The future of the Silver Krugerrand
As the Krugerrand is a trusted bullion brand without equal, silver Krugerrand has a very bright future. Trust in the precious metals market is exceeding difficult to earn for any refinery or mint (private or government-owned). Trust is developed through decades of consistency in quality and market supply. This is why the Krugerrand brand is trusted and recognized the world over, and I am certain that the silver version will change the bullion-investment landscape in South Africa. In fact, it already has. I predict that within the next few years, silver Krugerrand will surpass 10 million coins minted yearly. In 2016, Perth Mint released the Silver Kangaroo 1 oz. coin to compete in the legal tender bullion space against coins such as the American Eagle and the Canadian Maple. In the first year of issue, the Perth Mint produced and sold just over 11 million Silver Kangaroo coins. The reputation of the Krugerrand, I believe, will help the silver Krugerrand surpass this figure, notwithstanding various market factors differing from those in 2016. The bullion Silver Krugerrand is a historic release and will become one of the most desirable and trusted silver legal tender bullion coins in circulation. Well done to the South African Mint and the Rand Refinery for finally deciding to bring this product to the South African and international bullion market; 2018 was indeed a memorable year. Article courtesy of Going for Gold: A guide for the South African precious metal investor by Zoltan Erdey
Types of silver bullion products on the market
There are countless products available to silver investors. This, in my opinion, is what makes diversification such a fun exercise. There are five categories within a physical silver or gold portfolio: coins, rounds and medallions, bars of constitutional or junk silver and gold, and silver granules. It’s illegal to own gold granules without a license, so I will not include them here. Legal Tender Bullion CoinsLegal tender bullion coins are issued with a specific currency value minted on them. Other information includes the issuing government or institution, the weight and the purity of the metal. For example, the silver Krugerrand has a face value of one rand. The American Silver Eagle is a legal tender coin with a face value of one US dollar, and the Canadian Silver Maple is a legal tender coin with a face value of five Canadian dollars. In terms of gold, the American Gold Eagle and the Canadian Gold Maple both have a face for fifty dollars. The gold Krugerrand has no face value on it at all. It is important to remember that the face value on these coins is merely a symbolic value to give them legal tender status, which has little to do with their actual value. The justification for keeping the face value on bullion coins low seems to be to void the public using the coins in direct competition with legal tender currency notes issued by the reserve banks of each issuing nation. The value of a bullion coin is based on the value of its precious metal weight and purity. For this reason, institutions always guaranteed each minted coin in terms of purity and weight. Bullion MedallionsA silver medallion is essentially a non-legal-tender coin minted by various private mints or refineries in various sizes. Since coins can be issued by the government only, these cannot be called coins Bullion BarsUntil a few years ago, bullion bars were mainly minted and released by private mints or refiners around the world, but recently, various sovereign mints have released their own bullion bars onto the market. Two examples are the Royal Canadian Mint and the Royal British Mint: both sell 10 oz. Bullion bars are in direct competition with the Sunshine Mint 10 oz. bar. The guarantee of purity and quality comes from the mint or refinery that produces them. Bars are available in various sizes, ranging from 1 troy ounce for silver, and 10 grams to 1kg for gold. Junk or Constitutional SilverJunk silver refers to any high-silver-content coin that is not considered collectable and has no numismatic value. In general, coins that are 90% silver are desirable to silver investors and silver coin dealers who buy for silver content. The older South African coins (with the exception of the ½ and 1 coin) contained a certain amount of silver. For example, some of the old R1 coins held 0.3858 ounces of silver. Similarly, some of the old 50c coins held 5.65 grams of silver. Interestingly, buying freshly minted silver bullion coins (99.9% purity) for investment purposes only commenced in 1986 with the introduction of the American Silver Eagle bullion coin in the USA. In the 1970s and 1980s, silver investors were those who saved their change. Some investors still collect old coins for their silver content. This is one of the cheapest ways to buy silver if these are purchased for silver content and no premium is payable for the rarity or condition of the coin. The trouble is that older coins are now either in the hands of collectors and investors, or they were melted and cast into investment-grade silver bars and rounds. Silver GranulesMost private mints sell pure silver granules in various packaged weights. Avery small number of precious metal investors buy silver in this form. Silver granules are produced mostly for silver jewellery makers and artists, and perhaps for the electronics industry. But as is the case with junk silver, demand in this form is low. It is also the cheapest silver I would be able to source. COVID-19 and its accompanying lockdowns led to a fall in the availability of silver, as products such as the American Eagle became very expensive. This market scenario caused investors to settle for what was available and what was reasonably priced. Article courtesy of Going for Gold: A guide for the South African precious metal investor by Zoltan Erdey
Superficial scratches on coins
If scratches on your bullion coins don’t bother you, you are in the minority. Most investors object to even a small surface abrasion. Surface scuffs and scrapes will almost certainly affect the value of a coin for collectors of numismatic or rare coins. But what about silver bullions coins, rounds, and bars such as silver and gold Krugerrands, the American Silver Eagle, or the 10 oz. Sunshine Mint silver bar? Do minor surface abrasions on these bullion products affect their value? The tentative answer is no – they should not. Bullion products generally don’t have numismatic value over and above the value of the content and worth the precious metals they contain. They likewise have no rarity value per se. Therefore, even if the coin or bar has minor surface abrasions, the focus of the purchase for investors is on the weight of the bullion product. Commonly, all bullion products have some slight abrasions on them, since pure gold and silver products are extremely soft and are stacked on top of one another in tubes of 20 or 25. In my view, it is unreasonable to expect coins to be in perfect condition in a bullion tube. Article courtesy of Going for Gold: A guide for the South African precious metal investor by Zoltan Erdey
How to take care of your silver
Although silver bullion products derive their value almost exclusively from the weight of their silver content, some investors avoid purchasing bullion products that are damaged. By damaged, I don’t mean scratches and dents but rather chemical marks and fingerprints. Therefore, to void losing money when selling silver back into the market, it is important to consider a few points concerning the handling and storing of bullion coins for optimum sell-back value. Handle with glovesUnless the silver coin, round or bar comes in a protective capsule or sleeve, always handle it with 100% cotton gloves. Fingerprints on coins can become rather unsightly as a result of the natural oils from one’s skin, often turning yellow over time. These marks are virtually impossible to remove without damaging the silver and will affect the product’s resale value, even if only minimally. Since gold does not tarnish, this does not apply to gold. Handle over a soft surfaceIf you decide to handle your silver, it should be done above a table with a towel or cloth underneath the coin. This is done to avoid damage if you should drop the coin. Coins that have dings on the rim as a result of being dropped lose much of their value above the spot price. Investors who purchase coins individually (fewer than the number in an original mint tube) often buy them in capsules. Capsules are ideal because if the coin is dropped, the capsule will take the punishment, not the coin. Avoid moistureStore your coins in a dry place. Although you may consider a kitchen or bathroom a clever hiding place, it isn’t. This is especially pertinent if your silver is not housed in its original tubes, capsules or packaging, as kitchens and bathrooms tend to be damp, which leads to silver tarnishing and discolouring over time. Do not cleanDo not attempt to clean your coins with any chemical cleaners. This is particularly relevant when considering tarnished coins. If silver comes in contact with oxygen, it tarnishes – full stop. If you do find that some of your silver coins or bars have begun to show tarnish marks, do not attempt to clean them; light tarnish on fully exposed silver will affect the resale price. Article courtesy of Going for Gold: A guide for the South African precious metal investor by Zoltan Erdey
