3
of coins, resulting from a deterioration or even collapse in the bullion
and/or coin collectors' markets, the territories might be unable to
meet an implicit or explicit obligation to redeem the coins by payment
in an external currency, and HMG could thus be placed in a position of
having to meet a territory's resultant deficiency.
In addition certain developments in the Caribbean and Pacific
areas had revealed the vulnerability of some local administrations when
confronted with the high pressure sales techniques adopted by some coin
promotion companies. The UK Overseas Territories offered attractive
outlets through which companies could supply the fast-growing market
for new coins and there was also a degree of exploitation of the
dependencies' "royal" connection.
Summary of conclusions.
dependencies.
Attached at Annex II is a list of
the promotional companies who normally supply numismatic coins to
For the purposes of the Report the firms at Nos. (1) to
(5) will be understood to mean the "US promotional companies" and (6)
to (7) "UK companies".
There are fundamental differences between the US and UK types
of contract, revealed primarily in the treatment of royalty payments,
distribution limits, specifications and the policy adopted towards
formalised contracts - the US companies usually request a 5-year
contract requiring annual issues: the UK companies conclude less
formal agreements for single issues.
The UK
The approach adopted by Spinks and the Royal Mint appears
preferable in that the risk to the client is minimised.
companies generally limit the issue to a relatively small, predetermined
number. Royalty payments exceed the face value of the coins and the
intrinsic value is high. As a result, even where royalties are less
than face value, the combination of royalties and the calculation of
the bullion value, which may ultimately be regarded as an asset of the