Collecting Krugerrands: Know the story, understand the value
Gauteng / 20 April 2018, 3:39pm / SPONSORED CONTENT
First minted in 1967, Krugerrands are the most popular 1oz gold bullion coin in the world. Over 60 million coins have been sold to date and are the most highly traded gold coin in the world.
As a hedge against the rand and as a store of value and wealth Krugerrands have no equal. This is particularly relevant for South Africans who have seen the rand devalue by 95% since 1967.
One hundred and fifty million gold coins have been minted since then including the Canadian Maple Leaf in 1980 followed by the Austrian Philharmonic, the Chinese Panda, the Australian Nugget and the USA $50 coin.
Millions of these coins have changed hands many times over. We have traded billions of rands worth of coins by matching buyers and sellers.
In 1967, the price of gold was $27.50 per oz. Gold has had its up and downs over the past 50 years reaching a high of $1 950 and is presently trading at over $1 300 /oz.
In contrast the rand has consistently depreciated form R1.30 to the dollar to 8c over the same period.
It is the 50 years of international marketing and worldwide trade that has made this coin one of South Africa’s most famous and valuable exports.
Gold coins have a market value of approximately $2.5 trillion, and this excludes gold bars.
It is relatively easy to buy and sell gold coins but prices fluctuate daily.
Krugerrands have become as part of modern culture as pop songs and have been rated as one of the top 300 brands in the world.
There are hundreds of coins from time immemorial to the modern collectable coins. They range from Queen Elizabeth’s Inauguration coins in 1952 to her Golden Jubilee in 2002 to her Platinum wedding in 2017.
Proof Krugerrands have also been minted since 1967. Fifa Soccer coins will be minted for this year’s event in Russia. Both Summer and Winter Olympic Coins have been celebrated by the host countries’ mints. Nobel Peace Prize medallions have become one of the most enduring and unique Numismatic programmes in history.
Gold bullion bars themselves have become rare collectables selling at huge premiums to their intrinsic value.
The major mints of the world, some of whom have been in existence for 1 000 years produce coins annually. Private mints and gold coin companies are at the forefront of numismatic design and innovation including new and improved security features.
These numismatic items in every corner of the world collectively make it an $80 billion market.
There are purported to be 300 million coin collectors worldwide and you can collect coins from as little as 25c to as much as $10 million a coin.
The intrinsic value of the metal has no bearing on the actual value of the coins.
The rarity, condition, eye appeal, historical significance, provenance and supply and demand eventually determine the value of the coins.
Coins are independently graded today and this has revolutionised the coin market with 100 million slabbed to date. While it has helped dealers and collectors to purchase with more confidence. It has inadvertently attracted more and more investors.
Coins may become more valuable and desirable over time but it all depends on demand. Too few coins create little interest in the secondary market very much like a thinly traded share. Popular coins with a high initial mintage can flood the after-market.
The 450,000 US$20 coins minted by the US Mint in 1933 and ultimately withdrawn during the depression, left a coin population of just 10 coins in existence today. One was sold by Sotherby’s in 2002 for $8M.
The current unpopular or the unloved or unwanted coins like the 1931 Tickey and the 1980 fractional Proof Kruger Set become more desirable over time and consequently more valuable.
Fashion, tastes, supply and demand, the gold price, the local and world economy, wars, political uncertainty, interest rates, stock market crashes, recession, depression, and tax rates affect prices. The popularity of other asset classes that are the flavour of the month like holiday houses, Bitcoin and offshore investing can also impact on demand.
Gold has longevity and is the ultimate store of value with a 6 000-year history. (Half the shares included in the Dow Jones index 100 years ago are not included today.) This makes the case for accumulating a diverse collection of coins so compelling (even the proverbial farm in Eloff Street is not so desirable anymore).
The coin market is made up of collectors of gold, silver, platinum, copper, bronze, and other precious metals.
It consists of World Mints, wholesalers, dealers, marketers, auction houses, as well as casual and serious collectors’ short and long-term investors, speculators and even stags.
Who wins and loses is often determined by time as in most markets. The longer you hold onto your coins the more chance they will appreciate but there are no guarantees. They nevertheless make one of the best gifts you can make to your loved ones in your lifetime or afterwards.
The tax benefits of all collectible classes such as art, classic cars, silver, ceramics, books and stamps are appreciated by many collectors.
Every year the Mint of Norway mints the actual Nobel Peace Prize Medal. By the authority of the Nobel Institute medallions of the winners have been minted.
Medallions celebrating the winners have been minted by authority of the Nobel Institute for the past 25 years. From Al Gore to Woodrow Wilson, Desmond Tutu to FW de Klerk, Malala Yousafzai to Eli Wiesel, and from Nelson Mandela to Martin Luther King.
Royalties of R40m have been generated to the Nobel Institute and the winners’ foundations.
COLLECTING vs SPECULATING
If you buy collectables to make a quick return you may well be disappointed.
This is true of all collectables. If you do buy gold coins as a currency hedge, you lose the hedge when you sell them.
For 40 years we have encouraged collecting and accumulation of both bullion and collectible coins.