When you first start looking at bullion coins, you’ll probably ask yourself, “What is a Krugerrand?” The South African Krugerrand is one of the most famous and easily identifiable gold coins on the market today. It’s one of the longest running gold bullion coins, and the design has stayed the same since its inception. In 1980, it was by far the most popular investor choice for gold buying, but that changed when sanctions for apartheid began to hit the country. In 2012, CoinWeek called it “the world’s most popular gold investment coin,” citing 48 million ounces of Krugerrand gold sold. This unique and popular coin has been a mainstay of the world bullion market for decades.
The History of the Krugerrand
South Africa’s Rand Refinery began striking Krugerrands in 1967. Unlike many other gold coins, the Krugerrand was designed as if it were a possible circulating piece. The coin’s alloy was created with durability in mind. The Krugerrand is 22 karat gold, alloyed with copper to make the more durable. This alloy, called “crown gold,” was historically used for coins like the British sovereign that were designed for heavy circulation. The obverse features South African historical leader Paul Kruger’s face, while the reverse shows a springbok in motion. The coin took its name from Kruger and the South African currency, the rand.
Nations had struck gold coins before, but they had not been created primarily for their bullion content. The South African Krugerrand was minted for bullion. At the time, gold was mostly available only in much larger bricks. This made investing in gold more difficult, as only wealthy investors could really afford to buy such large bars of gold. The Krugerrand was a more affordable and interesting way to invest in gold, creating a lower barrier to entry and higher liquidity within the gold market.
The Krugerrand also benefitted from the U.S. Gold bullion ban. U.S. citizens could not own Gold bullion outside of a few small exceptions. In 1975, Gerald Ford repealed the Gold Reserve Act and allowed Americans to own and purchase Gold again. That buttressed demand for years until the 1970s and 1980s, as nations began to sanction South Africa for its apartheid policy. Krugerrands were much less popular after that point until 1994 when sanctions were lifted, and even then, it took a while for demand to recover as people did not realize that the coin was again available.
Krugerrands are still popular, but South African Gold production has not reached the same level as at the time of the coin’s conception. South Africa had held the vast majority of the world’s Gold reserves around 1967, but production dived as coin demand slowed.
The Krugerrand is still a popular coin despite that, but competition is much higher than it was at the time. There is a low premium on the coin compared to many others, which can make it an appealing investment option.
Gold Bullion Coin Investing
The Krugerrand is only one of a vast number of Gold coins on the market, and though it may have been the first bullion coin, it’s not the only one. Eagles, Pandas, Maples, Sovereigns and other coins from other sovereign nations have made large inroads into the market.
No matter what Gold coin you’re looking for, APMEX can help. We carry Krugerrands from various years and all the major Gold bullion coins, as well as many other Precious Metals. Contact us today to buy Gold bullion coins like the Krugerrand.
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