Jerusalem of Gold

Israel joins an exclusive club by issuing its first gold bullion coin, joining an $160 billion-a-year industry that includes the US, China, Canada and Australia.

By SHULA KOPF
February 16, 2011 15:50
Jerusalem Gold Coin

Jerusalem Gold Coin. (photo credit: Courtesy)

JERUSALEM OF GOLD IS Israel’s first one-ounce, 24-carat gold bullion coin launched by the Bank of Israel in May 2010.

The limited-edition coin, the first in a future series, depicts the Tower of David, its sculpted image floating above a mirrorlike field. The image is rendered in such detail that one can almost count the bricks of the Old City walls. The obverse side shows the image of the roaring lion of Megiddo with its stylized curving tail, duplicated from a 2,800-year-old ancient seal.

A bullion coin is valued by its mass and purity rather than by a face value and the price of the Jerusalem of Gold coin fluctuates daily depending on the international price of gold as set that morning in London, plus a 20 percent markup. As this issue went to press, the price of an ounce of gold was $1,330. Since in order to be considered legal tender a coin must have a face value, usually irrelevant, the Jerusalem of gold was given a face value of 20 shekels.

Only 3,600 such coins will ever be minted, making the Jerusalem of Gold relatively rare and giving it a numismatic value beyond the price of the gold content.

Since Israel does not have a minting facility, the Jerusalem of Gold coins are manufactured at the Royal Dutch Mint in Utrecht. There are four more bullion coins planned in the Jerusalem of Gold series in the upcoming four years. While Israel does issue other gold coins, they are 22-carat, which, for investment purposes, is not considered a bullion.The launch of the coin was a stroke of great timing. Gold gained almost 30 percent in 2010 reaching a record $1,431.25 an ounce as investors rushed to purchase bullion as a safe haven and a hedge against weakening currencies.

The metal’s mounting value is linked to its economic role as a stable alternative to paper currencies, and its rise speaks volumes about the health of the global monetary system GOLD COINS HAVE BEEN USED as money since the dawn of history, only to fall out of favor in the early 20th century about the same time that British economist John Maynard Keynes dismissed gold as a “barbaric relic.” Today there are about a dozen countries that continue to have legal tender gold coins, but they are minted primarily for collectors and for investment purposes rather than for shopping at the local mall.

Among Israel’s formidable competitors in the gold bullion business are the US with its iconic American Eagle, Canada with the Maple Leaf, China with the Panda, Australia with the Gold Nugget and South Africa with the Krugerrand.

“We are only a minor player in the international gold coin market, which is a $160 billion-a-year industry,” says Arthur Boxer, CEO of Israel Coins and Medals Corporation (ICMC). “But this first bullion coin puts Israel on the map.” This year he will travel the world showcasing Israel’s coin collection at trade shows in Berlin, New York, Tokyo, Singapore, Chicago and Beijing.

And even in its relatively limited capacity, ICMC is happy to jump on the gold trend. It has been advertising the gold coins both locally and internationally. Aimed at gold investors with a soft spot for Israel, the advertising tag lines says, “Now more than ever – the gold coins of Israel.”

While the US Mint sold 38 tons worth of American Eagle bullion coins last year, the neophyte Jerusalem of Gold coin sold a mere $5 million’s worth.“But it’s a start,” says Boxer with unfaltering enthusiasm.

The phone lines crashed on the propitious date that the ICMC began selling the Jerusalem of Gold coin, says Rivka Toledano, the company’s international sales manager. It was May 12, Jerusalem Day, commemorating the recapture of Jerusalem in the 1967 Six Day War. “We were overwhelmed by the reception.

Distributors in Germany and the US wanted to buy large quantities, probably because it was a first of its kind and has a beautiful design, but we limited the sales to no more than five coins per customer. It wasn’t only Jews who were interested; there was enthusiasm in the general market, particularly in Germany, the US and Poland,” Toledano says.

Lior Lichtman, head of the Issue Unit in the Currency Department of the Bank of Israel, points out that most other countries mint bullion coins in unlimited quantities with a constant, unchanging design. The Bank of Israel, however, will release only the planned 3,600 coins each year – 3,600 being a multiple of 18, symbolic of the Hebrew word hai, which means life. The bank’s advisory committee, headed by former Supreme Court Justice Yaakov Turkel, will choose a different Jerusalem site each year for the series, while the obverse side, with its roaring lion, will remain constant.

According to Lichtman, their rarity gives the coins a numismatic value beyond their gold content. Investment bullion coins with no numismatic value, such as the American Eagle for example, normally sell at a four percent premium. The Franklin Mint in Pennsylvania advertises the “first ever Israeli bullion” for $2,799, almost $1,200 more than the Israeli price of $1,626 at the time of publication.

When purchasing the coins, Israelis must pay an additional 16 percent value added tax. But, in any case, gold is not a popular investment vehicle for the average Israeli investor, says Nir Zonnenberg, head of research for Meitav Investment House.

“THE WHOLE SUBJECT OF commodities is less developed in Israel than in the US and Europe,” Zonnenberg tells The Report.

“The Israeli capital market is still in its infancy and Israelis don’t usually invest in commodities such as wheat, soy beans, sugar and so forth. Just about the only commodities they do invest in are oil and gold.

Most Israelis who invest in gold do so through Exchange Traded funds (ETF) such as GLD and gold related mutual funds, he says. An ETF is an investment fund traded on stock exchanges much like stocks and tracks the price of the underlying asset or index, gold in this case. Many gold bugs shun ETFs and prefer to own physical gold, despite US tycoon Warren Buffett’s famous dismissal of the yellow metal as something that gets dug out of a hole, then melted, and then stashed away in another hole with people paid to guard it.

The Bank of Israel does not seem to be a big fan of gold either. Unlike other central banks around the world, which have begun to increase their gold holdings, Israel holds no gold reserves at all, according to a Bank of Israel spokesman. The International Monetary Fund (IMF) regularly maintains statistics of national assets as reported by various countries and, according to the IMF, Lebanon has 286.8 tons, Egypt, 75 tons and Cyprus almost 14 tons.

The Bank of Israel prefers to keep its gold dealings limited to issuing gold coins and the next bullion coin in the Jerusalem of Gold series will be issued in late spring, set to coincide with Jerusalem Day, which will be celebrated on June 1. This coin will depict the Western Wall, a theme sure to ignite the collecting passions of Jewish coin collectors around the world.

Mel Wacks, president of the American Israel Numismatic Association, which has 800 members, is excited about Israel’s first bullion coin.

“It puts Israel in league with the big players, China, America and Canada and exposes Israel to a bigger audience,” he tells The Jerusalem Report in a telephone interview from Los Angeles. “The mintage of only 3,600 is minuscule. When the Chinese Panda came out as a bullion coin with a mintage of 25,000, everyone thought it was a small amount, and that’s selling for over $2,000 a coin. Israel is going to change the design every year and that’s a big plus that will make the coins desirable for collectors. If you add in the tiny mintage, in the long run it will increase in value above and beyond the value of the gold. But what thrills me the most is that our coins tell the story of Israel and the Jewish people.”

THE ICMC WAS FOUNDED IN 1958 by prime minister David Ben Gurion, with a mandate to commemorate the country’s history and culture and to mark national events and milestones.

The very first medal issued that year to celebrate the country’s 10th year anniversary, settled an old score with the Romans. The Roman Emperor issued the infamous Judaea Capta (Judea in Captivity) coin to celebrate the repression of the Jewish rebellion in 70 CE. On that coin, issued in great quantities as a propaganda tool, the Romans depicted a Jewish captive, hands bound behind his back, and a second captive, a despondent woman seated under a palm tree, weeping for the destruction of her homeland.

Modern Israel’s answer was a medal duplicating the Judaea Capta coin on one side, and on the other side, with the title Israel Liberata, instead of the Jewish captive, a proud farmer planting a tree, and instead of the woman in mourning, a young woman standing up holding her child aloft.

The medal was issued in three versions – copper, silver and gold. The first Israeli gold coin was issued in 1960 to honor Theodore Herzl on the centennial of his birth. It was not considered a bullion coin since it was 22-carat gold rather than 24-carat gold.

“There is no other nation that I know of whose culture, history, symbols and iconography are expressed in their coins to the extent that they are in Israeli coins,” says Josef Attali, former vice president of the ICMC.

In ancient times, the Jews minted bronze and silver coins rather than gold, which was too expensive. “It would have been like walking about with a $1,000 bill in your pocket,” says Wacks, who has written a book called “Handbook of Biblical Numismatics” (available online for free).

During the latter part of the 6th to 4th centuries BCE, when Judea was part of the Persian empire, small silver coins were struck by an autonomous Jewish authority with the permission of the Persians. Under the Hasmonean Kingdom the Jews minted small bronze coins. During the revolt against the Romans, beginning in 66 CE, the Jews made the famous silver shekel and half shekel coins. They also made silver coins during the Bar Kokhba revolt in 132- 135 CE by taking Roman and Syrian silver coins, filing off the design and restamping them with Jewish motives, he says. In the Torah, gold is the most frequently mentioned metal and makes its first appearance in Genesis 2:11 in the Garden of Eden.

Moses used gold beaten into plates and sheets for the construction of the Tabernacle, as described in Exodus. In Kings I 10:16, we are told that David set aside 100,000 talents of gold to build the Temple in Jerusalem.

Since a talent is considered to be about 75 pounds, in today’s prices that would come to about $1.6 billion. According to Kings I, the weight of gold that Solomon received in one year was 636 talents – or $9.6 billion in today’s values.

THE BANK OF ISRAEL CAN ONLY dream of Solomon’s lost talents of gold and besides the new Jerusalem of Gold bullion coin, it makes do with issuing five commemorative coins a year in five different series: Biblical stories, UNESCO world heritage sites in Israel, Independence Day, Israeli Nobel Prize laureates and one ad-hoc series. The coins are issued in minuscule mintages of only 444 or 555 and contain half an ounce of 22-carat gold. Because of their rarity they are sold at about a 75 percent premium over the value of the gold content.

Boxer estimates that Jewish collectors around the world hold about four billion shekels worth of gold and silver coins that were purchased over the years from the ICMC and are held in safe deposit boxes and desk drawers. He arrives at that figure by halving the amount purchased over the years, reasoning that at least half the coins have already been sold for their melt value.

The ICMC was a government agency until 2008 when the company was privatized and bought by G.R.A.S. Design Combinations, Ltd., best known as a manufacturer of Israeli-designed sterling silver and gold jewelry with over 70 retail outlets in the country. G.R.A.S. beat out 13 competitors and is now the sole distributor of Israeli coins and commemorative medals.

There is general consensus that G.R.A.S bought new energy and marketing savvy to what was a lackluster government agency. “I think the people of G.R.A.S. are determined to make it a financial success and they have brought in innovative marketing,” says Wacks.


“They can’t do everything they want to do, since they are limited by the Bank of Israel, which is very conservative in its approach. Our organization has a quarterly magazine called the Shekel and G.R.A.S. offered us money to print it in full color rather than black and white, and it’s gorgeous now.”

One of G.R.A.S.’s innovations was smart-looking gift packaging, which turned Israeli coins and medals into an impressive gift for business contacts abroad. The Japanese especially like the Masada coin, which they connect with their own Mount Fuji and their tradition of hara kiri, says Boxer.

Hidden in the inventory of the ICMC, along with the crates filled with old outof circulation coins, the new owners found an overlooked treasure, a trademark – Holyland Mint – registered in 2000 for the historic five-day visit of Pope John Paul II.

Hearts open up to Israeli coins in the most unlikely places. When Boxer travels this year to the Beijing International Coin Exposition he is likely to meet one of the world’s most ardent collectors of Israeli coins, Xu Long, the head chef of catering in China’s parliament building, the Great Hall of People. When he isn’t cooking Peking Duck, Xu Long devotes his time to his passion -- Israeli coins. He has written a 575-page hardback book in Chinese on the subject, titled, “Money of Ancient Judea and Israel.”

The book has had a place of honor on the bookshelf in Lichtman’s office in the Bank of Israel building ever since Xu Long presented Lichtman with a copy during a visit to Israel in 2009.


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