Understanding All About: Investing in Gold Krugerrand Coins

Jan 29, 2024 By Triston Martin

Introduction

South Africa's government mints gold coins known as Krugerrands. The first one was minted in 1967 when bullion possession in the United States had been illegal for decades. Coins with numismatic value were exempt from the bullion ban. Gold Krugerrands can be exchanged for goods and services in South Africa, but their true worth lies in the bullion market. Because of this feature, people from various countries could legally invest in gold Krugerrand coins and use them as legal tender. Possession of foreign cash allowed for the indirect purchase of gold.

The Gold Krugerrand

The portrait of Paul Kruger, president of the South African Republic from 1883 to 1900, appears on the obverse of all Krugerrand coins. The name of the cash is a combination of Paul Kruger's last name and the word "rand," the name of the currency used in South Africa. The coin's reverse features the springbok antelope, a symbol of South Africa. During Paul Kruger's presidency, the Durban Deep mine, one of the world's most lucrative, was established that year (1896).

When he was president, South Africa had the Witwatersrand Gold Rush, which contributed to the establishment of Johannesburg, the country's most populous city. Krugerrands are traded on the well-regulated secondary market of the Johannesburg Stock Exchange (JSE), just like any other listed equities market instrument, with prices given according to the coins' weight. South African Reserve Bank (SARB) is responsible for issuing and redeeming new Krugerrands. The South African legal tender gold Krugerrand coins were designed to last longer than 24-karat gold coins for medals of honour. The Krugerrand has 91.67 percent gold (22 karats) and 8.33 percent copper alloy.

Present Situation

Production of the Krugerrand dropped dramatically in 1994, following the end of apartheid. Though it has increased since then, South Africa's gold output will likely never again reach the heights it achieved in the 1970s and 1980s. Production of gold in South Africa has decreased by 85% since 1980, and the country now supplies only 6% of the world's needs. Even now, Krugerrands are in the wrong spot. According to the graph below, South Africa's gold output dropped by more than 30% between December 2018 and 2019, marking the most incredible run of declines since the financial crisis of 2007-08.

Purity and Composition

Like the American Gold Eagle coin, which is also considered high quality, the Krugerrand is 91.6% pure gold (or 22 karats) (gold purity is measured in karats, with 24 being pure gold.). The gold Krugerrand's signature orange hue comes from a composition of 22 parts pure gold and two parts copper alloy. Therefore, the gold Krugerrand is treated this way to be more durable than a pure coin like the Canadian Gold Maple Leaf. It bears repeating that the gold content of both coins is identical (1 Troy ounce for the standard coin size); what distinguishes one coin from the other is the additional materials that were melted down and poured into the moulds to create the final product, which affects both its appearance and its hardness.

How To Buy and Sell

Speciality bullion and coin dealers in the United States and worldwide sell the gold Krugerrand for a small premium above the current price of gold and repurchase it for a small discount. Gold investors frequently prefer Krugerrands to gold bars since they are easier to transport, store, buy, and sell.

Special Edition Coins

Like other gold bullion coins, the gold Krugerrand is also issued in a collector-friendly proof version. Due to their mirror-like gloss, these coins are more expensive than their standard bullion counterparts. For their collector's worth, proof editions of cash should be treated with more care than their regular bullion counterparts.

Advantages Of Gold Krugerrand Coins

No matter your level of experience with gold investing, purchasing gold Krugerrands coins is a simple option. In contrast to other solutions that may need a lot of skill or effort, the Krugerrand gold coin is made to be treated as currency. As a result, getting your hands on them is a breeze, regardless of your level of technical expertise. When compared to other gold investments, Krugerrands require little care.

Conclusion

Having actual gold in one's possession is undeniably advantageous from a monetary and practical standpoint. Easy to store and handle, gold coins like the Krugerrand can help you develop a gold investment portfolio without breaking the bank or requiring elaborate security measures. It's essential to have some cash left over after purchasing Krugerrands. Having safeguards in place to prevent dealing with shady gold dealers is necessary, but so is having a diversified investment portfolio that includes gold.

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