MONEY

A rare R5 coin: the best investment you can make?

by on August 11, 2017, No Comments

 

Dealer: “Spend R50 000 on a rare Mandela coin and you’re likely to double your money before 2013.”

JOHANNESBURG – coin dealer  is predicting that “rare” R5 coins will double in value by the end of the year. It is currently selling a special grade of coin for R50 000 each with the forecast that they will reach 100 000 by the end of the year, and R150 000 by the end of 2013.

But not everyone is convinced. An investor, Wayne Potgieter, who recently spent R100 000 on two coins is now worried that he may have been ripped off,

In 2008, millions of   were minted to celebrate the 90thbirthday of Nelson Mandela. The coins that went into circulation are neither very rare nor very valuable.

However, there are certain coins that have never been in circulation, or are specially-minted  coins. It is these rare coins that are being sold for high prices by, which claims to be South Africa’s largest rare coin dealer.

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The highest possible grading is 70. Once a coin is graded, it is encapsulated in a plastic case. See picture below:

SA Coin client Wayne Potgieter thinks he made a mistake following the advice of broker Patti du Plessis.

On February 29 this year, Du Plessis wrote to Potgieter: “We market and sell the Mandela Rare Investment coins and herewith above, pictures of the Proof PF69 Mandela 90th Birthday coins. These are premier investment coins and there isn’t a better investment than these coins, currently worldwide. They are iconic and have the Mandela name behind them. The coins can go anywhere in the world and they are tax free.”

Du Plessis told Potgieter that there were only 5 000 “proof” coins minted worldwide.

Convinced by the well-oiled SA Coin marketing machine, Potgieter bought two “proof” coins at R50 000 each. Potgieter’s coins were graded 69 by   anacs , just one level below perfect.

According to SA Coin, there are only 795 “proof” 2008 birthday coins that have been graded 69.

But it did not take long for Potgieter to question the wisdom of this decision. It did not help that he saw proof coins of the same grade  for R22 000 each.

Potgieter asked Du Plessis about the price he paid, and on July 5 received the following reply:

“The price you paid are market related prices. Coins can be bought all over as it is a multi-layered market, but you chose to buy coins from us and that was good. That having been said, if you buy cheap you will sell cheap. It’s like people who buy coins on line, i.e. Bid or Buy or eBay for example. These are coins which are offered at low prices and should you wish to resell, I daresay, you would have to sell at the prices dictated by them and not by reputable people like ourselves, because this is where the hosting site auctions would stop, you would not get any growth.”

Du Plessis stressed to Potgieter that when she sold him the coins, he was informed that it was a medium- to long-term investment.

“I reiterate again that you have bought good coins and would suggest you keep them as long as possible, but we will in the meanwhile provide you with a coin valuation profile of what you have bought.”

SA Coin valued Potgieter’s coins at R65 000 each, suggesting that his investment had grown by 30% in less than six months.

Moneyweb asked Du Plessis how SA Coin arrived at its valuation. We also asked whether SA Coin is prepared to repurchase Potgieter’s coins, and, if so, at what price.

SA Coin spokesman Eion Blignaut invited this journalist to a meeting at SA Coin’s Woodmead offices. I accepted.

Blignaut says that the R65 000 valuation is based on market prices. He says he would advise Potgieter against selling his coins, because they are a long-term investment. However, if Potgieter insisted on selling them, he could give SA Coin a mandate to find a buyer, in which case Blignaut estimates that a price of about R45 000 might be achieved in the next three months. That would exclude SA Coin’s commission of 10%.

Blignaut says that SA Coin may make Potgieter a cash offer of about R35 000 if he insisted on selling the coins immediately.

 

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