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Ever have something on your mind to the point that it crowds everything else out? I have just returned from the Memphis paper money show and all I have been thinking about for days is paper money.
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Ever have something on your mind to the point that it crowds everything else out? I have just returned from the Memphis paper money show and all I have been thinking about for days is paper money.

Those are not bad thoughts to have. The paper money field is exciting. Those who were lucky enough to be in it for the past 10-15 years have seen many of the prices of notes in their collections add a zero. That?s an investment return that would make a mutual fund manager green with envy.

Of course a part of these great gains is due to the great increase in the number of paper money collectors combined with an influx of so-called investors. Investors have been attracted by the advent of third-party grading in paper money. Until a year or two ago, there was still a great deal of resistance to the idea of third-party currency grading.

That resistance is gone. Any coin collector could have said ?I told you so? to any paper money collector because we went through it in the mid-1980s.
One thing, though, that makes the paper money situation so interesting is that the third-party grading services developed before a commonly accepted grading standard has. Let me explain.

Back in the mid-1970s, the American Numismatic Association oversaw the creation of an officially endorsed ANA grading standard for American coins that grafted Sheldon numbers, 1-70, onto adjectival grades that were widely in use at the time.

Brown and Dunn and Photograde were two popular grading books at the time. These were supplanted by the ANA when it adopted its own standards and launched its own third-party authentication and grading service. This process was very successful. It was so successful, in fact, that private firms decided to enter the business in the 1980s. They gave ANA such a run for their money that it sold ANACS to a private firm.

ANA, however, still maintains the official grading system for coins.
None of this is directly applicable to paper money. There is no officially sanctioned ANA paper money grading standard. But ANA has just announced that there is an official paper money grading service of choice for paper money, Paper Money Guaranty, a sister service to Numismatic Guaranty Corp., which is a leading coin grading service.

PMG has its own grading system, which has borrowed numerals to give it the same feel as the coin grading standard.

Other private paper money grading services have done the same. Their standards are reasonably similar and widely understood, though there are commercial reactions to each of the services that affect the prices their notes bring on the open market.

However, no matter how highly prized a paper money grading service?s notes are, the fact is there is still no numerical grading standard for paper money officially sanctioned by ANA or any other hobby organization.
Does the hobby care about this anomaly? Will there ever be an officially sanctioned grading standard? I don?t know.

I editorialized for probably 10 years in Bank Note Reporter that such a grading standard was needed before the third-party graders entered the field. Well, closing that barn door has gotten harder.

ANA could not develop a grading standard without either looking like a hopeless shill for the grading service it has chosen to the detriment of the others, or jeopardizing its newly entered contractual arrangement with PMG.

That family of grading services is paying $350,000 a year for the right to be the ANA?s grading service of choice. The firm deserves value for the money it is paying.

Where does that leave the paper money hobbyist? Your guess is as good as mine. Fortunately, times are good for the field.