Money from Medallions

At the end of 2013, with ubiquitous strikes, service protests and political scandals afoot, not to mention the death of a global icon, Nelson Mandela, and a presidential election on the way, it’s no surprise that sales of gold Mandela Medallions spiked.

But don’t go rushing in to buy some bullion thinking you’ll earn a quick few thousand Rand. Gold coins are mid-term investments that take, on average, a minimum of 5 years to accrue more value.

Background on the Medallions

There are several generations of Mandela Medallions that have been released over the past 20 years. The Mandela Presidential Gold Medallions were revealed on 22 April 2013. The set comprises three ¼ oz gold coins, which represent three important stages during Nelson Mandela’s presidency:

• A medallion for South Africa’s first democratic election
• A medallion for Mandela’s inauguration speech
• A medallion representing Nelson Mandela’s time as president

The medallions were minted by the Mint of Norway and have a relatively low mintage of 1500. If you buy a set they are accompanied by a reproduction of the original 1994 ballot paper signed by Nelson Mandela, F.W. de Klerk and Thabo Mbeki.

The medallion representing Mandela’s inauguration bears a poignant inscription quoting Mandela: “Never, never and never again shall it be that this beautiful land will again experience the oppression of another.”

Since the Medallions hit the market, they have seen huge sales, which is very promising as it shows that they are in demand. The Mandela Presidential Gold Medallions have a relatively low mintage for collectors’ coins (1500) and as such their value is likely to increase over time as they become rare collectables that commemorate the life of Nelson Mandela.

But! Don’t expect that buying these coins will earn you a quick buck. Medallions are not as liquid as you might think. Gold coins need to be kept for at least 5 years before you can sell them off at a good profit. So buy coins with a mid-to-long-term investment in mind. Make sure you buy your Medallions from an accredited dealer (there are tons of scams out there), and a member of the South African Association for Numismatic Dealers (SAAND). Don’t stress though, those coins are still the best form of tender to get you through the apocalypse.

10 things about trading in gold everyone should know

1. Gold will always be valuable and in the case of a catastrophe can be a useful source of funds.
2. A collector’s coin will accrue value based more on its condition and rarity than its metal value.
3. Some coins can be used as legal tender and others cannot, legal tender can be traded without VAT, whereas other coins are sold with VAT.
4. Coins can be traded without having to worry about capital gains tax.
5. Beware of crime. Unfortunately, South Africa is a country that requires security precautions. If you have invested heavily in gold coins, make sure to protect them.
6. Investing in gold, rather than buying gold coins will give you dividends periodically, which coins cannot. So if you are living on a tight budget, medallions may not be for you.
7. If you want to invest internationally, gold coins are useful to hedge as backup against the unstable Rand.
8. Remember that while coins hold their value in US Dollars, their value still has to be converted into Rands, if the Rand is strong against the Dollar at the time of your trade, you may lose out on some money. So watch the market.
9. The gold price does not just increase; it is prone to fluctuations like any other commodity. While gold is doing pretty well at the moment, its last all-time high was as long ago as 1980.
10. Mark up on gold coins is typically 2 – 5 %. Any higher and you should smell a rat.