Why You Should Invest in South African Gold Krugerrands

Why You Should Invest in South African Gold Krugerrands

Gold Krugerrands

 

The market for 1 oz gold coins is the strongest it’s been in years and among the most requested 1 oz gold sovereign coins in the marketplace is the South African gold krugerrand.

If you’re in the market to acquire gold coins for investment purposes, South African gold krugerrands should be at the top of your list.  These 22 karat gold bullion coins are among the most circulated, recognized, and highest minted 1 oz gold coins of all time.  In many respects, they were the model for other one-ounce sovereign gold coins that were subsequently produced.

In this post, we’ll share with you the interesting history of these coins, some specifications, the various sizes available, the number produced and why they make for a great investment.

 

What is the history of Krugerrands?

In 1967, South African gold krugerrands were presented as an attempt to promote gold investment in South Africa. They were the first 1 oz government-issued gold bullion coins made available to the public and were an instant success. Once the U.S. lifted the prohibition of gold coins in 1974, they became one of the most collected gold coins in the industry.

In 1978 these coins reached their peak and became the leading gold coins worldwide.  However, they were temporarily banned from being imported in the U.S. from 1984 – 1994 due to apartheid.

The South African Mint
The South African Mint

Following the fall of apartheid, these coins picked up where they left off as one of the most recognized and popular gold coins in the industry. By the time they were made legal again beginning in 1995, they were joined by the American gold eagle and Canadian gold maple leaf as one of the three most recognized gold bullion coins.

 

Technical Specifications and Facts

 

You may have noticed that the gold krugerrand has a slightly different color than the gold eagles and gold maples. This is because the coins are 22k gold and are composed of 91.67% gold and 8.33% copper. However, they still contain one troy ounce of fine gold; they’re simply heavier than 24k gold coins, weighing in at 33.93 grams. For those of you who are familiar with troy ounces, a troy ounce is equal to 31.1 grams.

Gold Krugerrand Specs

The metal composition was intentional and has nothing to do with the refining capabilities of the South African Mint. The addition of copper makes the coins more resilient. They’re less likely to show evidence of wear or handling, as is oftentimes the case with 24k gold coins. The composition also provides the coins with a distinctive rose color appearance, which makes them stand out from the crowd.  The only other sovereign gold coins to display a similar appearance are Russian gold roubles.

Gold krugerrands have been minted every year since they were first introduced by the government of South Africa. They’re minted both as proof coins mostly designed for collectors, and bullion coins for investors. Even though both possess the same design, the proof coins are more aesthetically appealing with a mirror-like finish background and a frosted foreground.  They’re produced in lower quantities than their bullion counterparts and are therefore more valuable.

 

Design and Sizes

Krugerrands originally were minted as one ounce gold coins, which remain the highest minted size gold krugerrand to this day.  However, in 1980, fractional sizes were introduced. Now, they’re available as 1 oz, ½ ounce, 1/4 ounce and 1/10 oz gold coins. Additionally, the coins can be purchased as four-coin sets.

Gold Krugerrand Fractional Sizes
From LEFT to RIGHT: 1oz, 1/2oz, 1/4oz, 1/10oz

To this day, the design of the krugerrand remains nearly unchanged. The obverse, or front of the coin, depicts Paul Kruger, South African Republic’s 5th president, and the reverse displays a springbok, the national animal of South Africa. The springbok is frequently mistaken for an antelope. One intriguing fact that distinguishes the Krugerrand from other gold coins is that it doesn’t indicate a denomination on the coin.

Nearly all other government-issued gold coins possess a face value or denomination. This is because the coins are considered legal tender and can technically be used as money. Of course, the gold value of the coins is substantially higher than the face value, so you wouldn’t want to use them as currency. The lack of a face value on South African gold krugerrands has had no impact on the popularity of these coins.

 

The Popularity of Gold Krugerrands

Over 50 million gold krugerrands have been produced since 1967, making them the highest produced modern issued gold coin. These coins are popular the world over. In fact, we regularly meet with customers from other countries, and while they may not be familiar with some of the other gold coin offerings, nearly all of them recognize gold krugerrands.

At the time of this writing, South Africa is one of the top gold producing countries in the world, and has consistently been for decades. Considering the substantial amount of gold mining that occurs in the country, we would expect for the gold krugerrand to remain the highest minted 1 oz gold coin for the foreseeable future.

 

Why Choose Popular Gold Coins

As coin collectors, it’s been ingrained in us that the rarer the coin, the better.  However, when it comes to bullion gold coins, it’s exactly the opposite.  When individuals invest in gold coins, they’re not only looking for an investment that will appreciate in the months and years to come, but also an investment that is easy to liquidate.  When it comes to gold bullion coins, it’s best to invest in high mintage and recognizable coins versus the alternative.

While some other gold coins are rarer and may be more aesthetically pleasing, it may not be in your interest to purchase these coins; especially if they’re more obscure. For example, the Isle of Man produces some stunning 24k gold coins, but the average gold coin investor may not be familiar with these coins.

Of course, coin dealers are, however, it’s always a good idea to have as broad and liquid of a market as possible if the need ever arises to sell your gold krugerrands.

 

What is the Value of a Krugerrand?

Except for proof coins, and a couple of low mintage dates, such as the first year of issue in 1967 and 1995, the value of a krugerrand is closely connected to gold’s value. Krugerrands can typically be purchased for the spot price of gold plus a small premium, which is the coin dealer’s commission.

Since the value of krugerrands are primarily determined by the spot price of gold, you can monitor the price of gold to determine the ideal time to buy or sell gold krugerrands.

Keep in mind that premiums and prices are subject to change, which is based on supply and demand in the marketplace. When the gold price is down and d

South African Gold Mine
South African Gold Mine

emand outstrips supply, you can expect to pay a higher premium as a percentage of the spot price of gold.

Alternatively, if the price of gold is trading near an all-time high and there’s plenty of supply in the marketplace, the premium as a percentage basis may be less.

 

Summary

In summary, we’ve shared with you a bit of history on South African gold krugerrands and how these coins came to be. Interestingly, they were banned in the U.S. for approximately a decade due to apartheid but picked up where they left off once the coins again became legal to own.

As we discussed, krugerrands are a bit different from some of their counterparts, as they’re 22k, have a rose color appearance and don’t have a stated face value. These differences, however, have had no impact on the popularity of these coins.

We also shared with you a couple of reasons why you should consider investing in gold krugerrands and why the high mintage of these coins should be considered a positive as opposed to a negative.

Whether you’re in the market to buy or sell gold krugerrands, Atlanta Gold & Coin Buyers should be your gold coin dealer of choice. We regularly deal in these coins and can assist you with any questions that you might have.

Contact us today to receive among the best rates in the industry.

Give us a call at: 678-264-6421

We look forward to hearing from you and earning your business!

Atlanta Gold and Coin Buyers

Tony Davis
Tony Davis