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Krugerrands: History

When Krugerrands were minted in 1967, the United States did not permit its citizens to own gold bullion, but it did permit ownership of foreign coins, so the Krugerrand could be bought and sold in the U.S. As the consciousness of South Africa’s apartheid—that country’s system of racial segregation—policies grew, the Krugerrand suffered from diminished interest. During the 1970s and ’80s, numerous Western countries banned the import of Krugerrands as part of enforced economic sanctions against South Africa because of apartheid. The United States banned the import of Krugerrands in 1985. These economic sanctions ended in the West in 1994 when apartheid was abandoned by South Africa. However, many U.S. investors did not realize that the ban had been lifted, which caused low volumes of U.S. imports of Krugerrands.

In 1970, South Africa was the largest gold producer in the world, holding more than 75% of the world’s gold reserves. Throughout the 1970s, Krugerrands quickly became the leading choice for gold investors. By 1980, at the peak of the gold market, the Krugerrand overwhelmingly dominated other gold investments, accounting for 90% of the world’s gold-coin market.

Locally respected and internationally acclaimed, the Krugerrand is the most widely held and actively traded bullion coin in the world with over 60 million ounces sold over the last 50 years. A brainchild of the Chamber of Mines in South African in 1967 and produced by Rand Refinery and the SA Mint, the Krugerrand tells a powerful story of resilience over time and promises investors an attractive return.

The Bullion Coin

As a legal tender gold coin with a denomination in ounces of pure gold, the Krugerrand is the only bullion coin that is conceptually worth its weight in gold. Containing 11/12 24 carat gold and 1/12 copper the Krugerrand offers a resilient 22 carat gold investment. Available in four sizes containing exactly 1 oz, 1/2 oz, 1/4 oz or 1/10 oz of pure gold, the Krugerrand offers the kind of accessibility that few other coins do.

Design Aspects of the Krugerrand Coin

Paul Kruger, South African president from 1883 -1900 is depicted on the obverse side of the coin, designed by Berlin medallist Otto Schultz.

While the reverse side shows South Africa’s national animal, the springbok, which was designed by South African sculptor Coert Steynberg. The springbok is known for its jumping abilities, which are displayed in its portrayal on the coin’s design. This springbok design was also previously showcased on the reverse of the South African five shilling coin. The aloe claviflora is one of South Africa’s most well known aloes. This plant is commonly found in the dry veld areas of South Africa, where springbok are found too.

Suid Afrika and South Africa appear on the coin, together with the gold weighted value.

Investing in Krugerrands

Krugerrands remain a popular investment for gold investors in part because of their value and small size, which makes for easy storage. Krugerrands appeal to professional and private investors who wish to make a direct investment in gold bullion, hedge their portfolios against the U.S. dollar, or to further diversify their portfolio.

Investors continue to buy gold because of the proven longevity of its value. Many gold investors consider this precious metal a safe investment that will retain its value even in an economic collapse. Owning a tangible asset appeals to some investors, who may put greater trust in physical coins or bars than in securities investments that exist only on paper. 

If you are interested in buying Krugerrands you should have a secure place in which to store them. You also should be wary of scammers, seek a reputable gold dealer, and brush up on your state’s tax laws, which could include a sales tax on gold. Here are some features of investing in gold that some investors could find attractive:

  • The gold market is very liquid.
  • Your investment is in physical gold and is not dependent on the performance of a gold mine.
  • Gold has a positive track record in terms of returns and has increased in value because it is a non-renewable natural resource.
  • Gold has a low-to-negative correlation with other asset classes, making it an effective portfolio diversification tool.

Krugerrands are the most affordable and effortless way of investing in Gold bullion and because Gold has always been one of the best-performing and most stable precious metals, they offer a very desirable return on investment. Historically, Gold has given local investors good value despite fluctuating financial markets since it is an international commodity which is largely unaffected by local economic and political shifts.

The true measure of any financial portfolio’s merit is it’s historical performance and in this regard, Krugerrands have on average doubled in value every 5 years for the last 50 years. This is due to the growth of the commodity as well as the devaluation of the Rand against the US Dollar, proving that they are a solid investment and an ideal Rand hedge.

Krugerrands are available in fractions – one ounce, one-half ounce, one-quarter ounce and one-tenth ounce weights – assisting in affordability for first-time investors. They can be easily bought and sold, giving the bearer quick access to cash.