Jump to content
Sign in to follow this  
alloway65

South African Mandela Coins: Mint State, Prooflike and Proof

Recommended Posts

alloway65

[h=1]An interesting article from the NGC Newsletter.

 

South African Mandela Coins: Mint State, Proof like and Proof

[/h] Posted on 4/16/2013 The South African 2000 Mandela Commemorative 5 Rand is an example of a coin with a designation change.

NGC always attempts to assign a coin the same designation that the issuing mint gave it. Many countries around the world now issue coins that cannot be identified as Mint State, Prooflike or Proof simply by their strike since the method of manufacturing is exactly the same and the designation is given indiscriminately by the mints when the coins are released. This often leads to confusion with consumers, dealers, and even NGC graders, especially when the mint that issued the coins decides to change the designation after they were released. This is the story of the South African 2000 Mandela Commemorative 5 Rand coins.

In 2000 the South African Mint issued a commemorative coin for Nelson Mandela, the first black president of South Africa and the man who helped unify the country after apartheid. In 2000 the coins were struck as both “circulation issue” (i.e. Mint State) and special collector Proof issues. NGC was not able to obtain an exact mintage figure for the Proof 2000 Mandela coins, but according to the mint records we were able to verify the following: over 5.2 million circulation issue Mandela coins were issued in 2000. In 2003 the South African Mint took the 2000-dated Mandela 5 Rand dies and put them back into production to strike over 1.024 million more Mandela coins that were released into circulation. An additional 40,000 Mandela coins were produced using the Proof dies on what the South African Mint termed a “continuous” minting press, instead of a “Proof” coin press. Of the 40,000 coins struck from Proof dies, 25,000 were issued in special sets and were called “Proof-like.” The coins were issued again in 2008 with the ones included in the Mandela 90th birthday two-coin set again issued as “Proof-like.”

When NGC first started to receive Mandela coins in submissions around 2004-2005 they were infrequent and there was a clear distinction between the Proof and circulation examples. As the price of original Proof Mandela coins quickly jumped, especially in high grades, NGC became flooded with submissions of what looked like impaired Proof Mandela coins. These coins were struck with Proof dies but often had contact marks, breaks in the cameo frosting, planchet issues, finger prints and other such issues that are seldom seen on Proof issues. Since the coins were struck with Proof dies and were trading as Proofs in the marketplace, NGC continued to call the coins Proof as their method of manufacture. The situation was further complicated by coins being sold in counterfeit mint packaging to unsuspecting collectors who believed they were getting something they were not. Shortly after this time NGC was notified by several collectors in South Africa that the Proof designation was incorrect; although these coins were struck with Proof dies, they were sold as circulation issues by the South African Mint. After further research and communication with the South African Mint, NGC changed the designation to the more accurate “Prooflike” or “PL” for these coins.

 

NGC strives to always provide the most accurate and consistent grading to create the best service. While there are some incorrectly labeled South African coins in the marketplace, we have worked diligently to correct these now that additional information has been released by the South African Mint. Anyone with a mislabeled coin may send it back to NGC at anytime for correction at no charge. For any questions or comments, please feel free to contact NGC

Share this post


Link to post
Share on other sites
Jongleur
An interesting article from the NGC Newsletter.

 

South African Mandela Coins: Mint State, Proof like and Proof

 

Posted on 4/16/2013 The South African 2000 Mandela Commemorative 5 Rand is an example of a coin with a designation change.

NGC always attempts to assign a coin the same designation that the issuing mint gave it. Many countries around the world now issue coins that cannot be identified as Mint State, Prooflike or Proof simply by their strike since the method of manufacturing is exactly the same and the designation is given indiscriminately by the mints when the coins are released. This often leads to confusion with consumers, dealers, and even NGC graders, especially when the mint that issued the coins decides to change the designation after they were released. This is the story of the South African 2000 Mandela Commemorative 5 Rand coins.

In 2000 the South African Mint issued a commemorative coin for Nelson Mandela, the first black president of South Africa and the man who helped unify the country after apartheid. In 2000 the coins were struck as both “circulation issue” (i.e. Mint State) and special collector Proof issues. NGC was not able to obtain an exact mintage figure for the Proof 2000 Mandela coins, but according to the mint records we were able to verify the following: over 5.2 million circulation issue Mandela coins were issued in 2000. In 2003 the South African Mint took the 2000-dated Mandela 5 Rand dies and put them back into production to strike over 1.024 million more Mandela coins that were released into circulation. An additional 40,000 Mandela coins were produced using the Proof dies on what the South African Mint termed a “continuous” minting press, instead of a “Proof” coin press. Of the 40,000 coins struck from Proof dies, 25,000 were issued in special sets and were called “Proof-like.” The coins were issued again in 2008 with the ones included in the Mandela 90th birthday two-coin set again issued as “Proof-like.”

When NGC first started to receive Mandela coins in submissions around 2004-2005 they were infrequent and there was a clear distinction between the Proof and circulation examples. As the price of original Proof Mandela coins quickly jumped, especially in high grades, NGC became flooded with submissions of what looked like impaired Proof Mandela coins. These coins were struck with Proof dies but often had contact marks, breaks in the cameo frosting, planchet issues, finger prints and other such issues that are seldom seen on Proof issues. Since the coins were struck with Proof dies and were trading as Proofs in the marketplace, NGC continued to call the coins Proof as their method of manufacture. The situation was further complicated by coins being sold in counterfeit mint packaging to unsuspecting collectors who believed they were getting something they were not. Shortly after this time NGC was notified by several collectors in South Africa that the Proof designation was incorrect; although these coins were struck with Proof dies, they were sold as circulation issues by the South African Mint. After further research and communication with the South African Mint, NGC changed the designation to the more accurate “Prooflike” or “PL” for these coins.

 

NGC strives to always provide the most accurate and consistent grading to create the best service. While there are some incorrectly labeled South African coins in the marketplace, we have worked diligently to correct these now that additional information has been released by the South African Mint. Anyone with a mislabeled coin may send it back to NGC at anytime for correction at no charge. For any questions or comments, please feel free to contact NGC

 

At last we have an explanation.

Share this post


Link to post
Share on other sites
Pierre_Henri
At last we have an explanation.

 

For me the following is scary ...

 

" ... over 5.2 million circulation issue Mandela coins were issued in 2000 ..."

 

" ... strike over 1.024 million more Mandela coins ..."

 

" ...Of the 40,000 coins struck from Proof ..."

 

" ... 25,000 were issued ..."

 

"... the coins were issued again in 2008 ..."

 

Newbie collectors have been warned against this bottomless pit of available Mandela coins for years - almost as many times as these almost worthless coins have been struck ...

 

When Mandela dies the market will totally collapse because every Tom, Dom and Harry will put his Mandela related coin on the market the following morning.

 

And there will be few if any takers.

 

Only the very top-top graded coins could somehow survive; meaning that there should be a few willing "survivors" to be wanting them.

 

In actual fact, the number of Madela coin collectors remaining (after his death) would/should be almost in line with say the Z.A.R. range that is the top collected (internationaly) SA coin range today (I am talking about coin collecting and not speculating on numismatic nonsense)

 

I am sticking my neck out but rather that than having to hear "I want my money back - I always thought that this Madiba R5 would make me rich" from the masses when Madiba dies.

 

To put it in a tiny nutshell - when Mandela dies the market for his coins will collapse.

 

Pierre

Edited by Pierre_Henri

Share this post


Link to post
Share on other sites
alloway65
This must be the way to solve poverty in South Africa.Just give everybody a few Mandela coins and in a few years we will all be rich.......see the graphs from The Coin Company website/QUOTE]

 

And the band played believe it if you like!!!!!

 

When you get a call from their "experts" and they learn that one has some numismatic knowledge....the conversation soon comes to and end...they say they will phone back and never do!

 

I must say I have made a few bob out of the bag of R5 Mandela Birthday coins I bought on the day of release.....a MS68 I sold on BoB for R23 000.000 and sold quite a few others at good prices....the motto is strike while the iron is hot.

Share this post


Link to post
Share on other sites
PBGold

 

To put it in a tiny nutshell - when Mandela dies the market for his coins will collapse.

 

 

I do not agree with this.

 

To say that the market for Mandela coins will collapse when he passes is to assume that the market does not collapse simply because he is alive.

 

This is too simplistic for me because the success of the Mandela coin mania is mainly driven by companies that market, promote and 'push' Mandela coins. When Mandela passes, will these companies suddenly stop advertising their products, suddenly stop pumping millions of Rands into marketing Mandela coins? I don't think so. This is how these businesses make their money, its how Bidorbuy makes tons of money, after all, Bidorbuy does advertise Mandela coins themselves.

 

There is no way a company like South African Gold Coin Exchange is going to 'call it a day' and close shop when Mandela passes, because 'the market has collapsed'. How will they pay their rent or staff? SAGCE has some of the most talented employees in the country working for them, and they will find a way to not just make sure the market will survive, but also make sure that it grows and evolves for many decades to come. All the dealers will. Even Bidorbuy and SAcoin and every other person that sells Mandela coins.

 

Sure, a speculator (and we must draw a very clear distinction between a long term investor and a speculator, because it is normally speculators that want to make a quick buck that complain the most.) who paid a ton of money for a MS or PF will moan because he can not 'turn it' quickly for a huge profit, but those that hold on will see returns.

 

There is simply too much money in the industry now for it to suddenly disappear in an instant.

Share this post


Link to post
Share on other sites
Cold Sea

Hi PBGold,

 

I think the market is collapsing as we speak, especially for the R5's. I do not think this has much to do with the demand in the numismatic market, but rather a correction of the value of these items. There will be a spike again when Mandela dies. After that advertising will be the only vehicle to keep the person and his memory alive. With the speculators gone, what type of return can the investor expect. I don't think it will be a performer anymore. That is why I support those who says that after Mandela, it will become a poor investment (there might not be an implosion), but no matter how innovative your strategy, artificial prices are just that, and can never last.

Edited by Cold Sea

Share this post


Link to post
Share on other sites
jwither

If someone wants to tell me what someone paid for the coin or coins they have, then we can determine whether they will see a return or lose their shirt.

 

From a numismatic standpoint, I do not see why any of these coins should be worth one cent over face value because there isn't a dime's worth of difference between the higher MS grades and their huge numbers make them a dime a dozen given that a disproportionate percentage of them exist essentially as struck. The proof coins should sell for nominal amounts as well. I mean 5MM 2008 5R BD coins, 10MM 1994 5R Inaguration coins and 40,000 2000 5R proofs, that is "scarce" or "rare"? Even for the proof coin, outside of the United States, how many countries issue proof coinage or annual proof sets with that mintage? And I am also talking about countries with substantial collector bases.

 

The idea that there are anywhere near enough collectors in or out of South Africa at current prices or anywhere near it for this glut is also unsubstantiated. There is no evidence of that anywhere or if there is, where is it?. It certainly does not show up in the number of collectors who desire other RSA, even the other more recent ones or else the prices would not be so low. I do not know how many there are and I will concede that coins like these are wanted by more than other SA coins, but most of these people are not real collectors however many of them there may be. They are a combination of mostly speculators with the balance either casual or even non-collectors, depending upon what they actually paid for the coins they own.

 

I also do not know how much the higher grade coins sell for now and though I understand they sell for much less than they did before, my guess is that it is still FAR ABOVE the demand which the real collector base can support longer term. For the 2008 BD 5R specifically, the last time I checked the NGC census, there were 11 in MS-69 as "conditional rarities", 27 in MS-68 and over 20,000 in MS-67. The most logical outcome is that the MS-68 and MS-69 will sell for a lot more than they should despite their dubious numismatic merits but much less than anyone who owns them now and who acquired them at their current or prior open market prices paid. My opinion is MUCH LESS. All other grades below MS-68 should ultimately sell for nominal prices all the way down to less than the slabbing fee since they are as common as a grain of sand on the beach.

 

If anyone here wants to know how this type of claim can be made for the size of the collector base, this is it. In the late 1980's, David Bowers (now with auction firm Stacks & Bowers) estimated in an article that the US collector base who would pay $100 or more for a numismatic coin (presumably as opposed to bullion) was 50,000. In a recent PCGS Coin Forum post, contributor "Red Tiger" (who I do not know but understand is a respected long time collector) estimated 100,000 today. Per my recent posts, given the number of US coins to collect, their general availability and particularly how expensive so many of them currently are, I believe both numbers are too low. I think 250,000 or even more seems more realistic and this might even include paying more than $100 since for US coins, this is really a nominal amount.

 

I do not know the size of the equivalent collector base for SA. One collector in your country with whom I correspond frequently mentioned 120 "serious" collectors for Union which sounds like a reasonable "ballpark" number if the definition is intended to include those who will pay $100 or more for a single coin. For ZAR, maybe between 500 and 1000 including a decent number of foreigners. For RSA generically, my estimate is almost none. For the more recent (1994 and later) issues, probably less than Union since there are likely many bullion buyers who acquire the lower mintage gold proofs and commemoratives (such as the Natura series and other Mandela coins) as "investments". Also, I do not believe there is much "cross over" between union and ZAR to more recent RSA or vice versa. But in any event, even if I am wildly pessimistic about the current numbers, I do not see how this equates to anywhere near the existing supply of the coins covered by this post given the estimates for the US by those who are supposed to be knowledgeable in these matters. Furthermore, i also do not see how so many more are going to find these coins so compelling in the future to absorb the supply held by SPECULATORS to maintain current prices, much less substantially higher ones.

 

Lastly, as I pointed out many times, there isn't any difference whatsoever between a supposed "investor" and a speculator. It is purely semantics and typically a basis to rationalize and justify the amount paid for a given purchase.

 

So yes, while the sellers discussed here and others will continue to market them as "investments" to unsuspecting patsies, like all other ponzi schemes, there are only a limited number of suckers available to be fleeced before the gig is eventually up.

Edited by jwither

Share this post


Link to post
Share on other sites
JohnBenn

Mahatma Gandhi died in 1948, today(65 years later) Poor quality 1948 Gandhi FDCs fetch between R18 000 and R30 000.

It's all about the market. The craze for these FDCs are so huge that forgeries pop up everywhere.

 

I do not speak for the coins on there own,but keep your 1994 FDCs with coin safe; those are true investments.

 

EDIT : (Note to self do not comment when tired.) - I am revering to the 1994 inauguration coins, and not the 2000 Mandela coins.:push:

Edited by JohnBenn

Share this post


Link to post
Share on other sites
jwither
Mahatma Gandhi died in 1948, today(65 years later) Poor quality 1948 Gandhi FDCs fetch between R18 000 and R30 000.

It's all about the market. The craze for these FDCs are so huge that forgeries pop up everywhere.

 

I do not speak for the coins on there own,but keep your 1994 FDCs with coin safe; those are true investments.

 

If you are going to make an analogy, could you actually make one that is valid or at least explain how it is one? Not trying to pick on you but this is exactly the type of reasoning that I see on this forum over and over from any number of contributors to rationalize both current prices and their supposed future merits.

 

How many were struck of the Indian coin(s) you are talking about and how many real collectors are there for it? The answer to the second is unknown but I can guess the first. There were either a few hundred or at most a few thousand struck of that coin or those coins. If I had access to my Krause manual now I would provide the mintage. In addition to that, there has probably been a combination of attrition where some of these coins were lost or destroyed and many others are likely in lower proof grades because few thought they would ever be worth anything. By contrast, "everyone" knew and knows about the coins that are the subject of this post. So unless someone can provide documented evidence that any large number have been melted, at least 99% still exist and disproportionately in their original state. In other words, there is no analogy whatsoever other than the fact that the comparison is using two legendary personalities.

 

On the 1994 5R, I addressed these in a post once before though it was for the business strikes. The proofs whether the 1994 or 2000 5R I agree are somewhat better "investments" but these are still only "grade rare". Yes, at least they are real collectibles but there is no real rarity. If the buyers pays an actually reasonable price, then yes, they may make a profit but unlikely otherwise.

Share this post


Link to post
Share on other sites
JohnBenn
If you are going to make an analogy, could you actually make one that is valid or at least explain how it is one? Not trying to pick on you but this is exactly the type of reasoning that I see on this forum over and over from any number of contributors to rationalize both current prices and their supposed future merits.

 

How many were struck of the Indian coin(s) you are talking about and how many real collectors are there for it? The answer to the second is unknown but I can guess the first. There were either a few hundred or at most a few thousand struck of that coin or those coins. If I had access to my Krause manual now I would provide the mintage. In addition to that, there has probably been a combination of attrition where some of these coins were lost or destroyed and many others are likely in lower proof grades because few thought they would ever be worth anything. By contrast, "everyone" knew and knows about the coins that are the subject of this post. So unless someone can provide documented evidence that any large number have been melted, at least 99% still exist and disproportionately in their original state. In other words, there is no analogy whatsoever other than the fact that the comparison is using two legendary personalities.

 

On the 1994 5R, I addressed these in a post once before though it was for the business strikes. The proofs whether the 1994 or 2000 5R I agree are somewhat better "investments" but these are still only "grade rare". Yes, at least they are real collectibles but there is no real rarity. If the buyers pays an actually reasonable price, then yes, they may make a profit but unlikely otherwise.

 

These are Indian First Day Covers with no coins, unlike our 1994 FDCs. Please see my edit. I need a nap:hm:.

Share this post


Link to post
Share on other sites
jwither

Thanks for the clarification. I agree the 1994 proofs are somewhat better but I still consider it an "apples to oranges" comparison. The personalities are comporable but the quality and number of survivors are almost certainly not.

Share this post


Link to post
Share on other sites
jwither

Out of curiosity, I just checked the census for the coins covered here and the populations are even higher than what I thought. Here is what the NGC census shows. I did not check PCGS since in the past, it has been immaterial..

 

2008 Mandela 5R

Total MS population = 159000+ (up from 133,000+ sometime last year)

MS-66 = 104,000+, MS-67 = 24,000+, MS-68 = 67 (up from 27 per above) and MS-69 = 11 (same as last year)

Proofs = about 900 with over half in PR-69 UCAM

 

1994 Inauguration 5R

Total MS population = almost 12000, up from just under 6500 last year per my prior post

MS-65 = 865, MS-66 = 297 and MS-67 = 50; These numbers have more than doubled per my prior post

Proofs = 2400 with almost 1800 either a PR-68 or PR-69 UCAM

 

2000 Mandela 5R

There are somewhat over 10,000 with about 6500 MS and 4100 proofs

For the proofs, about 1500 are 66 or better and 900 are 67 or better

For MS, 103 in MS-65 and 6 in MS-66

 

Looking at the above data, for all of these coins, I see the possibility that "conditional rarities" and maybe one grade below have some possibility to meet the apparent expectations of the proponents of these coins. But in saying this, mostly at much lower (though still elevated prices) versus today. The 2000 5R proofs, not unless the balance of the 40,000 mintage (if that is actually correct) is no longer mostly available. The 1994 proof inauguration, same comments as the 2000 except that I do not know how many were issued. The 1994 and 2008 circulation strikes, not a chance in the world. The 2008 proofs, yes if the coins are actually low mintage.

 

If the reason is still not clear, then those who do not see it need to consider that in the US, the only modern issue which remotely has this type of profile is the 1995 "W" (West Point mint) American Silver Eagle in proof. The mintage was about 30,000 and likely most still exist in an average grade of PR-68 DCAM. This coin sells for about $3500 in PR-69 DCAM.

 

Yes this coin is possibly more common than the SA proofs, but this must be considered in the context of the much larger US collector population, the fact that ASE is the most popular modern US coin and probably the second overall after the Morgan dollar, and it is silver instead of base metal. There are tens of thousands of collectors for this series, at least.

 

For the proponents of these coins to be correct with the coins profiled here, it is either going to take a stupendous increase in the real collector population, an outsize interest by foreign collectors, an essentially permanent willingness by a disproportionate number of speculators to hold these coins indefinitely and/or a substantial number of permanent non-collectors to want and buy them.

 

So the question then becomes, what reason is there to actually believe that the financial prospects for this outcome are remotely realistic?

 

I can see the majority population in your country retaining an interest in these coins even though i do not expect them to become real collectors, but only with a willingness to pay a nominal price or somewhat above it. I can also see some foreigners buying these coins but once again, not a substantial number who will pay high prices because the demographic group who theoretically has the most interest has no culture of collecting at all. I do not see that anyone can make any plausible case that a substantial number of non-collectors are going to find these coins so compelling that they will be willing to pay exorbitant amounts simply for a higher number on a piece of plastic. It is disproportionately only going to be speculators who are likely to do that as they are almost certainly doing so now. However, speculators require someone to sell to and eventually, they are going to have to sell these coins to real collectors to make a profit. My prediction is that they are not going to be nearly enough of them to keep what exists today going, no matter how and who promotes them.

Edited by jwither

Share this post


Link to post
Share on other sites
jwither

I just checked the PCGS for the first time. To the above numbers you can add:

 

1400+ 2000 Mandela 5R including 90 in MS-66

15000+ 2008 Mandela 90th BD 5R including 8618 MS-67, 71 MS-68 and 2 in MS-69

The totals for the 1994 Inauguration MS and for all three proofs are immaterial

 

There are two things that immediately stand out from the above data:

 

First, I find it interesting that PCGS has graded such a disproportinate percentage of the better 2000 MS and I admit I do not have an explanation for it. But regardless, I do not believe this coin is "grade rare" in MS-66. It might be so above that since there are none higher now but that does not change the outcome for these coins generically.

 

Second, the prospects for the 2008 are even worse than I thought. With a combined MS-68 population of 138, these coins are not remotely scarce even in this ultra-high grade, especially since common sense better supports that many more likely exist that have not been graded.. My opinion is that there are zero duplicates but if any exist, it is only a few. While this coin's popularity should enable it to sell for what I consider an exorbitant price going forward considering its actual merits and availability, I still do not see that anyone who owns it now is going to be able to make any money off of it unless its current or recent price is much lower than I believe.

 

For example, if the current price is "just" R10,000, that is still exorbitant and I consider it an almost guaranteed financial loser.

Share this post


Link to post
Share on other sites

Please sign in to comment

You will be able to leave a comment after signing in



Sign In Now
Sign in to follow this  

×