Some of the proof Krugerrand coins minted in April and May 2011 have been found to be under-spec, meaning they contain less than the amount of gold they were supposed to contain. Krugerrand coins in question were not underweight, but as mentioned under-spec, which makes harder for coin dealers and collectors to detect that they are flawed. They have been found to contain up to 5 percent less gold than the quality specifications require. The problematic coins were first discovered by a South African collector (watch a video).
Newspaper Sunday Times reported that important coin dealers were contacted by the South African Reserve Bank and the South African Mint Company (subsidiary of the Bank) last year, that informed them about the problematic coins. They were offered the possibility to return and exchange the problematic coins at the expense of the SA Mint Company.
South African Reserve Bank had confirmed that some of the proof Krugerrand coins minted in April and May 2011 did not meet the required quality specifications.
There were 1,539 proof Krugerrand coins minted in that period in various sizes, 548 coins of those were sold. After an investigation the SA Reserve Bank found 6 problematic coins. Investigation also led to suspension of two top executives of the SA Mint Company. Nobody had confirmed if the investigation provided any evidence of criminal activity or negligence, it is believed that the problem occurred during the production process.
The issue raises concerns among the numismatic community, because the coins were struck by the subsidiary of the important state institution. Some claim the problem may damage the Krugerrand coins brand, one of the most popular bullion coins that are seen as one of the safest investment coins in the world, and the reputation of the SA Reserve Bank.
On the other hand withdrawal of the flawed 2011 coins could add collector value to them, such as error Krugerrand coins.
Good to know: It is important to distinguish between proof Krugerrand coins, that are collectible coins produced in smaller quantities by the South African Mint and sold with higher premium, and bullion Krugerrand coins, that are minted by the Rand Refinery, which value is derived from the value of gold with a small premium and are sold as investment coins in higher numbers every day. The difference between the two is also in a number of serrations: bullion coins have 180 serrations while proof Krugerrands have 220 serrations.
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