Investing in gold is simple. In fact, anyone can do it says gold coin entrepreneur Alan Demby.
The 57-year-old is the owner of the Scoin Shop, the world’s only high-street gold coin retailer, selling collectable and bullion coins. He is about to roll-out several dozen stores in malls and airports across the UK in an attempt to “democratise” buying gold and bring it to the mass market.
He says: “You certainly don’t have to be an expert to collect or invest in gold. You don’t need a license or to be extremely wealthy.
“The purpose behind bullion coins on the whole, such as krugerrands or sovereigns, was to democratise gold — for anyone to use. You simply start collecting. You don’t buy 100 Picassos until you’ve bought a few less expensive pieces of art — the same principle applies. “We want to make gold more accessible to people and encourage more customers to become collectors.”
The Scoin Shop primarily retails collectable coins. It is the exclusive retailer of the Queen’s Diamond Jubilee Royal Set (right), plus the London Olympics 2012 coins. It also exclusively retailed the first Manchester United gold coins, which promptly sold out.
Prices at the Scion Shop range between £100 and £70,000. The average spend is around £3,000 per customer.
Born in Manchester but growing up in South Africa, Mr Demby has been in the industry for over 30 years. He says he is now witnessing a new type of customer.
“We are seeing many first time buyers — people who are traditionally not coin collectors.” He identifies a typical customer as male, over 30, employed or self-employed with sufficient disposable income.
“People who used to put money in banks and insurance policies are now buying coins. And an increasing number of teenagers and women are becoming customers.” Mr Demby has witnessed a 45 per cent sales increase in bullion coins including sovereigns and kruggerands over the past two months.
Why the surging interest? It is two-fold, says Mr Demby. “It’s investing and collecting. And it’s about making money and having enjoyment. Collecting is fun. People like the thrill of the chase and completing a collection. There is also the emotional aspect; collecting coins to mark significant events and people, such as the Princess Diana coins, Nelson Mandela Nobel Peace Prize medallions and coins to mark the Titanic tragedy.” And now, the Queen’s Diamond Jubilee Royal Set, a joint venture between the Royal Canadian, Australian and British Mints. Mr Demby has secured the exclusive rights to sell the collection, of which only 375 exist worldwide. The Royal Set costs £8,250.
Although Mr Demby does not like to speculate about how the collection will sell, he says: “For the Queen’s Golden Jubilee a ‘Maundy Set’ was sold for between £1,000 and £2,000 in 2002. That same set is now valued at between £7,000 and £8,000. Various factors have influenced this impressive increase, notably the popularity of the Royal Family — at the moment it’s higher now than it was then — in addition to rising gold prices over the past decade.”
Besides, he says coin collecting has become “sexy again.“Gold was out of favour for most of the 1990s even though it was the start of the present bull run. In fact, at the turn of the century, Gordon Brown, then finance minister, sold a large proportion of Britain’s gold. Now gold is back on everyone’s radar. Even the Swiss fell out with gold but are touting it again.”
He believes the global crisis has pushed consumers towards gold coins. “Customers want to safeguard a proportion of their cash by putting it into bullion coins. This, in effect, has protected their cash from currency flux.”
He adds: “The periodic blowout in share and property markets has turned the focus back to gold as the ultimate insurance you can rely on.”
The sovereign debt crisis from the US to Europe fuelled additional unease, propelling gold to new highs.
The introduction of gold exchange traded funds (ETFs) has resulted in some $80 billion invested in gold worldwide. “Asset managers, hedge funds and investors have renewed their love affair with it.” Quite. The Scoin shop, with a turnover of £60 million, had its busiest year to date last year employing 90 new staff, opening six additional stores and achieving record buy-backs from clients — a far cry from when the Scion Shop was launched in 1999 out of “desperation.”
Mr Demby, who was running the South African Gold Coin Exchange at the time, recalls: “The market for gold was not as positive and buoyant as it is today. We were trying to attract the tourist market and thought that a retail outlet in a mall would be an innovative approach. We tried to create an environment which would draw people, not necessarily coin collectors, into the store. Our locals (South Africans) found it more attractive and as we opened more stores and made gold more accessible, business boomed.”
The South African Gold Exchange was renamed the Scoin Shop. There are now 30 stores in South Africa and the UK, including Westfield London, Stratford and Bluewater, Kent, with plans for 30 more.
What returns can be made? “£1,000 invested in krugerrands in 1970 would be worth more than £400,000 today.
“UK, South African, Russian and US coins are reaching record prices.”
He advises: “When it comes to bullion coins, they are an easier buy as they are mostly the same; just different sizes, denominations, weights. When it comes to collectables, buy something affordable and appealing. This is a simple process.
“Don’t put all your eggs in one basket. A 10 to 15 per cent holding in gold, partly bullion and partly collectables, is a realistic number.”
Mr Demby was not necessarily destined for the coin world. A former product manager at EMI, it was not until 1977 when he was conscripted to the army in South Africa for two years that he was introduced to krugerrands. “I laid out all the money I had — £150 in those days — which could buy three one-oz krugeraands.” The arrangement was to sell them to the South African Gold Coin Exchange.” Following the army he started his own coin dealing business, the Gold Club, in 1980. Nine years later he bought the Gold Investment Corporation and in 1992, the South African Gold Coin Exchange. The Scoin Shop came seven years later.
Mr Demby, who divides his time between north London and Johannesburg, has since traded several Royal Family and Nelson Mandela coins.
The Scoin Shop has been involved in numerous charitable organisations including the Nobel Institute through its involvement in the Nobel Laureate programme. Mr Demby has met US President Barack Obama and Frederik Willem de Klerk, the former president of apartheid-era South Africa. Mr de Klerk recently opened a Scoin Shop flagship store in Cape Town.