Jump to content
GROOVIE MOVIES

The silver Krugerrand, mintage, price and commemorative collectable

Recommended Posts

GROOVIE MOVIES

I haven't seen a post dedicated to the topic of the 50th anniversary silver krugerrand aside from mentions in other topic posts, so I thought I'd start one seeing as this being one of the most hyped coins of 2017. Yes it's true, you'd have to have lived under a rock not to have heard about the long awaited silver krugerrand, as it has drawn quite the media attention through news articles, social media and coin forums.

The coin has more often than not sparked controvercial debates amongst the bullion investor community, especially on social media like Youtube and coin forums like Kitco, with regards to it's high price and high mintage. I think the silver stacking/investor community was most vocal in their review of this coin as they were probably most excited about the release, expecting an afordable silver bullion coin as the gold krugerrand as pioneered and provided for so long. 

I would like to challenge the views the investor community have on this piece with regards to price and mintage. The problem is that they are looking at this coin as a standard silver bullion coin and it has already been well documented that this is a collector coin to commemorate the 50th anniversary of the krugerrand. No where has the South African Mint indicated that this silver piece will be an annual release, and personally I don't think silver has that much of an investor market in South Africa to warrant striking an annual bullion coin in high mintages comparable to that of the US and Australian mints.

I admit the price was hard to swallow at R600 from the SAmint for an ounce of silver, but it's not that much more than the standard R2 commemorative crowns released in low mintages annually (key word being low mintages). Anybody could be put off by the innitial price being twice of thrice bullion value, though I have mentioned this is not a standard bullion coin. The price was further inflated in the international market due to high shipping costs and distributor mark ups, not to mention the reshipment of the US lot that had to be replaced due to damages. This along with the high mintage of 'One of a million' has brought on cristism and backlash from the silver stacking community. 

All but everybody has dismissed the silver krugerrand as a dud or flop of an investment, though I'm inclined to disagree. I see huge potential in this piece and I'd go further on to say, that  I see a winning horse or may I say springbok in future. A million mintage is not that high, comparable to that of the 1952 five shilling and when you consider it globablly distributed, the idea becomes more sensable. The krugerrand is after all one of the world's most well known and recognised bullion coins (much more so than the disney coins that one person once said they would rather invest in due to the low mintage after discrediting the silver krugerrand). 

I see a winning springbok in the 50th anniversary silver krugerrand, because it's not only collectors and numistmitors that will be after them but I think all those german gold investors would be keen on them as well. If you have the entire gold kruger set, I'm sure you'd want this commemoritive piece as well? And the silver stacking community wants these pieces as well, don't let all the negative reviews fool you. They want it bad enough to be very vocal about it and once they see the price refuse to fall to bullion spot price, they will jump on the band wagon and cough up high premium prices. This is afterall a premium uncirculated coin, and what a beautiful one at that!

Share this post


Link to post
Share on other sites
dcdoberman

This super hyped up bullion coin is only worth its bullion content ,now and into the rest of eternity, if you believe in some other reality you should take a bite of reality before it bites you.

As for the fact that these bullion coins are currently being bought for more than bullion it only proves that a sucker is born ever minute.....

If you think it's pretty and deserves a premium,  well that's just like your opinion man.

I'm sorry if I hurt someone's feelings ,but this has to be said I feel in order to try and protect the real hobby and newcomers to numismatics. 

Regards

Share this post


Link to post
Share on other sites
Manfred1
21 hours ago, dcdoberman said:

As for the fact that these bullion coins are currently being bought for more than bullion it only proves that a sucker is born ever minute.....

Agree 100% ... i will rather buy any AME, Maples or Kookaburas

Have you seen the British new coins? (Queens beasts) .... note - without the "R"

Share this post


Link to post
Share on other sites
jwither
On ‎10‎/‎15‎/‎2017 at 4:34 AM, dcdoberman said:

This super hyped up bullion coin is only worth its bullion content ,now and into the rest of eternity, if you believe in some other reality you should take a bite of reality before it bites you.

As for the fact that these bullion coins are currently being bought for more than bullion it only proves that a sucker is born ever minute.....

If you think it's pretty and deserves a premium,  well that's just like your opinion man.

I'm sorry if I hurt someone's feelings ,but this has to be said I feel in order to try and protect the real hobby and newcomers to numismatics. 

Regards

You summed up my sentiments.  A mintage of one million is low?  Give me a break.  There is also no comparison to the 1952 Crown because the survival rate on the silver KR will approach 100% decades from now while the 1952 Crown's is very low in a quality most collectors want to buy, as in probably less than 10,000..

The last time I checked the NGC census, the count was about 87,000.  If every single other one was melted and ceased to exist forever, it would still be incredibly common as a collectible coin.  For anyone who doesn't believe me, go look at the NGC and PCGS population counts for the US Morgan dollar where a few have similar or higher totals. This is a real collector coin.  Now go look at the prices.

After this reality check, does anyone still believe it has financial potential?

In a prior post, I mentioned that I thought the silver KR would sell well to foreign buyers.  However, I wasn't aware of the premium.  At $50+ USD, it isn't going to be competitive longer term and I have no idea who is buying all the graded coins.  Presumably uninformed "investors".

Share this post


Link to post
Share on other sites
Mike Klee

To illustrate the fact that foreign buyers aren't prepared to pay the huge premium demanded for the silver Krugerrand, I had an enquiry today from a top-notch game reserve in Alicedale, Eastern Cape. An American guest staying there had wanted to buy some silver Krugerrands, but was so horrified by the price (R750) quoted at a well-known Port Elizabeth coin dealer that he thought that they had made a mistake and was asking elsewhere. When I confirmed the situation re the selling price over the actual much lower silver bullion value, I was advised that the American would be returning to the USA without any silver Krugerrands.

Share this post


Link to post
Share on other sites
GROOVIE MOVIES

Good day all.

I thought it would be good to look back and reflect on how the 2017 silver krugerrand has performed to date, and if it's outlook for the future has changed. 

It's been 9 months since I posted this article and over this time I've come across a few interesting claims, statements and speculations. One of these statement that I read somewhere quite early after the coin's release was of the million, 480 000 was earmarked for the US market through MCM, 400 000 was earmarked for Europe and the remaining 120 000 coins for global distribution including the South African market. Now don't ask me where I got these figures as I read them somewhere and can't cross refrence them. They might have been an ideal distribution plan, pending the success of the coin's release, though this ideal was probably never realized, if one takes statements of the current mintage into account. But I'll come back to this.

Let's look how the price has been holding up. The release price from the SA mint was R600 (about 3x spot) for a premium uncirculated coin in capsule with COA only, and is still on offer at this price (yes they still have stock). For my first and only coin I paid R750 including delivery and leather pouch (probably pleather, but it looks decent) from Cheeky Mongose, an official trader on the SA market. This I regard as a good deal as how often do you get a coin in the secondary market on bidorbuy for about the selling price at the SAmint, and for those who say I paid R750 for an ounce of silver I say I sleep very well at night thank you. 

It wasn't long, around black friday when you saw specials on bidorbuy from a certain seller who put up a 100 coins for R495 each! Cheaper than the official price, though delivery cost of R120 would bring you back inline if you purchased one coin. The idea was to buy 10 and spread out your delivery fee! And what a hit it was a hit as the Silver krugerrand was among the top selling products across all catergories on BOB on black friday. After November this special price would become this seller's standard price, which raised thoughts as to whether people where getting these coins at a discount from the mint, as how could sellers sell them under cost? But come on, I work in retail, so I should know better. Many times you sell your KVI's like coffee and baked beans at or below cost, to attract customers to your stores. 

Another crazy reduced offer was a seller with no previous ratings record come to the party with about 40 of these coins at about R400 each if I remember correctly. But the pictures told a tale of coins scuffed up and without capsules. This listing stayed for a few weeks with no interest, though in the end I think somebody purchased them. 

For a long time the best deals on BOB were R495 for a buy now coin, though every week auctions went into the mid R500 range (people get emotional when bidding). Then this week (which prompted me to update this post) I saw Cheeky Mongose (official trader) put up a special of R450 per coin incl leather pouch (this tugged at my heart, as I would like to have jumped on), prompting other sellers to match this special excluding the pouch which I must say makes the difference. 

So as predicted by many the price of the silver krugerrand on the open market seems to be dropping when it comes to sales ans specials, though the official SA mint price remains the same, and as mentioned previously they seem to have more than enough stock, which indicates sales have been slow. Afterall the 2018 has already been released and the 50th anniversary a distant memory as the months slip by. Another interesting point and I haven't been able to confirm this, but apparently the declared mintage by the SA mint for the 2017 silver krugerrand is 630 000! Now if true, it will come as no surprise as many coin mintages, especially silver coins released by the SA mint differ from the official figure stated on the COA that comes with the coin. This is nothing new and I have always assumed the COA to be an indicator of a maximum mintage, largely depended on sales. However this being said, even though I suspected a lower mintage especially after the negative backlash, having 630 000 does fall short and is a condridicton to the one of a million marketing campaign. 

In closing I still maintain this coin will be a wining springbok as I stated 9 months ago and here is why. The SA mint has stuck to there guns with this being a once off commemorative release. No uncirculated silver krugerrand was released this year, though it seems a proof coin limited to a mintage of 15 000 will be a annual release and at a much higher price. And with a once off mintage of far short of a million for global distribution, how can one cry shame? From the ideal distribution plan mentioned previously it is evident that a million can easily be spread out over different markets. And then finally even if this coin were to be accepted as a bullion coin, how can a million be considered a large mintage when other bullion coins such as the ASE are minted in tens of millions annually (not taking into account recent drop in sales). How many ASE are there in the world today when the first issue started out with 5mil in 1986 icreasing annually and peaking at 30 - 40 mil around housing collapse in th US? Then there is the price at three times bullion value, which I believe will level off in the long term future, once the coin is properly distributed and it becomes apparent how scarce (I expect the thrashing) the coin is in comparison to say American Silver Eagles or even Kooks, another high priced coin with a lower annual mintage, but when taken into account how many are out there in the market, the number increases substantially. 

Even with the drop in price I see this coin doing well as an investment or commemorative collectable in future. All the better to get it at those discounted prices that are common place these days.

regards Robert

 

 

Share this post


Link to post
Share on other sites
jwither
Posted (edited)

Where can I start in my reply?  

One: The American Silver Eagle (ASE) is predominantly a bullion coin bought by non-collectors, just as is and will be overwhelmingly true for the silver KR.  The only ASE which have a numismatic premium include:

NGC and PCGS MS-70 or PR-70.  For a few of the earlier dates (ASE dates to 1986), in slightly lower grades since the ASE wasn't collected as a numismatic coin initially.  "Monster" toned coins.  A very few die varieties.

Two: A mintage of 630,000 with the prospect of the coin being struck into future years indefinitely as the gold KR has been since 1967 isn't remotely low.  It's effectively as common as dirt as a collectible.  My prior guesstimate has been maybe as many as 10,000 real collectors in your country with several thousand more predominantly financial buyers purchasing numismatic and RSA commemorative coins as "investments".

Even if my estimates are far too low, there is no remote possibility that a collector base composed mostly or substantially of real collectors will ever exist to absorb even a noticeable fraction of the supply for this coin (the 2017) or future (2018 and later) years.  The South African market cannot remotely absorb the supply and foreigners have essentially zero affinity for it, except at minimal premiums to the spot price.  The 2017 is selling at current prices only due to marketing and likely because any actual collectors might not know it will be issued in future years.  It is currently a novelty which will lose it's appeal when buyers realize it will be struck indefinitely.

Three: If my comments in #2 above seem hard to believe, name me one coin which is actually bought as a collectible coin (as opposed to bullion) by anywhere near 630,000.  No one can do so because no such coin exists.  Even at 100,000 (slightly over 15% of this mintage), it can only be realistically applied to maybe US Lincoln wheat cents and Morgan dollars.  But even here, it's at immaterial prices because no one which exists with this supply will ever have the appeal where collectors will have sufficient affinity to pay a meaningful price for it.

The TPG population counts for the most common Morgan dollars (the most common US "investment" coin) number to almost 400,000 with a low proportion of duplicates.  If my estimate of the active US collector base is ballpark accurate (approximately 2MM), even if half of this supply were owned by actual collectors, it would require one in 10 to own it.  Since this ignores ungraded coins which possibly exceed those graded, in higher proportion.

I don't see any reason to believe that one in 10 or one in five US collectors own one of these coins.  This should make it evident that there is equally no prospect for the silver KR to be mostly owned by actual collectors either.  This is necessary because non-collectors have no affinity for the silver KR whatsoever as a collectible and will sell it on any noticeable price increase, as I expect them to do eventually when it almost certainly loses more value.  

It's reasonable it will eventually appreciate due to the bullion content but not otherwise.

Edited by jwither

Share this post


Link to post
Share on other sites
GROOVIE MOVIES
7 hours ago, jwither said:

Where can I start in my reply?  

One: The American Silver Eagle (ASE) is predominantly a bullion coin bought by non-collectors, just as is and will be overwhelmingly true for the silver KR.  The only ASE which have a numismatic premium include:

NGC and PCGS MS-70 or PR-70.  For a few of the earlier dates (ASE dates to 1986), in slightly lower grades since the ASE wasn't collected as a numismatic coin initially.  "Monster" toned coins.  A very few die varieties.

Two: A mintage of 630,000 with the prospect of the coin being struck into future years indefinitely as the gold KR has been since 1967 isn't remotely low.  It's effectively as common as dirt as a collectible.  My prior guesstimate has been maybe as many as 10,000 real collectors in your country with several thousand more predominantly financial buyers purchasing numismatic and RSA commemorative coins as "investments".

Even if my estimates are far too low, there is no remote possibility that a collector base composed mostly or substantially of real collectors will ever exist to absorb even a noticeable fraction of the supply for this coin (the 2017) or future (2018 and later) years.  The South African market cannot remotely absorb the supply and foreigners have essentially zero affinity for it, except at minimal premiums to the spot price.  The 2017 is selling at current prices only due to marketing and likely because any actual collectors might not know it will be issued in future years.  It is currently a novelty which will lose it's appeal when buyers realize it will be struck indefinitely.

Three: If my comments in #2 above seem hard to believe, name me one coin which is actually bought as a collectible coin (as opposed to bullion) by anywhere near 630,000.  No one can do so because no such coin exists.  Even at 100,000 (slightly over 15% of this mintage), it can only be realistically applied to maybe US Lincoln wheat cents and Morgan dollars.  But even here, it's at immaterial prices because no one which exists with this supply will ever have the appeal where collectors will have sufficient affinity to pay a meaningful price for it.

The TPG population counts for the most common Morgan dollars (the most common US "investment" coin) number to almost 400,000 with a low proportion of duplicates.  If my estimate of the active US collector base is ballpark accurate (approximately 2MM), even if half of this supply were owned by actual collectors, it would require one in 10 to own it.  Since this ignores ungraded coins which possibly exceed those graded, in higher proportion.

I don't see any reason to believe that one in 10 or one in five US collectors own one of these coins.  This should make it evident that there is equally no prospect for the silver KR to be mostly owned by actual collectors either.  This is necessary because non-collectors have no affinity for the silver KR whatsoever as a collectible and will sell it on any noticeable price increase, as I expect them to do eventually when it almost certainly loses more value.  

It's reasonable it will eventually appreciate due to the bullion content but not otherwise.

Good morning

I totally agree that with you where you say it is predominantly bullion investors over numismatists that purchase coins like the silver KR, and it is these very same "stackers" that shelve out big money for high premium coins. By the looks of all the videos on youtube, posts in forums and on social media, it would seem every bullion collector has a semi-numismatic collection or at least one coin. This is because even bullion collectors realize you cannot have all your eggs in one basket, hoping the spot price will rise some day. 

If you say that the South African market of collectors, even investors is not large enough to absorb a mintage of 630 000, then I agree with you fully again. But also keep in mind SA is not the biggest market for the gold krugerrand, it is Germany and the rest of Europe, so I don't see why the silverKR can't be successful there as well. The SA mint is well aware of this as it was Germany they first choose to kick off the 50th anniversary krugerrand campaign.

Then thirdly, I can't think of any bullion collectors coin with a high premium and large mintage save for the Chinese panda perhaps. Now I'm aware that the Chinese panda is a much popular investment coin and has a large proven market share and some would say there is just no comparison. It has been around since the early 80's and is iconic in its own right. However I just looked one website Apmex as an example, and found the 2016 Chinese silver panda with a mintage of 8million and NGC has it listed on their website as 247 000 graded of which 223 000 fall into the MS70 bracket. This coin is currently listed at Apmex for a whopping $24.33, well above spot price for such a high mintage coin. And 8 million seems to be the average annual mintage for the silver panda which historically has proven to be a high premium but also high yielding investment.

I understand that the krugerrand might not be appealing to all and many find the design unattractive. I personally love the reverse design, whether it's on the 5 shilling crown, 1953 pound or 1980 tenth of an ounce KR but I'm biased as the springbok is a South African symbol. Jwither I think you need to jump into the deep end and get yourself one of these overpriced silver krugerrands (not the proof). You'd be astonished at how it grows on you!

regards Robert

Share this post


Link to post
Share on other sites
jwither
5 hours ago, GROOVIE MOVIES said:

If you say that the South African market of collectors, even investors is not large enough to absorb a mintage of 630 000, then I agree with you fully again. But also keep in mind SA is not the biggest market for the gold krugerrand, it is Germany and the rest of Europe, so I don't see why the silverKR can't be successful there as well. The SA mint is well aware of this as it was Germany they first choose to kick off the 50th anniversary krugerrand campaign.

It is easier for me to respond in multiple posts, so here is the first.

The point you are missing is that the buyers in other countries who buy the gold KR aren't buying it as a collectible.  They are primarily buying it as bullion, even though the premium is noticeable.  Now, I will grant you that the silver coin is a lot cheaper and therefore affordable which makes an above average premium for a silver bullion coin more realistic.

However, there is no reason to believe that real collectors in Germany or the rest of Europe have any meaningful affinity for this coin in large numbers.  You haven't been on this forum long but if you read my prior posts, I have made this point many times.  In the past, contributors here have exaggerated the supposed appeal of South African coins (mostly ZAR) to foreigners.

It doesn't exist as I explained through seven observations in a prior post.  South African collectors don't have any noticeable affinity for the coinage from elsewhere.  There is zero verifiable evidence that they are doing so in any noticeable number (if at all) at prices which are remotely comparable to South African coinage.  For those who don't believe me, go look at the listings on BoB or on dealer websites.

So if South Africa collectors aren't doing it, why would hardly anyone else?  The primary exception to this principle are US collectors but that's mostly because an American can easily buy and sell practically any coin right here in the USA and all other coins are so much cheaper than US coins.  However, Americans aren't about to pay much higher prices than now for a silver KR for the reasons I have given you.

There is a much better reason to believe that this coin is being marketed by the distributors (such as Modern Coin Mart, aka MCM) predominantly to "investors", not real collectors.  This is even more true of "70" graded coins which I believe have sold for as much as $500 USD though I suspect it's far less now due to the population counts. 

Financial buyers have either a low or absolutely no affinity for collecting.  As I explained before, a low to no affinity for collecting means that the holding period is (much) shorter which concurrently means that the supply available for sale at any point in time is (much) larger resulting in a lower price.

Share this post


Link to post
Share on other sites
jwither
5 hours ago, GROOVIE MOVIES said:

Then thirdly, I can't think of any bullion collectors coin with a high premium and large mintage save for the Chinese panda perhaps. Now I'm aware that the Chinese panda is a much popular investment coin and has a large proven market share and some would say there is just no comparison. It has been around since the early 80's and is iconic in its own right. However I just looked one website Apmex as an example, and found the 2016 Chinese silver panda with a mintage of 8million and NGC has it listed on their website as 247 000 graded of which 223 000 fall into the MS70 bracket. This coin is currently listed at Apmex for a whopping $24.33, well above spot price for such a high mintage coin. And 8 million seems to be the average annual mintage for the silver panda which historically has proven to be a high premium but also high yielding investment.

I understand that the krugerrand might not be appealing to all and many find the design unattractive. I personally love the reverse design, whether it's on the 5 shilling crown, 1953 pound or 1980 tenth of an ounce KR but I'm biased as the springbok is a South African symbol. Jwither I think you need to jump into the deep end and get yourself one of these overpriced silver krugerrands (not the proof). You'd be astonished at how it grows on you!

regards Robert

The differences between the silver KR and the Chinese Panda are these two, and this is irrespective of the relative scarcity:

The domestic collector base for the Panda is in China and it is much larger, both today and potentially.

Chinese collectors have an affinity for the Panda because it is their own coin, just as Americans do for the ASE and its gold and platinum counterparts.  They don't have the same affinity for the silver KR now and there is no reason this will noticeably change in the future either..

The total numbers you listed are not directly comparable because the Panda (like the ASE) has been issued over many years, back to 1982 is my recollection.  Many of those who are actually buying it as a collectible are attempting to have one of each date for one or more denominations to complete or maintain their sets.

I believe your sentiments on the Springbok design are the consensus.  It is a favorably viewed design.  The Kruger portrait is also widely recognized and to my knowledge, reasonably liked.  That's probably why foreigners primarily collect ZAR in any noticeable number.  Otherwise, it would have about the same preference as Union.

However, paying $24.33 is one thing and paying your unstated future price for a silver KR is another entirely.

Share this post


Link to post
Share on other sites
jwither
5 hours ago, GROOVIE MOVIES said:

I totally agree that with you where you say it is predominantly bullion investors over numismatists that purchase coins like the silver KR, and it is these very same "stackers" that shelve out big money for high premium coins. By the looks of all the videos on youtube, posts in forums and on social media, it would seem every bullion collector has a semi-numismatic collection or at least one coin. This is because even bullion collectors realize you cannot have all your eggs in one basket, hoping the spot price will rise some day. 

I  have never watched the YouTube videos you reference but I am familiar with the profile you describe.

Most ASE and silver equivalents such as the KR aren't owned by collectors at all.  Even with the proof ASE which is issued as a collectible, there is no reason to believe it's mostly bought by collectors.  The mintages are in the range of 500,000.  I had always wondered who owned all these coins since it made no sense for silver "stackers" to buy it in large quantity due to the premium.  Recently, I read that it was purchased by financial advisory firms for inclusion in managed retirement accounts.  I cannot confirm it but it makes sense, as I cannot think of any other source to absorb the supply at the prior premiums.  I also read that this demand had decreased noticeably recently which is why the premiums have declined substantially.  This last bit is conjecture on my part but it's a reasonable explanation.

The ASE is probably collected predominantly by low budget silver "stackers".  Yes, there are many of them in America but I don't believe anywhere near 600,000.  As a complete guess, I'd say that maybe as many as 250,000 are "collecting" the ASE in some format.  A very low proportion (maybe as many as 1%) are willing to pay the current premiums for a "70", toned coins and the few recognized die varieties.  If 2500 is "ballpark" accurate, it's larger than most series but not enough to noticeably impact the price for most of these ASE.  The exception is the proof 1995-W valued at about $3000 in PR-69.  With a recorded mintage of 30,125 (or 30,152), the buyers must be relatively affluent.

Many of these ASE collectors will maintain more or less complete sets of the bullion and proof version.  It's also my opinion that they predominantly buy other "investment" coins such as the Morgan and Peace dollar (both crown sized coins) and pre-1933 US classic "generic" gold; mostly the $10 and $20 common dates.  A minority also buy other numismatic coins but it's my belief that they don't have much of an impact on the market price of very many other coins.

I also suspect that most of these low budget ASE (and similar) collectors are younger..  This improves the future prospects (somewhat) because I don't believe most older collectors (I am 53) consider an ASE or silver KR a real coin at all.  I am one of them and would never pay any noticeable premium for this type of "coin".  This makes a difference because older collectors spend most of the money on the "hobby".

Share this post


Link to post
Share on other sites
GROOVIE MOVIES

I can see the holes in the stratergy of the SA mint. It wanted to expand it's market share from gold to silver by releasing a collector coin into a bullion market. This was a ambitious venture (dumping 480K highly priced coins in the US and 400K in Europe) into already saturated matured markets and looking at the full picture, this stratergy would have been better aimed at developing the South African silver market, which is near non existant compared to the gold investor market.

The reason ASE appeal to younger "stackers" in the States is much more to do with hedging against inflation than investment. I read somewhere that the leading jobs in the US are truckers and store cashiers. Where the big Mc was previously a part time job to pay for college text books, now they have become permanent jobs to pay off college loans for text books. Rememer there was a time when everybody had life savings? Life savings meaning nothing to my generation today, youngsters living a life style of consumerism. ASE are seen as a perfect vehicle for saving to so many younger lower income earners that have woken up from this life style.

This is the route the SA mint should have taken in their stratergies and campaigns. Developing a culture of saving in the form of bullion locally with a silver krugerrand at bullion prices. I think the chinese are the only people who still save, though they have been pushing towards consumerism. I once read that it was common for the chinese save 50% of their salaries and wages. Perhaps that is why the silver panda is so popular over there. 

regards Robert

Share this post


Link to post
Share on other sites
jwither
Posted (edited)

Silver "stackers" are invariably gold and silver "bugs".  By "investment", I mean they bought it for financial reasons.  The ASE and most other NCLT is overwhelmingly not bought as a collectible and a substantial proportion of the collector base don't view it as real coins at all, though this is much less so among younger buyers.

My assumption is that the reason the SA Mint has to charge a higher premium versus other NCLT such as the ASE is that your country doesn't have any noticeable local silver supply.  I haven't heard that China has any either but don't know the specifics.  Is the silver KR even struck in South Africa? 

For it to be a commercially successful coin in the secondary market as a collectible, the mintage should have been much lower, as in maybe 10% or less of the actual mintage maximum.  That's a far more realistic mintage to support the initial issue price in the secondary market, at maximum.  Real collectors never buy their coins in a complete vacuum and a lower mintage is necessary at the issuing price point to keep it competitive even in your country versus other coins in the same price range, an example being common ZAR in AU-58 or some KGV Union even in MS.

With the existing mintage, my prediction is that the SA Mint and the distributors who sold it initially into the secondary market will be the overwhelming winners.  Next will be NGC (and PCGS) who will rake in the grading fees at zero risk.  Lastly, those who "made" a "70", especially early.  Most everyone else is likely to end up as a financial loser absent a big run up in the spot price.

I don't know what the mintages are for other NCLT without checking but silver KR has to compete with the Chinese Panda, Australian Koala and several others from the Perth Mint, numerous NCLT from Canada, Britannia from the UK and Mexican Libertad.  All of these coins have established "collector" bases which a silver KR does not.  Granted the silver KR has the benefit of the novelty effect but that's not enough for such a common coin.

As for the proof version, if the intent is to strike it annually with a mintage in the vicinity of 15,000, that's not really low either.  Compared to at minimum the Libertad and Britannia, it's predominantly (if not usually) more or a lot more.  It might be competitive but that will depend upon the price.

I can see the proof version as competitive somewhere between $50 and $100 USD but with little prospect of long term appreciation.

Edited by jwither

Share this post


Link to post
Share on other sites
GROOVIE MOVIES
10 hours ago, jwither said:

My assumption is that the reason the SA Mint has to charge a higher premium versus other NCLT such as the ASE is that your country doesn't have any noticeable local silver supply.  I haven't heard that China has any either but don't know the specifics.  Is the silver KR even struck in South Africa? 

For it to be a commercially successful coin in the secondary market as a collectible, the mintage should have been much lower, as in maybe 10% or less of the actual mintage maximum.  That's a far more realistic mintage to support the initial issue price in the secondary market, at maximum.  Real collectors never buy their coins in a complete vacuum and a lower mintage is necessary at the issuing price point to keep it competitive even in your country versus other coins in the same price range, an example being common ZAR in AU-58 or some KGV Union even in MS.

As for the proof version, if the intent is to strike it annually with a mintage in the vicinity of 15,000, that's not really low either.  Compared to at minimum the Libertad and Britannia, it's predominantly (if not usually) more or a lot more.  It might be competitive but that will depend upon the price.

I can see the proof version as competitive somewhere between $50 and $100 USD but with little prospect of long term appreciation.

SA mines silver as a by product to gold, but is not a leading miner as the South and Central American countries. The silver Krugerrands are struck in South Africa, this has been mentioned official "issued in SA only" but whether they are struck from SA silver or imported silver is another question. It has been mentioned in the marketing campaign that the KR is struck from "the very best silver available", though I doubt any silver was imported. 

On the topic of the proof version, the 2017 release sold out very fast. Within a short period it was being sold with massive markups in the secondary market. The official release price was around R895 if I'm not mistaken and within weeks you could only pick it up in the secondary market for inflated prices, some asking as high as double at R1600. The same unfortunately didn't hold true for the 2018 proof release which believe it, is still in stock on the SA mint website for R895. Already a slow start, undoubtedly brought on by the slow down in marketing campaign.

regards Robert

Share this post


Link to post
Share on other sites
jwither
6 hours ago, GROOVIE MOVIES said:

On the topic of the proof version, the 2017 release sold out very fast. Within a short period it was being sold with massive markups in the secondary market. The official release price was around R895 if I'm not mistaken and within weeks you could only pick it up in the secondary market for inflated prices, some asking as high as double at R1600. The same unfortunately didn't hold true for the 2018 proof release which believe it, is still in stock on the SA mint website for R895. Already a slow start, undoubtedly brought on by the slow down in marketing campaign.

regards Robert

Yes, I find it easy to believe that the 2018 has not sold out and is still being offered by the SA Mint if the mintage is near 15000.  This demonstrates that there isn't a sufficient collector base in your country at the issue price.  I don't think R895 is that much (though I don't think it will ever be worth much more adjusted for price changes) but apparently it's above the price point of most collectors in your country.  I attribute the difference between the 2017 and 2018 to the novelty effect.

In the US, I believe proof ASE is "struck to order".  Proof ASE are struck for as many or few as will buy it.  The same applies to some commemorative coins which are mostly silver crown sized $1 and the approximately quarter sized $5 gold.  I presume that like the US, there is also a noticeable non-collector buying though less than here.  In the US, many non-collectors buy this stuff as gifts or at least did in the past.  Combined with speculator demand, that's why the mintages vastly exceed the real collector demand.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×