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The Honolulu Advertiser

Posted on: Thursday, February 3, 2005

AKAMAI MONEY
Options for selling Krugerrands limited in Hawai'i

By Deborah Adamson
Advertiser Staff Writer

Q: Where can I cash in or redeem Krugerrands for cash? I recently inherited several Krugerrands. There used to be a Deak-Perera office in Hawai'i that dealt in gold coins. Two banks I spoke with would not handle them. — H. Sugai, Mililani

A: There's a list of coin dealers in Hawai'i on the Web site of the American Numismatic Association, a Colorado-based nonprofit dedicated to the study and collection of money, at http://anamarket.money.org/. Check around to see who is willing to buy your Krugerrands.

"In Europe, banks deal in them. In the U.S., they don't," said Don Medcalf, owner of Hawaiian Islands Stamp and Coin in Honolulu and author of "Hawaiian Money Standard Catalog." "I usually buy them for $10 below the price of gold and sell them for $10 above."

But there's more to selling your Krugerrands than meets the eye.

The Krugerrand is a bullion coin valued primarily for its precious metal content, said Barry Stuppler, a dealer and publisher of Coin Connoisseur magazine and Gold News Today in Woodland Hills, Calif. Other popularly traded bullion coins in America are the American Eagle and Canadian Maple Leaf.

In contrast, investment quality coins — such as the $20 St. Gauden coins — derive value from their rarity and allure to collectors rather than from gold content.

Minted between 1907 to 1933 and considered one of the best designed American coins, the "Saints" have an ounce of gold each but are worth $100 to hundreds of thousands of dollars above the price of gold, said Donn Pearlman, spokesman for the Professional Numismatists Guild in Fallbrook, Calif.

Augustus St. Gaudens, a renowned American sculptor, was asked by President Theodore Roosevelt to design them.

As such, the value of collectible, rare coins can vary much more widely than bullion coins.

The price you'll get for your gold Krugerrands should be close to the spot price of gold traded on the New York Mercantile Exchange. (While gold is bought and sold around the clock worldwide, American dealers mainly base their prices on the New York close.)

To check spot gold prices, go to www.kitco.com or www.coinmag.com. Prices don't vary by much day to day, barring related global catastrophes.

The dealer would have a spread of about 2 percent to 5 percent, Stuppler said. A spread — or mark up — is the difference between the dealer's buy and sell price.

Krugerrands tend to have a spread on the higher end of the range — you get less from selling them — than American Eagles or Maple Leafs since the latter are more heavily traded and the market for them is more competitive.

Yesterday, the price of gold was about $420 and a Honolulu coin dealer quoted a buy price of $400 for Krugerrands. Assuming the dealer is able to buy at the current gold price, the spread would be 5 percent.

If you get a larger spread than 5 percent, shop around. Your options are limited in a city with just a few dealers. However, if you're traveling to a larger city, you might check around for a better deal since there's more competition, Stuppler said.

In a city with enough competition, you might be get a spread of just 3 percent when selling your Krugerrands, he added.

Choose dealers who actively buy and sell gold bullion coins instead of those who only specialize in rare coins. You could get a better deal with the former, since it's their specialty. Some rare coin dealers who don't make a market in gold bullion coins could charge a wider spread since it's not their main business — they might have to sell it to another dealer at wholesale prices to get rid of it.

With one or two coins to sell, you probably won't be able to negotiate a better price. But if you have one or two dozen, try haggling, Pearlman said.

Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.