You may have noticed a new R5 coin in circulation, which celebrates 25 years of democracy. While it might be a new design, it does not have any collector’s value – despite what coin store assistants may tell you.
Pradeep Maharaj, group executive for currency management at the SA Reserve Bank, has warned against fake advertising claiming that buying a set of the new R5 coins will have collector’s value over time.
“There is no rarity attached to those coins. We produce millions of those coins, so they are not rare – they are only worth the face value of R5,” says Maharaj.
Each year, the SA Mint produces collectable coins that should not be confused with regular circulation coins or commemorative circulation coins. Collectable coins are made from precious metals, such as the R5 Nelson Mandela coin, which is made with 1/10oz of gold. The value of the coin is in the precious metal used. Depending on the number of commemorative coins produced, there could also be a collector’s value. However, a return on a collectable coin could take decades, depending on how many coins were issued at the time.
This year, as part of the commemoration of our 25 years of democracy, a three-part series of collectable coins was produced by the SA Mint: a 1oz pure gold R500 coin, a sterling silver R50 coin and a bronze R50 coin.
The pure gold coin with a denomination of R500 has been limited to only 125 coins and sells through the SA Mint for R33 995. This is a premium on the current gold price of R21 800 per ounce and any return on investment would require a buyer who is prepared to purchase the coin for its rarity value.
The R50 sterling silver coin can be purchased for R995, although the price of sterling silver is R250/oz – with 10 000 coins having been minted, it would have a lower collector’s value. This would not necessarily provide a return on the investment.
Not all commemorative coins are produced by the SA Mint. A coin issued by the mint would have a face value or denomination, while some issuers create medallions that have no face value. For example, the SA Gold Coin Exchange, in collaboration with the Nelson Mandela Foundation, created gold coins depicting Robben Island, and marketed them through Scoin Shops. These coins are only worth the gold value, the same as a Krugerrand, however, they were sold for several thousand rands above the metal value, leading to many disgruntled customers.
When it comes to purchasing commemorative coins, be cautious of coin shops that guarantee that they will buy the coin back from you. These promises are usually only made verbally and when you attempt to sell your coin, you may well discover that they will only be prepared to purchase the coin if they have a buyer.
Before you start investing in coins, do your homework. Coin collecting is a specialised industry and, while it is an investment class that can provide significant returns, this is only on very rare and collectable coins that are hundreds of years old.
To learn more about coin collecting as an investment, contact The SA Association of Numismatic Dealers at saand.co.za or the SA Coin Association on its Facebook page.