What Happens if the Euro Falls? Will the Dollar Strengthen Further as the World’s Reserve Currency?

The Eurozone is faltering according to recent reports. Some of the weaker member-states are facing bleak economic conditions, weakening the confidence of stronger members in the Euro as a currency.

The formation of the Eurozone gave many in the international community hope that  the economies of Europe and government policies would become more homogeneous and productive. Additionally, weaker member states hoped a stronger currency would boost their domestic economies, eventually making the Eurozone a viable competitor to the United States. The global economic recession, however, has made many European countries rethink their pledge to circulate the Euro.

As a reminder, the United Kingdom never adopted the Euro. At the time  the Pound was estimated to be stronger than the Euro, and therefore too risky for the Brits to use as their own. This was a controversial decision during the formation of the Eurozone, but it has proven to be wise in the long  haul.

The World’s Reserve Currency is STILL the United States Dollar

According to Wikipedia’s World Reserve Currency entry, 62.1% of world reserves were in the United States dollar in 2011. The Euro came in a distant second at 24.9%.  The Pound Sterling and Japanese Yen come in around 4% a piece, with the Swiss Franc barely making the chart at 0.3%. This generally suggests most countries view the United States economy to be stable enough to invest in dollars, ie. buy Treasury Bonds or simply hold dollars in central banks. “Stable” is a relative term nowadays, and in reality the beleaguered USA economy is simply a safer bet compared to the desperate situation in the Eurozone.

What about the Chinese Yuan? Good question. As long as China continues to manipulate its currency value and NOT sell bonds on the open market, it doesn’t make sense for other central banks to invest in it.  The Chinese have quietly instituted some currency trade agreements with other nations, but not nearly enough to make it a global reserve contender. They’ve also wisely stockpiled currency for a rainy day. They might not play by the same rules, but they do protect their own self interests.

Go USA?!? Not quite

Many economists, both American and foreign, advocate for NOT using the United States dollar. Some believe central governments should hold a mix of many currencies, or a neutral currency (Bit Coin? 🙂 ) that does not necessarily favor one country over another.

For the meantime, however, it’s still a good thing that other governments, including China, choose to hold dollars. It gives them an incentive to allow the USA to succeed economically, with the secondary effect of producing a world favorable to USA political policies. After all, if your own bank account stands to benefit from a productive country, you’d probably like to see them succeed.

If the Euro does cease circulating, the strong member states in the Eurozone will be forced to circulate their own currency again. The weaker states (Greece, Ireland, Poland, etc.) would still have to pay their bills, in addition to adopting some form of legal tender. Stronger European countries have attempted to bailout other nations, but the results have not been positive since each country ultimately decides independently how the bailout money is spent,  and which austerity measures (if any) are implemented.

What’s next?

In the short run, if the Euro ceases to exist in the next 2-3 years, United States dollar reserves will go up, but so will the currencies of the surviving European nations, freed from the restraints of the Eurozone currency policies. They will immediately roll out their own fiscal and monetary policies, hoping to attract foreign investment as FAST as possible.

Unless the USA economy completely crumbles, it will still be a strong reserve currency even if another nation (China, Japan, Great Britain) takes over as the world’s leading reserve currency. The Euro is still strong despite its troubles, and rather than flush it down the toilet completely, Euro holders are keeping it with the hope that things will improve.

As with any investment, don’t gamble with money you can’t afford to lose!

Are Two Grand Watermelons or Just One Up for Grabs at the April 2013 Chicago Heritage Signature Currency Auction?

The fabled “Grand Watermelon” is one of the classic rarities of the USA paper money hobby. Most known examples reside in official government collections, leaving a handful for private collectors to obtain. In 2006, Heritage Auctions brokered the world record setting sale price for a single piece of United States currency at a staggering $2,255,000 between two high-end collectors. The specific note was Fr. 379b 1890 $1000 Treasury or Coin Note with signatures of Rosecrans-Nebeker.

We received Heritage Auctions’ April 2013 Chicago Signature Currency Auction #3522 email flyer today. The auction takes place between April 24-26, 2013 and April 28, 2013. To our amazement, we saw what initially appeared to be the obverses of NOT one, but TWO Grand Watermelons for sale! Wow, talk about unloading the big guns from your collection!

After the shock and awe gave way to a more sober mindset, it was became clear that only ONE of the Fr. 379 $1,000 Treasury or Coin Notes being offered later this month is a true “Grand Watermelon”. The other is actually a much rarer “Open back” variety from the series of 1891, and the opening bid is a hefty $1,200,0000. Heritage estimates plenty of action on this note, hoping for a closing of around $2,000,000.

For most folks, seeing an authentic Grand Watermelon in person is a once in a lifetime event, let alone having the opportunity to own one. Their prohibitively expensive price tag is beyond the reach all but the most well financed collectors. So the question for most people isn’t “How much?” but “When will we see these notes again, if ever?”.

The latter of these questions is definitely the most interesting. In 2006, Heritage set the world record price for sale of a single piece of United States currency, $2, 255,000 for Fr. 379b 190 $1,000 Treasury or Coin Note, signatures of Rosecrans-Nebeker grading at PMG Very Fine 35. This incredible record has yet to be matched. Here’s the record setting note:

Fr. 379b 1890 $1000 Treasury or Coin Note,
Fr. 379b 1890 $1000 Treasury or Coin Note, “Grand Watermelon” Rosecrans-Nebeker PMG Very Fine 35 – World Record Sale Value of $2,255,000 2006 – Obverse









Fr. 379b 1890 $1000 Treasury or Coin Note, “Grand Watermelon” Rosecrans-Nebeker PMG Very Fine 35 – World Record Sale Value of $2,255,000 2006 – Reverse

Later this month, the note that everyone will be watching – with record breaking potential – will be Fr. 379c 1891 $1,000 Treasury or Coin Note, signatures of Tillman-Morgan. Here’s the note as it appears in the online auction catalog:

Fr. 379c 1891 $1000 Treasury or Coin Note, “Open Back” Tillman-Morgan PCGS Extremely Fine 45 PPQ – Bidding starts at $1,200,000 – Obverse

From Heritage’s Auction Lot Description:

“Only two examples of this design-type are known to exist. The first is this note, whose pedigree lists most of the important names in the history of US currency collecting. It was in the 1944 Barney Bluestone sale of the Grinnell Collection, then to Robert Friedberg, then to Amon Carter, Jr.,  followed by Jim Thompson, then on to Dean Oakes who sold it to Dr. Edward and Joanne Dauer (the only collectors who ever formed a complete collection of all known U.S. type notes), and finally to the Greensboro Collection. The second existing example has a much simpler history. It has resided in the National Numismatic Collection of the Smithsonian Institution since it was transferred there by the Treasury Department.”

As you can see, this is the ONLY EXAMPLE available to the public at this time, which is why a $2,000,000 final hammer price could be a conservative estimate. The other Fr. 379 up for sale is Fr. 379a 1890 $1,000 Treasury or Coin Note, signatures of Rosecrans-Huston, one of two available to collectors, with a total of five known. Of this small population, this note has the lowest serial number.

Fr. 379a 1890 $1000 Treasury or Coin Note,
Fr. 379a 1890 $1000 Treasury or Coin Note, “Grand Watermelon” Rosecrans-Huston PCGS Extremely Fine 45 Apparent – Bidding starts at $750,000 – Obverse













Fr. 379a 1890 $1000 Treasury or Coin Note, “Grand Watermelon” Rosecrans-Huston PCGS Extremely Fine 45 Apparent – Bidding starts at $750,000 – Reverse

From Heritage’s Auction Lot Description:

“This example, which has the lowest serial number of the five known pieces, is one of two available to collectors. The second privately held example is the Limpert, Friedberg, and Krause-Lemke illustration piece. It was previously owned by F.C.C. Boyd, James Wade, Robert Friedberg, and Amon Carter, Jr. and was sold to its current owner at public auction in October 2005 for $1,092,500…the first note to break the seven figure mark. The currently offered example made its first public appearance in Harmer-Rooke’s 1969 Million Dollar sale. It then reappeared in 1983 in the H.I.M. sale at the Memphis show. Since then it had been in an east coast private collection until it was sold privately into the Greensboro Collection.”

So it looks like the Greensboro Collection is liquidating its Fr. 379s! Wow, imagine selling off these two behemoths at the same auction. It will be a thrilling evening and hopefully profitable for the Greensboro collectors that have safeguarded these numismatic treasures for years.

Don’t have $2,000,000 to spare? No problem: Heritage Auctions’ April 2013 Chicago Signature Currency Auction has many very affordable notes with great investment potential. Browse the catalog for further details.

PaperMoneyAuction.com was not paid or otherwise compensated for this article about Fr. 379 note types up for sale at the end of April 2013 in Chicago. This article is for news and entertainment purposes only. Anyone interested in these or other notes available at the Chicago Signature Currency Auction #3522 event should visit this link – click here.