Gold IRA Frequently Asked Questions
There is no precious metal investor that hasn’t come across the term South African Krugerrand. So what is a South African Krugerrand this is the question I will answer here for you.
What is a South African Krugerrand
A South African Krugerrand is a gold bullion coin produced in South Africa. The first Krugerrands produced were back in 1967. It was a co-operation between the South African Mint and a precious metals gold refining company.
The reasons the South African government decided to mint bullion coins were to promote gold to the world, to support their booming gold mining industry, to promote gold to the world, and to make gold accessible to the public in general.
The Krugerrand took its name from South Africa’s first Boer president Paul Kruger and Rand. Rand is the country’s basic unit of currency.
The coin depicts the face of Paul Kruger on one side and on the other side, it depicts the springbok, one of South Africa’s national symbols.
The South African krugerrand is a gold coin designed to follow the price of gold. As a result, its price follows the price of gold.
Krugerrand Facts
- South Africa started minting gold bullion coins (Krugerrands) back in 1967
- Krugerrands were massively produced in the 1980s
- Krugerrands are still very popular among gold investors
- Not an aesthetically attractive coin but, an honest and durable coin meeting all bullion standards
- Since 1967 over 50 million ounces of South African Krugerrands have been sold to investors and collectors
- Krugerrand is considered to be a legal tender in South Africa
South African Krugerrand History
1967 was the year South Africa introduced Krugerrands to the rest of the world. Although in the US owning gold was illegal, the American government allowed its citizens to own foreign coins. As a result, Krugerrands became popular in the States.
In 1971 most Western countries started imposing sanctions against South Africa because of apartheid. Throughout the 1970s and 1980s most Western countries one after the other imposed sanctions against South Africa.
In 1970 South Africa was the number one gold producer globally. In fact, South Africa mined over 75% of the yellow metal worldwide. It was an easy task for Krugerrands to become the number one investment choice for gold investors.
In 1980 the South Africans introduced three more sizes of bullion coin. They were 1/2, 1/4, and 1/10, a.of an ounce size.
Krugerrand suffered from these sanctions. In 1985 the United States banned Krugerrand. In 1994 apartheid was abandoned and consequently, the West lifted its ban. By that time the Krugerrand had lost its place as the number one choice for investors.
In 2000, investment gold became tax-free in the EU and the UK. Consequently, there was a demand increase for bullion bars and coins including Krugerrands.
During the 2008 financial crisis, Krugerrands became popular again among investors. The South African coin became popular worldwide and in the US until 2011. Those years investors bought millions of Krugerrand coins.
How are Krugerrands Manufactured
Krugerrands were designed to be tough. That is why they contain a small amount of copper. The coins are manufactured to weigh more than an ounce because an ounce of gold which is 91,67% of the coin and 8,33% of copper totals 1 and 1/11 ounces.
The copper added makes them tough and resistant to scratches compared with other gold coins that are made of pure gold. That toughness and durability are what make them so popular among gold investors.
Krugerrands Huge Success
The Krugerrand is by far the world’s most popular gold coin. Over the years It has sold over 50 million ounces of gold. In the 1980s it accounted for 90% of the world’s coin market.
To grasp Krugerrand’s huge success all we need is to take a look at the American Gold Eagle, an immensely successful coin that has sold over 20 million bullion in coins. That is well below the South African Krugerrand.
The Krugerrand Now
After the 1995 South African sanctions were lifted by the world, the krugerrand never fully recovered. South Africa is not the world’s leading gold producer anymore. As a consequence, the Krugerrand doesn’t sell like hot cakes as it used to. However, in 2018 with investors flocking to buy gold, the Krugerrand became very popular again.
The revived popularity of gold followed by the large increases in gold bullion prices led the South Africans to introduce the silver Krugerrand coin. That was in 2018. The Krugerrand silver coin has 99.9% purity and it has the same design as the original gold Krugerrand coin.
Nowadays Krugerrands are still very popular among investors. They combine durability and are easy to store in small sizes. They appeal to both professional and private investors who want to invest in physical gold or silver. If you want to invest in Krugerrands make sure you do it through a reputable dealer.
Investing in South African Krugerrands
Investing in gold is paramount for serious investors. That is because gold is a non-correlated asset and with gold, portfolio diversification can be achieved.
The krugerrand is the coin you will find available in any gold broker together with the American Gold Eagle, the Canadian Maple Leaf, the Australian Kangaroo, the British Gold Sovereign, and many others. It is my favorite gold coin because it is different and because it is durable.
Investors are buying physical gold because they want to safeguard their savings, protect themselves from the fluctuations of the dollar, protect their savings from geopolitical uncertainty and war, and protect their savings from the oncoming economic crisis.
I hope my What is a South African Krugerrand post got you covered. If you have any further questions or queries feel free to write a comment and I will get back to you.
Amazing that I have never heard of the Krugerrand and I actually like the idea of buying gold to offset currency fluctuations. It fascinates me that it has come in and out of fashion over many years but what a brilliant idea. You gave an excellent warning to only buy from reputable dealers as I am sure that there would be counterfeit coins out there as in all things to do with money.
A very interesting article, I will be on the lookout for these gold coins.
The South African Krugerrand is the world’s most popular gold coin with well over 50 million ounces sold. However, the best is to buy gold coins from a reputable dealer. This is the only way to get exactly what you’ve paid for. Thank you for taking the time to comment on my website Lily.
Many may be wondering how can I tell when a Krugerrand is real and when is fake? Am I the only one asking myself these questions? As happens with many precious metals, gold is not magnetic. So if the coin sticks to the magnet, it is not real.
But, you may say, other metals are not magnetic either so the coin could be made of a different non-magnetic material. In that case, there is another test. If the coin does not ‘ping’ when dropped on a smooth surface, then it could be fake.
Did you see the movie “The Pianist” that tells the true story of Wladyslaw Szpilman? There is a scene in which the main character is at a restaurant playing the piano. Another guy that is seated at one of the tables asked the pianist to stop paying so he could hear the sound the coins made when they hit the table. The man was doing this because, as I’m telling you, gold makes a certain sound as opposed to a counterfeit coin. If you watch the scene carefully, listen to the coin with a different sound. They discard that one.
You are right Ann, you can tell if a gold coin is real by its sound, gold coins make a long high pitch sound compared to the dull sound made by other metals. Magnet testing is also a way to find out whether a gold coin is counterfeit or not. Another way is by testing its size and weight. Thank you for taking the time to leave a comment on my website, Ann.