The History and Future of the South African Gold Krugerrand
Introduced in 1967, the introduction of the Krugerrand revolutionized the way that people buy gold bullion. Coins typically contained fractions of ounces, worldwide, up until that point. These coins contain exactly one ounce of gold and were intended for export. This has made the gold Krugerrand one of the world's best selling coins and a standard for investment grade gold bullion coins, with over 50 million coins sold.
All gold Krugerrand coins are made with a 91.67 pure alloy (the rest being copper) or, 22-karat, so the total weight is in excess of a single ounce on the one-ounce coins. Since 1980, they are available in several denominations, down to 1/10-ounce of pure gold. They are produced and owned by copyright by the Rand Refinery, Ltd. The obverse side of the coin features a profile of 4-time Boer president, Paul Kruger. On the reverse a springbok antelope, native to South Africa, is depicted along with a date and the weight in pure gold. Though legal tender as an ounce of gold in South Africa, they do not have a face value – being intended for use as gold bullion.
As the world's largest gold producing nation by far (at the time), South Africa's Apartheid government was unpopular worldwide, to say the least. Many nations had active sanctions against purchasing goods through the 1970s and 80s. However, when they were first introduced, Krugerrands were immensely popular and profitable. This produced a large influx of more stable international currency that, it can be argued, propped up the ruling minority. While true, these embargoes did significantly decrease sales for many years.
The introduction of the Krugerrand was innovative because its status as legal tender in South Africa made it possible for US investors to purchase these coins as a method to buy gold bullion. Coins made in the US were still outlawed, as they had been since 1933. It was not until the 1980s when ownership was made legal again to coincide with the launch of the first US gold bullion coins in 50 years, the US Gold Eagle.
Krugerrands are available in both bullion coin and limited-edition proof sets that have a somewhat higher numismatic value. Being alloyed with copper, they have the advantage of being far more resistant to scratches and wear than the far-softer 99.99% pure gold bullion coins such as the US Buffalo and the Canadian Maple Leaf.
Now that there are several different gold bullion options, it is interesting to note that Krugerrands still carry significant influence as a well known and respected way for citizens and institutions to buy gold bullion. Coins, both used and new, can be purchased from just about any dealer who specializes in gold coins. Be wary of anyone trying to sell a Krugerrand made of any other metal – this is one of the few bullion coins that is only offered in gold.
Kevin Bowman
March 10, 2009
