The Coin Analyst: From 50 Cents to $1 Million? High-Grade Nelson Mandela Coins Continue to Set Price Records
By Louis Golino for CoinWeek ……
Former South Africa President and Nobel peace prize recipient, Nelson Mandela, is clearly a man beloved by people all over the world, especially South Africans. Mr. Mandela was imprisoned by the South African government for decades.
It is therefore not surprising that Mandela coins are very popular, particularly in his home country, a nation he worked hard to unify after the fall of apartheid, which was a system of racial segregation used to suppress the country’s non-white population.
Mandela commemorative coins have also been making history in recent years because high-grade examples of two different Mandela coins have set records for prices realized for circulation-quality and commemorative modern world coins.
It should be noted that in raw form, the first Mandela coin from 2000 is one of scarcer modern South African issues and is not easy to find, whereas the coin from 2008 is much more common in low grade and sells for less than $10.
First, there is a copper-nickel 5 Rand Mandela commemorative issued in 2000 in proof and mint state quality. When submitted for third-party grading, some of the proof coins have been graded as proof-like rather than proof.
The NGC and PCGS population of the highest-graded examples of these coins is very small, and the very best examples have sold for astronomical prices in recent years for a coin that can be purchased in raw form for $150-200.
An example graded MS66 by PCGS is listed for sale on e-Bay for over $4,300. The coin’s seller says MS67 is the highest grade ever given for the coin.
Proof-69 is the highest grade that exists for the proof version of this coin, and the one NGC PF-69 coin in 2006 sold for the equivalent of $16,700. South African coin dealers estimate the current value of that coin at over $40,000.
The second Mandela coin that has been setting recent records is a circulating 5 Rand bi-metallic commemorative issued in 2008 to mark Mr. Mandela’s 90th birthday. It has a face value equivalent of about 50 cents. That particular coin, of which 5 million were minted, often has a lot of contact marks on it, which has helped drive prices higher for high-grade examples. Though intended for circulation, the coin was immediately hoarded by the general public.
Examples of this coin that have been submitted for grading rarely come back with high grades.
MS-69 is the finest grade that exists of this coin from over 150,000 examples that have been graded, and there are twelve known examples in that grade, according to a report by Chris Woltermann from World Coin News’ April 2012 issue. An MS-69 example sold recently for 2.5 million Rand, or almost $339,000.
There is also a proof version of this coin with a mintage of 5,000 pieces, and proof-70 examples of that version have sold for 275,000 Rand, or about $37,000. 58 coins have graded proof-70.
An NGC proof-69 example is currently listed on e-Bay with an opening bid of $949.
There is also a 1994 coin that was issued to mark the inauguration of President Mandela that is considered scarce in high grades.
A South African dealer that specializes in Mandela coins, SA Coin (www.sacoin.co.za), points out that the World Coin News article notes that “These coins are internationally acknowledged as being the fastest appreciating rare coins in the history of the world.” The dealer points out that this coin has appreciated 49.9 million percent since issued, which is the basis for the claim that it is the fastest appreciating coin. The same company estimates that the one MS69 example of the coin will someday be worth $1 million!
According to both the author of the World Coin News article and SA Coin, these coins are expected to continue to appreciate at a fast clip, and there is a strong South African and global market for them.
I think these examples show several interesting things about modern world coins.
First, it is clear that third-party grading of modern world coins is becoming more common than it used to be. I expect that trend to continue as the world coin market continues to mature.
Second, the reputation of NGC and PCGS, the most highly regarded American professional grading companies, has clearly achieved global scope now that modern world coins graded by those companies are selling for big money overseas.
Third, I wonder if the individuals who purchased the top-graded examples of these coins for such large sums fully understand that their investment could potentially go south if significantly more examples of these coins receive the same or higher grades in the future.
However, in the view of World Coin News’ Chris Woltermann, more submissions of the birthday coin to the grading services “will actually help the market by drawing in more collectors,” as happened with Morgan dollars.
These coins have been characterized by South African coin dealers as the fastest appreciating modern coins in history as noted. But I wonder what the long-term demand will be for these high-priced condition rarities if more submissions earn the top grade and especially if any MS70 coins ever surface.
I certainly have nothing against grading modern coins, but as I have suggested before, I believe caution is in order in this area. A modern world coin dealer will often charge double the regular price for a 70-graded modern world coin, but since most world mints issue coins of very high standards, I suspect a large number of coins would receive the top grade if submitted. And over time, if more and more coins are submitted and a high percentage receive the top grade, prices will surely come down.
In the case of the 2008 birthday coins, SA Coin believes the best-quality pieces have already been submitted, and given the fact that 150,000 of the coins have been already been graded by NGC, PCGS, and ANACS, that may well be the case.
A few years ago I located one of those proof Mandela coins from 2000 and sent it to PCGS, which gave it the grade of proof-like 66. I have not tried to sell the coin, but I have seen coins of the same type and grade listed for over $700, or several multiples of what I paid.
It is one thing to buy a coin for say $150, have it graded, and later find out it has a retail value of about five times what you paid. It is quite another to spend hundreds of thousands of dollars on a coin which in a lower grade is worth less than $20. I know some people disagree, but to me it is reminiscent of those high-grade Lincoln pennies with very low populations that sold for tens of thousands one year and later declined dramatically in value after the population numbers rose a lot.
Grading modern world coins can certainly add value, as happened in my case, but I think collectors need to keep things in perspective. Paying big bucks for top-graded modern coins is a risky enterprise, no matter how strong the market may appear to be for a particular high-grade coin.
Louis Golino is a coin collector and numismatic writer, whose articles on coins have appeared in Coin World, Numismatic News, and a number of different coin web sites. His column for CoinWeek, “The Coin Analyst,” covers U.S. and world coins and precious metals. He collects U.S. and European coins and is a member of the ANA, PCGS, NGC, and CAC. He has also worked for the U.S. Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of newspapers and web sites.