(14 May 2017 – Article from The Sunday Mail)
As the world continues to explore alternatives to volatile fiat money (paper money made legal tender by a government decree), investors are gradually renewing their centuries-old flirtation with gold as both a collectable and tradable instrument.
While digital currencies – largely driven my modern technologies – are claiming a share, even though small, of global transactions, gold coins and medallions are slowly reclaiming their lustre. At the 46th World Money Fair that was held in Berlin, Germany in February this year, the Krugerrand coins, which were first produced in 1967 by Mint SA, a unit of South African Reserve Bank (SARB), were launched.
This year, the Krugerrand, which is considered to be the world’s most collectable gold coin, will mark 50 years after it rolled off the printing press. More than 50 million once-ounce gold Krugerrands have been sold worldwide over the past 50 years.
Also, only 1 967 limited edition 1967 Vintage Proof Krugerrands have been released. Initially sold for 27 rand in 1967, the first minted coins are now worth about 46 000 rand each.
The coins were the first bullion coins in the world and were used by the SA government as an alternative legal tender to government bonds, and were also used as a form of gold beneficiation. Similarly, in March this year, businessman Mr Frank Buyanga launched ten gold Pan African medallion coins, all of which have since been bought by South African businessman Mr Sandile Shezi. The Durban-based entrepreneur is considered to be one of South Africa’s influential young persons. Mr Buyanga believes that the quarter-ounce coins are likely to appreciate in value over time and are an alternative investment avenue.
“I see these medallions as the future global currency; you might have seen how well Bitcoin has been doing for the past few years. The only challenge with Bitcoin which is a cryptocurrency is that it’s online,” said the businessman in a recent statement.
Though principally touted as a store of value, the medallions are expected to become tradable with time.
Economist Mr Persistence Gwanyaya said recently the appeal of gold continues to attract investors.”Increasing discontent with fiat or paper money due to the experiences of currency crisis continues to drive investors towards gold.
“Fiat money is susceptible to manipulation and in most cases that has been to the detriment of monetary stability.”Also, the experiences of currency rot in the world, including the Asian financial crisis, the global financial crisis and, back home, hyperinflation, have largely resulted in the rethinking of alternative currency forms. “Gold-backed currency seems to be the most preferred option benefiting from the desirable characteristics of the yellow metal.
Unlike fiat money, which has been depreciating over time, gold is renowned for maintaining value no wonder it outperformed all other investments such as money and capital market investments.”
“Gold would be a preferred future currency and this could well be the reason why influential nations such as the US, China and Russia are building up stock of this mineral at an alarming rate,” said Mr Gwanyaya.
Only time will tell whether such initiatives as gold coins and medallions, which are gaining popularity by the day, will indeed become a future world currencies.
- Persistence Gwanyanya is an economist, banker and an executive member of the Zimbabwe Economics Society. He is the founder and CEO of percyonAdvisory.
ARTICLE DATE: 14 May 2017 | SOURCE: www.sundaymail.co.zw/as-the-world-moves-towards-gold-coins-medallions