How to Invest in Krugerrands
Today’s financial world is both fast-paced and complex.
Investment and trading opportunities the world over are becoming ever more diverse, with each offering its own distinct risks and benefits, advantages and disadvantages that affect their attractiveness to potential investors. South Africa has its own unique and highly popular investment option in the form of the Krugerrand.
The Krugerrand is a type of gold coin minted in South Africa that has risen to become the world’s most widely held and actively traded bullion coin. Named for Paul Kruger, the 5th President of the South African Republic, whose profile appears on the obverse side since 1967, when they were introduced. In the bullish gold market that emerged in the 1970s, the Krugerrand became the top choice for investing in gold around the world. By 1980, the coins accounted for 90% of the global gold coin market. Today, over sixty million Krugerrands have been sold worldwide.
How many carats are Krugerrands?
Krugerrands are 22 carat gold coins that are divided into four sizes according to weight, containing 1oz, ½oz, ¼oz or 1/10oz of pure gold bullion. In fact, they were the first gold coin in the world to be denominated in ounces of pure gold. This means that the coins’ value is inextricably linked to their gold content, which allows them to retain their value in a variety of economic conditions.
As with many other coins, alloyed with the gold is a small amount (1/12th of the coin’s mass) of copper, which serves to harden the metal, making the coins even more durable. This popular alloy is historically known as ‘crown gold’, and is also used in England to make gold sovereigns.
The Krugerrand’s main selling point is that it allows investors to buy and trade gold on the international market in a form that is easily exchanged. Gold in today’s market is, as it always has been, a trusted way to store monetary value in a fixed asset. Even in a recession, gold has proven to hold its value against many other forms of investment, such as commodities and shares, and can be an excellent hedge against the rise of inflation. As a wealth preservation measure, especially in economically challenging times, gold is hard to beat.
This unique coin serves as one of the world’s main ‘gold standards’, allowing for the precious metal to be traded in an easily recognisable and transferrable form This means that Krugerrands can be bought and sold in a variety of establishments, including coin dealers, banks, collectors, businesses, and other authorised third-party services worldwide, making them a highly liquid investment. In addition, their durability portability, and ease of storage provide further benefits.
Unlike other kinds of collectable coins, the value of a Krugerrand is not based on its rarity, condition, or other factors, but simply for its gold content. This makes trading a simple and straightforward matter. Furthermore, their specific value at any point in time can be effectively calculated based on the current gold price (in troy ounces) to an exact amount, depending on denomination.
Where do you buy Krugerrands?
All of the gold used to make Krugerrands is supplied by Rand Refinery, the largest single-site refining and smelting complex for precious metals in the world, and the sole supplier of gold bullion to make the coins. Rand Refinery has smelted nearly a third of all the gold mined across the globe, and has built a strong reputation for maintaining the highest standard of quality, purity, and reliability worldwide.
In South Africa, Krugerrands are legal tender, being minted by the South African Mint. As a result, they are one of the few gold assets (in South Africa at least) that do not have to be melted down or assayed to be resold, but can be used in their current form. This further simplifies trading in gold for all parties, adding to the attractiveness of this investment option.