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Why are Prices Higher on Paper Currency Products than Bullion

If you are in the market for numismatic products, you may see several variations associated with each product. Gold, Silver and other Precious Metals have a value associated with them that dictate a certain price. Gold price history and Silver price history give us a clue about the pricing structure of bullion today.

With notes and bank certificates, it is a different story. Factors such as age, minting or printing come into play but so do historical context, popularity and necessity when determining the price. Prices are higher on certain products than others, but supply and demand are not always in play for these pieces. 

THE DIFFERENCE IN PRICES FOR BULLION
Metals prices give us an idea of how much a bullion product will be. Even so, Gold, Silver and Platinum bullion prices vary. These are three factors why you see prices higher than other standard bullion products:

  • Private mints vs Sovereign mints
    This is an important distinction in pricing. Oftentimes with private mints, you do not pay the premiums associated with sovereign mints.
  • Popularity of the product
    There are popular bullion products from private mints and sovereign mints. The facets of supply and demand come into play but not necessarily right away. After a new product release, you can see the price differential take place.
  • Certifications
    Certifying agencies like the Numismatic Guaranty Corporation (NGC) and the Professional Coin Grading Service (PCGS) are the top two grading services in the world today. You will often find coins and bullion certified by these organizations at a higher price than non-certified coins. That does not mean the quality or value is any less or more than a non-certified bullion coin. 

THE DIFFERENCE IN PRICES FOR PAPER CURRENCY
Notes and other paper currency play an equally important role in numismatic collecting circles. Though the antiquity of these products is not as prominent as bullion, paper currency products have a varying set of values that are important:

  • Overall demand
    Demand and necessity are two separate items in terms of price. Demand might be higher or lower in different areas of the world, or during different years. Demand is not as high for Confederate Currency in Canada or Mexico. Its significance lies with its demand in the 1800s in the United States. The year also matters. Years like 1929 or 1933 are pivotal with paper currency because of varying recessions and the need for paper currency to fight economic downtown.  
  • Rarity
    In terms of rarity for paper currency, the numbers of printed money varied greatly proportionally to minted bullion coin and bars. Notes like the 1934 $10,000 Federal Reserve Note Gem Uncirculated is an example of extremely low print production. It was the highest denomination note the United States ever printed and very few people during the 30s could afford it.

When you look at a Zimbabwe Note versus a Federal Reserve Note, the price, speaking in terms of denomination, will be higher for a Federal Reserve Note. The public used Federal Reserve Notes out of necessity. U.S. Bank Notes were used during certain time periods before being phased out. Confederate Currency was used only during the Civil War. Prices vary because of demand, rarity, condition and cultural relevance.

For every numismatist, weighing the value is a daunting task but has rewards. Looking at the variety of numismatic products available, you can find a product that fits your investment portfolio and budget.

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