Jump to content
Sign in to follow this  
GROOVIE MOVIES

2018 Silver Krugerrand

Recommended Posts

GROOVIE MOVIES

Good day all

 

I've come across an article stating the SA mint plans on striking 2018 silver krugerrand at bullion price to diversify SA's Krugerrand exports. SA falling gold output (though the article mentions 2016 being a bumper crop year, not seen since the 80's in terms of kruger sales) has encouraged the rand refinery to look into marketing bullion silver. That being said, I wonder if South Africa produces enough silver as by product of our gold mining to meet the demand for a international silver bullion coin. One of the main reasons silver is so expensive in SA is that we are not a leading global producers as is the case with gold.

Though I welcome the notion of a krugerrand at silver bullion prices, I can't also help but wonder how it will affect prices on our old silver coinage such as silver rands and crowns which fill the bullion gap in the SA market. 

https://www.businesslive.co.za/bd/companies/mining/2017-08-17-krugerrand-maker-seeks-silver-lining/

regards Robert

Share this post


Link to post
Share on other sites
jwither

It's my belief that the 2017 version of this coin will ultimately be a money loser.  Too many at too high a price to maintain the premiums I have heard described.  If 2018 and subsequent years are struck, it will be even worse, as the novelty effect will vanish and I'd rate the chances of a series of this coinage at current premiums to the 2017 as just above zero.

If the SA Mint intends to strike this coinage regularly, my recommendation is both of the following:

One: Strike it as a proof with a limited mintage, similar the British Brittania, Chinese Panda and Mexican Libertad.  These can be struck in SA using locally sourced silver and might be longer term competitive near the price of the 2017 but only with a much lower mintage, as in less than 10,000.

Two: Strike bullion coins primarily or exclusively elsewhere to source cheaper silver to sell it at a competitive price.  These would need to be sold at nominal premiums to spot, just as the USA ASE or Canadian Maple Leaf.

As for your last question, I don't know.  Currently, I don't see the 2017 silver KR competing with this "junk" silver because of the premiums.  If the silver KR is issued regularly at reasonable premiums, I would expect buyers to prefer it and the coinage you describe to sell for less than melt value.

Share this post


Link to post
Share on other sites
Coin Database

Just my 2c... but, I think the SA Mint will continue to mint the Silver Krugerrand in both Proof and UNC coins. This is a big money-spinner for them and silver is the more affordable coin the average Joe can afford. From the reports I have read in the US, UK and Germany, the 2017 silver Krugerrand was a flying success for the Mint and I see no reason why they would not mint a 2018 version either.

That being said, I agree, initially these coins sold at massive prices. I know of a few sellers who bought proof silver Krugerrands at R1000, or less, and sold them at R13k+ on eBay. This was the fastest way of becoming a millionaire, because there was a massive demand for them. But, prices have come down since, and they are no longer trading at the prices it did from March to August 2017. I believe that the 2017 silver Krugerrand will keep some of its value, especially the graded FDOI's, Early or First release coins, even though these coins sold at crazy high prices.

If the Mint wants to make a success of any further Silver Krugerrand sales from 2018 and beyond, they will need to get them to the market at close to bullion value. If not, I am convinced that sales will fall flat, as most would rather settle for the Silver Eagles.

Share this post


Link to post
Share on other sites
EWAAN Galleries
18 hours ago, Coin Database said:

Just my 2c... but, I think the SA Mint will continue to mint the Silver Krugerrand in both Proof and UNC coins. This is a big money-spinner for them and silver is the more affordable coin the average Joe can afford. From the reports I have read in the US, UK and Germany, the 2017 silver Krugerrand was a flying success for the Mint and I see no reason why they would not mint a 2018 version either.

That being said, I agree, initially these coins sold at massive prices. I know of a few sellers who bought proof silver Krugerrands at R1000, or less, and sold them at R13k+ on eBay. This was the fastest way of becoming a millionaire, because there was a massive demand for them. But, prices have come down since, and they are no longer trading at the prices it did from March to August 2017. I believe that the 2017 silver Krugerrand will keep some of its value, especially the graded FDOI's, Early or First release coins, even though these coins sold at crazy high prices.

If the Mint wants to make a success of any further Silver Krugerrand sales from 2018 and beyond, they will need to get them to the market at close to bullion value. If not, I am convinced that sales will fall flat, as most would rather settle for the Silver Eagles.

Apparently the SA Mint is adjusting all prices - ‘maybe’ they have realized what a rip off they are by charging such ridiculous premiums over the spot price....

 

Share this post


Link to post
Share on other sites
GROOVIE MOVIES

With regards to the 2017 Krugerrand being so highly priced. I don't think the SA mint expected such a backlash from the international community on the premiums. Remember South Africans are used to shelving out R800 - R900 for commemorative 1 ounce crowns, however those crowns are always low mintages. I certainly wasn't surprised when the first silver Krugerrand was released at R600 a pop genuinely didn't think a million was a large number, when compared to how many eagles and kuks are out in circulation. But with annual releases follow on the horizon, the "novelty" is set to wear off as Jwither mentioned. 

I have read previously 480 000 of these 2017 Krugers were earmarked for the US through MCM distributor, 400 000 for Europe, and 120 000 for the remaining global distribution. Not sure if they achieved these sales with the high premiums though.

Another question would be is, would they stop minting of those million krugers if sales stagnate? We have seen this with the mintages of commemorative coins where the official numbers listed on the certificate are many times not met due to lack of interest and minting is just halted. The result being you have a coin with an official mintage of 10 000, but in reality only 3900 coins were struck for example. 

Share this post


Link to post
Share on other sites
GROOVIE MOVIES

The SA mint has just released the 2018 Krugerrand range and a normal circulation silver krugerrand price isn't listed!

At R895 (no surprises) only the silver proof krugerrand is listed in the 2018 range with a maximum mintage of 15900 limited to 15000 as per the certificate of authenticity.

One BOB seller has already put 5 of these coins on auction.

So the question I'm waiting in anticipation  to be answered is, will a normal circulation silver krugerrand be launched at a bullion price?

 

regards Robert

Share this post


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

At R895 (no surprises) only the silver proof krugerrand is listed in the 2018 range with a maximum mintage of 15900 limited to 15000 as per the certificate of authenticity.

Too high a price for the mintage in my opinion.  I'm dubious there are enough local buyers to support the price and it's more common versus what I believe to be more preferred alternatives, such as the Chinese Panda, British Britannia and Mexican Libertad.

Share this post


Link to post
Share on other sites
GROOVIE MOVIES

Good evening all

It seems after much speculation the SA mint will be releasing a silver krugerrand at bullion prices. Though not listed on their website as yet, sellers have already started listing on BOB. As soon as I saw one of these listings, I did an online search and came across one news article dated 13 July (certainly caught snoozing on that one) mentioning the release date of 1 August for the 2018 silver krugerrand and mintages would be depended on sales. On youtube there was mention that official distributors in the US would be offerring this BU (different to the Premium Unc release of 2017) .999 one ounce silver coin for around $18 on pre-order.

I find this news surprising and exciting because if this bullion coin can be offered in the US for only $2 - 3 over spot, it surely means we are likely to get such a offer close to spot in SA. That would be a treat for the SA market, one ounce silver coin for R200 -250. That type of offer would encourage investing and savings at a much more affordable price to the common man or woman.

regards Robert

Share this post


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

Good evening all

It seems after much speculation the SA mint will be releasing a silver krugerrand at bullion prices. Though not listed on their website as yet, sellers have already started listing on BOB. As soon as I saw one of these listings, I did an online search and came across one news article dated 13 July (certainly caught snoozing on that one) mentioning the release date of 1 August for the 2018 silver krugerrand and mintages would be depended on sales. On youtube there was mention that official distributors in the US would be offerring this BU (different to the Premium Unc release of 2017) .999 one ounce silver coin for around $18 on pre-order.

I find this news surprising and exciting because if this bullion coin can be offered in the US for only $2 - 3 over spot, it surely means we are likely to get such a offer close to spot in SA. That would be a treat for the SA market, one ounce silver coin for R200 -250. That type of offer would encourage investing and savings at a much more affordable price to the common man or woman.

regards Robert

The link below contains an example of retail silver bullion prices.  As of Friday, apparently the close price was $15.53.  As I write this post, this firm's bid and ask prices on the ASE are $16.03 and $17.53 respectively.  It is somewhat more for the 2018 but silver "stackers" don't care about the date and this premium will disappear in the near future.  For the Canadian Maple Leaf, $15.83 and $17.03.  I haven't looked in a long time but the spreads have finally come back to "reasonable".

For other silver bullion NCLT, the only one with a wider spread than the ASE is the Mexican Libertad.  Others listed include the Britannia, Australian Kangaroo and the Austrian Philharmonic, all with lower spreads than the ASE.  I didn't see the Panda listed.

I don't know what the price spreads in the USA mean for buying the 2018 silver KR in South Africa.  I can tell everyone here though that anything much more than $18 with silver spot around $15.50 would make it uncompetitive in the United States.  In other words, sellers likely cannot get away with charging any more here.  https://www.golddealer.com/product-category/products-2/bullion/silver-bullion-coins-and-bars/

Share this post


Link to post
Share on other sites
GROOVIE MOVIES
Posted (edited)
11 hours ago, jwither said:

I don't know what the price spreads in the USA mean for buying the 2018 silver KR in South Africa.  I can tell everyone here though that anything much more than $18 with silver spot around $15.50 would make it uncompetitive in the United States.  In other words, sellers likely cannot get away with charging any more here. 

The thought crossed my mind and it's going to all come down to mintages. If there will be lower mintages on the scale of 2 - 300 000, then I can see justification for a dollar or two over spot. One also has to take into consideration the shipping costs, that already puts the krugerrand at a competitive disadvantage. To be honest, I'd really be surprised if the SA mint tried to kick out millions annually such as the US mint does on the silver eagle. We just don't have the supply to meet that production. Our silver is a by product of gold production and that has been dropping. I think we dropped to 8th place at 140tons in terms of gold production for 2017, compared to China at 426 tons, and Australia and US at 295 & 270 tons respectively. 

In actual fact it's been mentioned that the reason the SA mint introduced the silver and platinum krugerrands to begin with was to diversify away from gold which has been in decline for decades. Though I know if more that a million silver ounces annually is possible. 

Even though a $18 ounce of silver wouldn't be seen as competitive internationally, this is a game changer for the South African market. I mentioned before the only way you can get silver close to spot price in our market is in the form of what you would call "junk silver" and bullion bars that are a kilo or more in weight. The drawbacks of these is the common man unfamiliar with coins isn't interested in collecting old silver and the fact that after 76, silver rands were replaced by nickel makes it more confusing to them. Even gold bullion dealers keep going on about the date. I once told a gold shop owner, you don't need to look at the date if you know how silver looks and feels. Many people don't. 

The other drawbacks are kilo bars are too expensive for the average joe, and silver eagles along with beasts, Canadian maples, Australian dollars are all imported and thus sell for inflated prices to accommodate import costs and duties. You'd be lucky to get a normal silver eagle for $23 in our market at current exchange. So if played well, this krugerrand can definitely revolutionise the South African silver market.

regards Robert

Edited by GROOVIE MOVIES

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
Sign in to follow this  

×