Gold coins: the South African Krugerrand
16.03.2011 | GoldMoney
Roman Baudzus writes --
The concept of the South African Krugerrand dates back to 1964, when it was thought of as a potential means of making private ownership of gold possible for the general public. The South African Mint released the first series in 1967, and the gold coin was the first of its kind worldwide. The front side of the coin features the profile of Paul Kruger, the South African Republic's fifth president and leader of the Boer resistance movement against the British. On its back it shows the springbok, the famous national symbol of the country. The minted words "South Africa" and "fine gold" are displayed in South Africa's two official languages, English and Afrikaans. The coin is available in four different sizes and weights respectively. According to the country's constitution as well as its central bank provisions, the Krugerrand is a legally accepted means of payment.
Worldwide sales of the Krugerrand were so high until the early 1980s that it reached a market share of 89 per cent of the entire gold coin industry. The unique concept behind the minting of the gold coin with the weight of one ounce was that its value only depends on the current London gold fixing price. For this reason the Krugerrand does not have a nominal rand-value. The fantastic marketing and sales success of the Krugerrand led to other countries minting their own gold coins by the late 1970s. The Canadian Mint started production of the Gold Maple Leaf in 1979, and the United States followed in 1986 with the minting of the American Gold Eagle. However, Krugerrand sales were hit by European and American trade sanctions on South Africa in protest at apartheid. Production and trade in the coin dramatically declined. After the end of apartheid and the election of Nelson Mandela in 1994, the market share of the Krugerrand increased somewhat, and nowadays forms approximately 50 per cent of worldwide gold coin demand.
Standard weight of the South African Krugerrand
The purity of the Krugerrand is .9170, or 91.7 per cent gold. Copper makes up the remaining percentage, which gives the coin its reddish colour. Every one-ounce coin weighs 33.93 grams and consists of 31.1 grams of gold as well as 2.83 grams of copper. Due to the sales success of the one-ounce coin, the South African Mint started producing half, quarter, and 1/10 ounce gold coins. The production of smaller Krugerrand coins aimed to facilitate trade in gold, with the smaller finenesses making gold purchases more attractive to certain target groups, since it is more affordable. Since its first series in 1967, more than 50 million Krugerrands have been sold, making it the best distributed gold coin in the world.
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