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Gold Krugerrand Buying Guide


In production since 1967, the South African Krugerrand is the first of the modern bullion coins. They quickly became hugely popular with investors, and in fact it was the restrictions on buying them towards the end of the Apartheid period that spurred the release of similar coins like the US Gold Eagle. Now that South Africa has reformed its political systems Krugerrands are a leading investment vehicle once more, even if they haven’t regained their old dominance of the gold coin market.

If you’re planning to add gold to your portfolio and think coins are the way to go the Krugerrand has a lot going for it. It’s a thoroughly established brand with a reputation for quality, and demand is consistently high – you’ll have no trouble in selling off holdings. Another benefit is its gold content. The Krugerrand is minted from Crown gold – an alloy of 91.67% gold and 8.33% copper – but the coin is sized so the actual gold content is exactly one ounce. That makes it easy to calculate their actual metal value.


Design & Sizes


The standard gold Krugerrand has a profile of Paul Kruger on the face and, on the reverse, a Springbok antelope, “Krugerrand,” and the words “South Africa” and “1oz fine gold” in English and Afrikaans. As an official South African coin the Krugerrand is legal tender but unlike many other bullion coins they don’t carry a nominal face value; the currency value of a Krugerrand floats with the gold price.

Since 1980 three smaller sizes of Krugerrand have been available. These follow the same design as the standard coin but contain ½o z, ¼ oz or 1⁄10 oz of pure gold.

There are several factors to look at when you are looking to buy gold Krugerrands. Like all bullion coins Krugerrands carry a premium over the spot price of gold, usually between 5 and 10 percent. The premium is variable and tends to be lower as a percentage when the spot price is high. It’s also lower on the larger coins, as production costs for the smaller ones aren’t significantly lower.

Grades

Most Krugerrand production is standard bullion coins but the manufacturer, Rand Refinery Limited, also makes limited edition proof coins. These are geared towards coin collectors rather than investors and carry a higher premium. They’re finished to a higher standard than bullion mintings and can also be identified by the finer reeding on the edges – they have 220 serrations instead of the normal 160.

Investing In Krugerrands

If you want to add Krugerrands to your portfolio our advice is the same as with other coins – stick with the bullion grade to take advantage of lower premiums, and make the bulk of your purchases the 1 oz size. If you plan on selling off smaller quantities it’s worth buying an assortment of smaller coins too, to build in some flexibility. The premium on secondhand Krugerrands is lower than on new ones, although the difference isn’t as great as with some other coins, so this is a good way to maximize your gold holdings.

With its solid history as an investment the Krugerrand is a great option for expanding your metal holdings. In many ways it set the standard for bullion coins and it’s still one of the most widely traded. With a guaranteed ounce of pure gold in every coin it’s a very attractive option, and every gold investor should give it a close look.