to have a better market value than the current Portrait series.

The Singapore Government started to auction out the solid number Ship $2 notes sometime in late 1980s or early 1990s. if my memory never failed me. It didn't received very well initially as most of the early solid numbers comes from the bank tellers whom spotted them while they were working in the bank. They were then sold to banknote dealers and collectors buy them. The earlier solid numbers banknotes may not be spotted and may not survived the circulation. Here is a good example in my collection where a rare solid number large denomination note survived the circulation. An orchid $100 last prefix A/6 555555. Because of the abundance and easy availability of auction solid number banknotes, collectors felt that it is no longer a challenge to own solid number banknotes. Over the years, these auction solid numbers have also steady rise in value as well as collectibles.

Most collectors will want to believe that commemorative banknotes are a must to collect. That is not very true for modern commemorative notes. Today, collectors collect such notes in bulk. To get them to become scarce will probably taken many years, maybe not in our lifetime. But collecting the rare serial number such as the first prefix solid number is still a good piece for collection. Here is an example in my collection where there is only one prefix A/1 for a solid serial number. They were auctioned out in Singapore.

Celebrating Singapore-Brunei 40th year relationship, this commemorative Brunei $20 was released together with the commemorative Singapore $20.  Most collectors collected them but the rare ones are the solid number ones. 

Finally, all my Straits Settlements, error and world solid numbers collection notes still reside in my collection. If interested parties are keen, they can offer to buy my collection notes. If the price is right, I will let go my collection notes. As for my investment banknotes, they are for sales and you can pm me for the price if you are interested in a particular banknotes that is showcase in this blog.

Lastly, banknotes collecting or we termed it as numismatics is both a hobby and investment. You must be passionate about it and have a full understanding of this hobby cum investment. I find it rewarding over the years. Acquiring a piece and understanding the history behind the banknotes makes it even more interesting. At the end of the day, if you decided to sell it, if the banknotes is a rarity, you should be able to make a small fortunate out of this investment banknote.  Enjoy your collecting and increase your knowledge for a better investment.

Collecting foreign solid number such as Macau 1991 can be quite rewarding since it was then still a Portuguese colony. A relative small country with a low mintage of banknotes circulated within the country. Today Macau is part of China. Collectors may have an interest in Macau banknotes especially those before China took back the tiny colony. 

Look out for more posting on my blog on various interesting topics on banknote collecting. Posting may also list some of my collection and investment banknotes for sales or for sharing. Happy Collecting !

Paper Chase

I came across this article from Hong Kong about Hong Kong collectors views on their collection.

As I personally collect these special serial number banknotes, I have to agree with what have been written in this Hong Kong article. The above banknote is one of my Hong Kong collected solid number banknote in my world collection.

The article is written by Stephanie Tong dated Monday, February 26, 2007

In fact, banknotes are an affordable path to wealth accumulation for every Hong Kong person as the amount to be invested can be as low as HK$100, or even less.

Karim Alamdin, 35, a life member of the Hong Kong Numismatic Society, started investing in Hong Kong banknotes four years back. "Unlike paintings and antiques, banknotes are a safe investment as the chance of getting fake money is very small," he says.

"The Hong Kong Monetary Authority, with the advancement in technology, is able to ensure dollar notes circulating in the market are real. "In addition, even if the value of this investment drops, we can still use the note in our hands. After all, what we invest in is actual money circulating in the market." Before investing in banknotes, one should know that the investment value of dollar notes largely depends on the combination of the serial number, which includes two parts: the alphabetic letters and the six numeric digits. The alphabetic part usually consists of two letters, running from AA, AB, AC, AD and so on, to ZZ, representing the different editions of banknotes in the same year. For each edition, the number of dollar notes printed will be one million. Use HK$10 notes printed in 2005 as an example: its first edition notes will have serial numbers from AA000001 to AA1000000. The second edition serial numbers will run from AB000001 to AB1000000. Cheung Tak-shing, owner of Hong Kong Coin Co, suggested four popular serial number combinations. "People at present like to collect dollar notes with lucky numbers," he says. "Serial numbers with `8' is the most popular one as its Cantonese pronunciation - baht - is similar to faht - the pronunciation of a Chinese word meaning 'going to get rich.' " Cheung adds: "The second most popular type is serial numbers with consecutive number arrangements, such as AA123456, AA654321 and AA345678. People like to have this arrangement as it is similar to `straight flush' - five cards in sequence and in the same suit - in card game Big Two (called `Choh Dai Di' in Cantonese).

"Another popular serial number grouping is collecting the first and the last dollar notes of an edition. "For example, AA000001, AA1000000, AB000001 and AB1000000. However, investors should note that the quality of these two types is usually worse than the others, as they are the first and the last dollar note to be printed in one edition. Chances to have defects in the appearance of dollar notes will be higher." Cheung says these three kinds of combinations - deemed to be the blue chips - are more coveted by most numismatic investors. Yet, investors can also invent their own combination. For instance, some investors collect banknotes with serial number showing their birth dates.

In addition to the different kinds of serial number combination, values of banknotes are also determined by the year of printing (the older the better), the edition (the earlier the better, AA is better than AB) and the currency value (HK$50 and HK$1,000 notes are more valuable as the number of bills in circulation is less than that of HK$20 and HK$100 notes). The last factor would be the appearance of the dollar note. "Dollar notes should be straight, not creased, without stains, and the four corners of the note should be sharp," Alamdin says. He adds this is very crucial as the investment value of a dollar note will be halved if there are flaws. "I have a HK$10 note printed in 1970. It is worth HK$1,000 at present as there are creases on the note. If it was a straight dollar note, the value of it would be at least HK$5,000," Alamdin says. Alamdin has a collection of banknotes with lucky number 3: MF000003, MF000033, MF000333, MF003333, TS033333 and VT333333. He says although this set is not of the same edition, MF, the value of the collection is at least HK$2,000. In Cheung's coin company, there is a set of $10 note that is worth HK$18,800. The set was printed in 1988 and of the same edition: PU000001, PU111111, PU222222, PU333333, PU444444, PU555555, PU666666, PU777777, PU888888, PU999999 and PU1000000.

"Unlike other investments, diversification is not encouraged when investin in banknotes, as this will hinder investors to form a collection of banknotes with similar interesting serial numbers," Alamdin advises. Currently, most banknotes are traded through Yahoo Auction. Alamdin said this method is the most popular one as the admission fee involved is little - only a few dollars are charged for each trading item - and the Internet can bring together most of the collectors of banknotes. Another place of transaction would be coin shops like the one owned by Cheung. Most of the coin shops are located in the Willy Commercial Building on Wing Kut Street in Sheung Wan and Portland Street in Mongkok. "For newcomers in the market, they are advised to focus on banknotes of lower value first," Alamdin says. "Do not sell your collection unless the return is at least 15 to 20 percent."