Krugerrand prices plunged yesterday and area precious-metals dealers expressed concern over possible political protests in their stores following an announcement by Deak-Perera Inc. that it would not sell the South African gold coins to retail customers.
The New York-based foreign currency and precious-metals firm decided to stop selling the coin "pending resolution of the proposals currently before Congress to restrict the importation of krugerrands," said Deak-Perera President R. Leslie Deak. A bill that would impose many economic sanctions on South Africa, including a ban on the importation of krugerrands, has passed the House. The Senate is expected to vote on it when it reconvenes next month.
Deak-Perera has long been the target of demonstrations and protests from activists who complain that the sale of krugerrands supports the apartheid system in South Africa. However, the company refused to comment on whether the move to stop retail sale of krugerrands is linked to anti-apartheid pressures.
Deak-Perera will continue to buy krugerrands from customers, many of whom are small investors, and will continue to sell krugerrands on the wholesale market, according to the Washington Deak-Perera branch manager, Bernard P. Zeng. At his branch, the krugerrand price dropped $6 yesterday to close at $317, $10 lower than the price when the legislation to ban krugerrands was introduced.
At least one large national and several area firms will continue to sell krugerrands in the retail market. New York-based Manfra, Tordella and Brookes Inc. estimates it has sold as many krugerrands as Deak-Perera, although it has not advertised them in two or three years, according to Executive Vice President Luis Vigdor.
He said that his firm decided to continue to sell krugerrands because so many Americans -- 2 million by his estimate -- already have invested in them.
"In an effort to punish South Africa, we are now punishing the investor," said Vigdor, who added that between 15 million and 20 million krugerrands are in circulation in the United States. The decline in prices because of the threatened import ban already has caused millions of dollars in losses for investors, he said. "We are trying to maintain an orderly market" by continuing to sell krugerrands, he added.
The buying price for 1-ounce krugerrands yesterday at his firm was $330, while its strongest competitor, the Canadian Maple Leaf, had a buying price of $338. Krugerrands and the Canadian Maple were equally as popular until the South African coin plunged in price.
Otto Ruesch, president of the Washington precious-metals and foreign-currency firm Ruesch International, said that Deak-Perera's decision to halt retail sales of krugerrands will have little effect on the market. "Deak-Perera certainly doesn't have an impact on the krugerrand market," said Ruesch, who worked for Deak-Perera for 16 years, adding that large metal dealers such as Manfra Tordella and Brookes and Republic National Bank in New York do far more business in krugerrands.
Ruesch International sells several hundred krugerrands each week in a busy week, according to Derek Trujillo of the firm's precious-metals department. "We're providing a service that if the market decides it wants, we will make it available," he said, although he expressed fear that his company would become a new target for protestors.
Many of the local precious-metals dealers expressed fear that anti-apartheid protestors would focus attention on their stores. The Maryland Coin Exchange in Silver Spring received a bomb threat about two weeks ago because it sells the South African coin, according to manager Jay Rudo. The store sells about eight or 10 krugerrands daily, he said, adding that "as long as they're legal, I'll sell them."
Midas Coins in Rockville stopped selling krugerrands about a month ago because of the coin's political unpopularity and slipping price, according to store manager Jim Linn. He pointed out that while protestors have complained about the sale of South African coins, little has been said about the sale of South African diamonds to U.S. jewelers or South African titanium to the U.S. government.
"Why don't they go to jewelers and picket the jewelry sellers who buy diamonds?" asked Donald Apte, owner of the Virginia Coin Investor in Vienna. "Krugerrands are a drop in the bucket. There are far more important things to protest against." Krugerrands represent about 5 percent of South Africa's annual gold output and are frequently bought by small-scale investors.