Investors misled on ‘rare’ coins
23 July 2012 | JULIUS COBBETT
The dealer has exaggerated the rarity of certain R5 coins.
Such coins have been sold to investors for very high prices. A simple investigation has revealed that the coins are considerably less rare than SA Coin would have its clients believe.
CitiBusiness recently reported on the case of investor Wayne Potgieter. Acting on the advice of SA Coin broker Patti du Plessis, Potgieter bought two “rare” R5 coins at R50 000 each. Potgieter made the purchase in March this year. However, it did not take him long to wonder if SA Coin had ripped him off.
Potgieter’s suspicions were aroused when he saw the same coins available on auction website Bid or Buy for half of what he paid.
SA Coin is a private company with two directors: Mark Andersen and Mariam Bashir.
Potgieter bought two “proof” 2008 Nelson Mandela coins that were minted to celebrate the former president’s 90th birthday.
Proof coins are of a higher quality than ordinary coins. They are made with special equipment and can be distinguished from ordinary coins by their sharper appearance. Proof coins are collectable because they are usually minted in relatively small numbers.
The coins sold by SA Coin are rated according to their quality by coin graders. The highest possible grade a coin can achieve is 70. Once a coin is graded, it is sealed in a plastic case.
Potgieter’s coins were graded 69, just one level below perfect. They were graded by ANACS, one of three coin graders whose work is recognised worldwide.
Potgieter was told that his coin was one of just 5 000 proof coins.
Furthermore, SA Coin’s spokesman Eion Blignaut informed this journalist that there are only 795 proof coins that have been graded 69. This statement is patently false. It was easily disproved with a visit to each of the three recognised coin graders. The graders’ websites revealed that 1948 proof coins have been graded 69. ANACS accounts for 1 470 of these and NGC the remainder. The third grader, PCGS, has none.
Blignaut has failed to explain how SA Coin arrived at its figure of 795, despite being invited to do so.
But the controversy does not end there. It is questionable whether Potgieter’s coins are even genuine proofs.
CitiBusiness asked the SA Mint if it could confirm that it had made just 5 000 proof coins. We received a reply from Telana Coetzee, PR: numismatics, who noted that the mint had produced two types of collectable Nelson Mandela R5 coins.
The first “commemorate” set contained coins classified by the mint as “proof-like”. They are distinguishable from ordinary coins because the image of Nelson Mandela is frosted. The mint produced 14 000 of these coins.
A second “celebration” set contained a genuine proof coin and a bi-metal medallion. On the proof coin the image of Nelson Mandela is unfrosted. The sets were put into exclusive packaging so that, to quote the Mint, “people would not be tempted to remove the coin to have it graded and then use it to exploit the naïve public…”
The mint released only 5 000 of these celebration sets. They were distributed as follows: 1 000 went to top black businessmen and women, 1 000 were shared amongst coin dealers on the mint’s database, and 3 000 were allocated to coin collectors and top SA Mint clients.
The image of Nelson Mandela on Potgieter’s coins appears to be frosted. Therefore it seems likely that Potgieter’s coins form part of the “commemorative” set, and are much less rare than the genuine proof coins from the “celebration” set.
Again, SA Coin’s Blignaut has failed to confirm whether the coins sold to Potgieter are genuine proofs, or the frosted “proof-like” varieties. If Potgieter’s coins are the frosted variety, it raises the question: how were they graded as proof?
The answer can be found in the fact that coin graders consider both types of coin to be proof. Thus the SA Mint made 19 000 coins that would be considered proofs by coin graders. These comprise the 5 000 genuine proofs and the 14 000 frosted “proof-like” coins.
In 2011, NGC, considered by most collectors to be the most reputable grader of coins, announced that it had started recognising two distinct types of 2008 Nelson Mandela proof coins: a frosted variety, and a mirrored one.
ANACS, which graded Potgieter’s coins, does not distinguish between the two types of “proofs”.
Moneyweb sent a photo of one of Potgieter’s coins to NGC spokesman Max Spiegel and asked him to identify it. He responded: “It is difficult to say for certain based on the image but that coin does appear to be the Frosted RAND variety.”
Last week Potgieter wrote to SA Coin demanding a refund.
If one is not received, he intends to lay a complaint with the National Consumer Commission.
Yesterday SA Coin’s Blignaut replied with the following counter offer:
The coins sold by SA coin are either graded proof or Mint state.
We have never sold and will not sell a so called proof-like coin.
The Coin Report indicates a number of 1964 proof 69 coins graded.
You purchased these two proof 69 graded coins in terms of the conditions set out in our documentation as medium to long term investment coins.
I have been advised by my Directors to offer you two options as a final offer from SA Coin:
We will swop your two ANACS graded proof 69 coins with two NGC graded proof 69 coins or
In terms of our mandate priority list your first coins will be sold and you will be refunded R35 000 on the October 22, 2012. Your second coin will be sold and you will be refunded R35 000 at the end of February 2013.
Please advise your choice as soon as possible so that our messenger can collect the coins to sell Or to bring the coins to be swopped to you.
Have an excellent day
Prior to publication a copy of this article was sent to SA Coin with the invitation to correct factual errors and offer any additional comment it might have.
SA Coin did not take issue with any of the facts reported, but did state that it was uncomfortable with the article’s “negative slant” on what it claims are “some of the most sought after graded rare coins in the world”.
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