Why Are Krugerrands so Expensive?

Economic instability triggered by COVID has seen investors increasingly turning to gold in an attempt to diversify their portfolio and gain protection against an uncertain market. But how do you know what sort of gold to invest in? Gold coins are a popular choice owing to their size and ease of transferability. The Krugerrand is one of the most well-known coins, and for good reason.

The Krugerrand is the original modern bullion coin, first minted in South Africa in 1967. It is a product of the collaboration of the South African Mint and the Rand Refinery, a precious metals refining company, and was specifically produced to offer private investors an opportunity to access the gold bullion market. Containing exactly 1oz of pure gold to appeal to investors and offer straightforward value proposition.

^{A 2018 South Africa Mint 2 oz Proof Gold Krugerrand, with certificate numbered 58 of 200, in a presentation case.}

^{Sold for £2,900}

It was named after Paul Kruger, who was the first Boer president, and the local currency, the Rand. Each coin features the South African national symbol of the Springbok on one side, and the image of Paul Kruger on the other. A fixed weight rather than a fixed face value, makes this coin an attractive investment regardless of inflation. Despite the coin having no monetary value, the overall gold content of 91.67% or 22 carat is what determines its worth, one ounce of pure gold follows the market price of gold, which is quoted per-ounce.

The intention was to attract global investment into South Africa’s rich gold reserves, which were the largest in the world, holding more than 75% of the world’s gold reserves in 1970. At the time, the United States did not permit citizens to own gold bullion, but they were allowed to own foreign coins. Not surprisingly the Krugerrand quickly became the most popular gold bullion coin worldwide. Between 1974 and 1985, approximately 22 million gold Krugerrand coins were imported into the United States alone.

^{Sold for £1,500}

International embargoes and economic sanctions against South Africa in the 70s & 80s, made the Krugerrand illegal to import in many Western countries, with the US banning imports in 1985. Most of these sanctions were removed after the government abolished their policy of apartheid in the early 90s, but by then the Krugerrand had already lost market share.

Other gold-producing countries had been inspired by the unprecedented success of the Krugerrand to issue their own examples, including the Canadian Gold Maple Leaf, the Australian Nugget, the Chinese Gold Panda, the American Gold Eagle, and the British Britannia coin.

As it is legal tender in the Republic, it is alloyed with copper to provide a harder and more resilient finished product. It is estimated that approximately 50 million Krugerrands are in circulation with the vast majority in excellent condition due to the durability.

So next time you wonder why Krugerrands are perceived to be so expensive – keep in mind that they are valued based on the gold market, which has proven longevity in terms of returns and has increased value owing to non-renewable natural resources. With more Krugerrands in circulation than all the other gold bullion coins combined, they are still the most extensively collected and traded bullion coin of this century. Buy a Krugerrand and you’ll be able to sell it on quickly, easily and at a good price. It is a lucrative long-term investment that ensures your hard-earned money is safely tucked away for that rainy day.

If you are considering selling any Krugerrands, please do get in touch with a member of our friendly team

We would be delighted to hear from you

0207 431 9445 / info@DawsonsAuctions.co.uk