customers, but if they see demand in the industry for certain coins and medallions, then they will repurchase the coins from the client.
Clearly there is little interest in Lizo’s 1/10oz Robben Island coins.
Van Kerckhoven also contends that “we provide a high standard of training to all our consultants so that they are equipped with the right knowledge to guide our customers, which is neither misleading nor mistrusting in any manner”.
John Keogh, a coin dealer with 35 years’ experience and founder member of the Coin Dealers’ Association, disagrees.
“One of the roles of the Coin Dealers’ Association has been to educate the public so they do not get caught up in false promotions,” says Keogh, who adds that coin collecting is a specialised industry and, as an investment class, has made people significant returns, but only on rare and collectable coins that go back hundreds of years.
For example, currently a 1931 complete set of South African coins would fetch around R250 000 and Keogh says, as a collectors’ item, it will increase in value due to its rarity. Only 130 of these proof sets (sets that have been graded and sealed) were made and only 100 exist today, making them very rare.
The grading process analyses the coin for any imperfections or damage with a maximum of 70 points awarded to the most “pure” coin. “Most customers, and even dealers, could not tell you the grade of a coin by looking at it,” says Keogh. Although a grading system is beneficial for true collector items such as the 1931 proof sets, it is often used just as a marketing ploy.
The R5 Mandela coin marketing scam is a good example. Twenty-two million R5 coins were issued, ensuring they would never carry any rarity value, yet people paid significant premiums for what Keogh describes as “a piece of plastic”.
The newly minted R5 Mandela coins were sent to the US for packaging and grading, sealed in plastic and then sold as “collectable”.
In terms of the gold Mandela coins or other commemorative coins such as the Robben Island coins purchased by Lizo, these were minted in Norway on behalf of The South African Gold Coin Exchange and the Nelson Mandela Foundation and marketed through The Scoin Shops. Hundreds of them were minted and are only worth the value of the gold they contain, in the same way as a Krugerrand would be valued.
“You can calculate the value by taking the rand price of gold today,” says Keogh, but they do not attract any premium as a collectable.
Lizo is in fact being optimistic in believing that he would receive even the original R5 000 that he paid for each medallion. When he bought the coins in December 2011, the rand gold price was around R13 300/oz, which means a 1/10oz coin would only have been worth R1 330. He significantly overpaid for the coins. Currently, the rand gold price is around R18 400/oz, meaning the coins would only be worth R1 840 each.
Keogh adds that if a salesperson promises to buy back a coin at its original value when you want to sell it, the promise is only enforceable if it is in writing.
“Rare coins do make money, but you must know what you are doing,” concludes Keogh.