The Krugerrand gold coin a model for other bullion gold coins
South Africa had the inspired idea to mint their own gold coin, the Krugerrand gold coin which contained exactly one troy ounce of gold, in order to boost their gold market. When it was conceived, in 1967, the Krugerrand was not intended to be legal tender; it was considered just a bullion gold coin, destined to investments. Therefore, its face value was first established in connection to the gold spot price adding a small premium of maximum 5%. It then became a legal tender in South Africa which made possible its importation exempt from VAT.
The Krugerrand gold coin receives the title of being the first bullion gold coin with worldwide circulation. However, many Western countries imposed economic sanctions which made the importation of the Krugerrand illegal. This was due to the South Africa`s policy of apartheid which ended in 1994. Even though those interdictions weren`t leveled until 1994, the Krugerrand gold coin`s success determined other countries to mint their own bullion coins. This is how the Canadian Gold Maple Leaf, the Australian Nugget, the American Gold Eagle, and the British Britannia coin appeared.
By 1980 because the Krugerrand gold coin succeeded in acquiring approximately 90% of the gold coin market, the South African government decided to introduce smaller versions of half-ounce, quarter ounce, and tenth ounce of gold. In dealer`s vocabulary, the one troy ounce Krugerrand is also called a full coin.
The Krugerrand and any other fraction of it are protected by Part II of the Forgery and Counterfeiting Act 1981.
The beautiful part of the Krugerrand gold coin
The Krugerrand gold coin is 91.67% fine gold (22K) the rest being cupper, it has a diameter of 32.7 mm, and a thickness of 2.83 mm. on the obverse of the coin is the figure of President Paul Kruger also known as “Uncle Paul” and the coin`s reverse illustrates a springbok antelope and also the mint date in the field.
As said above, the Krugerrand was conceived with an economic purpose in mind, to help South Africa market the large amounts of gold extracted from the mines near Johannesburg. If we were to compare the Krugerrand gold coin with other bullion gold coins we could say that South Africa did not mint a very attractive coin but it minted a coin that had an international success from the investors` point of view.
If we were to consider the collectors` affinities, we could not say that the Krugerrand gold coin is on top of the list. There are the US Gold Eagle, the US Gold Eagle, and the Chinese Gold Panda. In order to please the collectors, the South African government produced the proof Krugerrand. Being destined to collectors, the proof Krugerrand has the face value above the bullion value.
The difference between proof Krugerrand and Krugerrand bullion coin and the way to distinguish them is the number of serration found on the edge of the coin – for the proof coins is 220 and for the bullion gold coins is 160.
Reasons for investing in the Krugerrand gold coin
In 1967 with the introduction of the Krugerrand gold coin, South Africa which is the biggest producer of gold on the planet, changed the way people regarded coins. Until then, coins had only a numismatic value; they were desired by collectors only. The bullion bars were the way people invested in gold. After the Krugerrand, investors began to secure their wealth by trading bullion gold coins.
Investing into gold coins has become increasingly popular among investors, especially in hard financial times like the ones we are facing today. When acquiring Krugerrand gold coins investors pay only the gold value plus the cost of manufacturing and distribution which is very convenient.
The Krugerrand gold coin is a mass-produced bullion coin which can be bought and sold everywhere in the world so owning gold has never been so simple.