The Krugerrand is the world’s most popular gold investment coin. There are more in circulation internationally than all the other gold coins combined. To date, Krugerrand coins containing 48 million ounces of gold have been sold.
The Krugerrand was first minted in 1967 in an attempt to market South African gold to international investors. Produced by the Rand Refinery, the 22 karat gold coin weighed just over one troy ounce. The additional metal was a copper alloy added to the gold to make the coins harder and more resistant to scratches. The copper is what gives the Krugerrand its characteristic red appearance.
On the front of the coin is the image of Paul Kruger, the last president of the old South African republic. The back of the coin depicts a Springbok antelope, one of South Africa’s national symbols, as well as the mint date and the fine gold content. The name Krugerrand is a combination of Paul Kruger’s name and the word “rand”, which is the monetary unit of South Africa. From 1980, the Krugerrand also became available in half ounce, quarter ounce and tenth ounce sizes.
The Krugerrand was the first gold bullion coin to be struck by any nation. Before it, gold was only obtainable in brick form, making it unaffordable for private individuals to own.For nearly two decades after the Krugerrand was first minted, it dominated the global coin market.
In 1975 the U.S. government repealed the Gold Reserve Act, and Americans could once again freely own and trade gold. As a result, investing in Krugerrands skyrocketed. The USA became the biggest market for Krugerrands, accounting for over 50% of all sales. From 1975 to 1984, 22 million Krugerrands were imported into the USA.
In 1984, the U.S. Congress banned the importation of Krugerrands in protest of the apartheid policies of the South African government. Krugerrands already in the country could be bought and traded but no new coins were allowed in until 1994, when South Africa had its first democratic elections.
Many other Western countries imposed similar import bans on the Krugerrand during the 1980’s. As a result of these economic sanctions, the sale of Krugerrands declined. It also started to face competition from other gold bullion coins.
Due to the massive popularity of the Krugerrand, other gold producing nations decided to produce their own gold coins starting in the late 1970’s, including the Canadian Maple Leaf, Australian Nugget, the Chinese Gold Panda, the American Gold Eagle, and the United Kingdom’s Britannia.
Despite increased competition, trade in Krugerrands remains strong today. According to the Rand Refinery, the Krugerrand is the most widely held and actively traded gold coin in the world. Some of the reasons for its continued success include the fact that it carries a fairly low premium – the price you have to pay over and above the spot price of gold – compared to other gold coins. The gold price has been rising for some time and this has also made the Krugerrand a popular investment option.
Lauren van der Westhuizen is an e-marketing specialist with Lima Bean and is responsible for the online marketing of South Cape Coins, a premier dealer in rare South African coins. For more information on rare coin investments visit www.southcapecoins.co.za or email [email protected] or [email protected]