“A lot of people are looking to get exposure into gold, and I think what’s going on internationally, and what’s going on with the world economy, gold is always going to be a good hedge investment,” South Africa Gold Coin Exchange manager of global brokerage operations Rhys Cullinan told CNBC Africa.
“From a medium to long term perspective, it is where a lot or people want to put their money away. From our side of the business, we look at collectibles as well as the likes of bullion coin such as Kruger rands.”
Companies such as the South African Mint Company and the South Africa Gold Coin Exchange have been servicing a demand for collectible coins for decades. They provide a range of collectible coins and medallions.
Cullinan added that a lot of the company’s clientele will buy collectibles as well as the bullion, which will be kept for a five to seven year period of time.
“[Coin collecting] wouldn’t form as a complete alternative to equity investments and other investment portfolios, but it would form a part. We normally suggest to our clients around about a five to 10 per cent part of their portfolio,” he explained.
Coin exchange companies can release certain collectible coins in a limited number, sporadically or in commemoration of certain milestones or historical facts. The South Africa Gold Coin Exchange’s Nelson Mandela medallions are their most popular product.
Similarly, the South African Mint produces not only coins for national circulation but also collectible medallions and coins.
“The South African Mint makes circulation coins for South Africa, but then there is a department that makes coins. In comparison to the gold price, the majority of products that we make at the mint are proof coins,” said Bertus Van Zyl, acting general manager of numismatics at the South African Mint.
“They are numismatic coins beautifully made and designed, low mint each, [and] we charge a premium for that. Whereas bullion coins would mostly go for the investors’ public, the coins we make, we would like to think to the collectors more.”
Minting coins is however a tricky trade, as minting too much will decrease the value of the coin range but minting enough is necessary for a successful sale.
“If we say that we’ll make too many coins and eventually when we publish the mintage, sell very little, it looks rather silly. Quite recently, with the Union Buildings coins, we didn’t make enough, but it was sold out within days. Perhaps there’s a bit of value on the table for those who bought out once.”
A one ounce mint mark was recently released, commemorating Nelson Mandela’s Rivonia Trial. Only 750 are released, and were sold out within a day.
“The interest over the type of person that actually buys this is really there. We sell internationally [and] we have a retail store in the UK. Strangely a lot of collectors tend to make more money than investors. Our aim is to sell the [coins and]medallions to a collective market and people who are looking at keeping these for the medium to long term. That is part of the game,” said Cullinan.