Famous Coins - The Gold Krugerrand
Every coin has a story and the Krugerrand's is fascinating
This famous coin is held in high esteem by coin collectors, numismatists and gold investors. The gold coin has made its mark in history, creating controversy through the years..
The Rise of the Krugerrand
The South African gold bullion coin was first struck on 3 July 1967 by the South African Mint. Its name is an amalgamation of Kruger, who was a South African president and features on the obverse, and Rand, the unit of currency in South African. Paul Kruger is famous in South Africa for standing up to the British during the Boer War of 1899-1902, thus giving him pride of place on the iconic coin.
The coin was minted as a way to promote the gold discovered in the country in the 1960s. It was a time when buying gold ingots for private ownership was illegal. So, the South African Mint minted 1 troy ounce gold coins that could be converted into any currency, and sold them at 5 per cent of the spot price.
It was an instant win.
Controversy Surrounding the Krugerrand
The Krugerrand allowed private buyers to buy gold in a time when it was illegal (many countries used the gold standard to protect their currencies). By creating gold coins as legal tender, the South African Mint was able to profit from the sale of gold, and investors to insure themselves against a destabilised currency. It's the original gold bullion coin. It was a game changer. And it had very little competition.
The gold coin was seen as contentious during the 1970s and '80s because of the practice of Apartheid by the South African Government. Some Western countries stopped their citizens from investing in South African gold. Despite the worldwide ban, the Krugerrand became the most widely circulated gold bullion coin in the world.
Today, even with the competition of the Britannia, Gold Eagle, et al, the Krugerrand remains the world's most widely distributed gold coin, and has earned its place in the Fabulous 15 collection.
Over the last 50 years, production levels have varied immensely. Between 1967 and 1969, c. 40,000 coins were minted each year. This rose significantly to 200,000 in 1970, 1 million in 1974 and to 6 million in 1978. By 1980, the Krugerrand accounted for 90 per cent of the global gold coin market.
In 1998, at the end of apartheid, 23,277 Krugerrand coins were issued. Since then, levels have increased but are yet to reach the pre-sanction levels of the '70s and '80s.
Why Buy Gold Krugerrand?
Krugerrands are 22 carat gold, but weigh more than a troy ounce and therefore contain exactly 1 troy ounce of 24 carat gold.
Gold coins have an advantage over gold jewellery and bullion bars in that they are officially issued by governments. This makes them instantly recognisable across the world and removes many barriers and problems associated with selling gold.
One ounce gold coins are the most "affordable" gold investment due to their size. The coins are small so a portfolio can slowly be built up over time giving you more control over the buying and selling of gold coins.
It's legal tender. The Krugerrand doesn't have a monetary face value and so their legal tender is linked to the market price of gold. Legally, you can exchange a Krugerrand coin for the cash value equivalent to 1 ounce of gold.
It's cheaper to buy Krugerrand coins. Generally, you pay less for a 1oz Krugerrand than you would for a 1oz Gold Eagle or 1oz Gold Maple Leaf.
Its quality: Krugerrands are 22 carat alloy consisting of more than 90 per cent gold with tiny amounts of silver and copper. This gives the Krugerrand its distinctive golden orange glow and superior durability. The pure gold of other bullion coins is softer and easily damaged.