Business, Legal & Accounting Glossary
A krugerrand is a gold coin minted by the Republic of South Africa. A krugerrand contains one ounce of twenty-two-carat gold. It is legal tender and is valued at the current market price of gold. The krugerrand is named after Paul Kruger, an early president of South Africa, and was first sold in 1967. The coin shows his face on its front side. The backside of the krugerrand shows a springbok, a national symbol of South Africa. The krugerrand also has a tiny amount of copper added to it to help it resist damage. The Krugerrand has often been controversial because it was first made under the country’s practice of apartheid when gold was mined by black workers.
A gold coin minted in South Africa, containing a full troy ounce of gold.
Krugerrands are gold coins created by the Republic of South Africa in 1967 to aid in the promotion of South African gold on worldwide markets and to make gold ownership accessible for individuals. Krugerrands are one of the world’s most frequently traded gold coins.
Krugerrands are legal money in South Africa, despite the fact that they were never assigned a rand (ZAR) value.
Krugerrands were created with the sole purpose of deriving their worth from the spot price of gold at the moment they are traded. When the price of gold fluctuates, the value of Krugerrands fluctuates as well.
A Krugerrand coin depicts the image of Paul Kruger, the South African Republic’s president from 1883 to 1900. The coin’s name is derived from a combination of Paul Kruger’s surname and the word “rand,” the currency of South Africa. On the reverse of the coin, a galloping springbok antelope, one of South Africa’s national symbols, is depicted. Paul Kruger was in government when Durban Deep, one of the world’s most profitable mines, was founded in 1896. He was also president during the Witwatersrand Gold Rush, which resulted in the establishment of Johannesburg, one of the greatest cities in South Africa.
The Johannesburg Stock Exchange (JSE) trades Krugerrands in the same manner it trades any other listed equities market instrument, with quoted prices depending on the coin’s weight. The South African Reserve Bank (SARB) issues new Krugerrands, which can be redeemed. 4 Due to the Krugerrand’s legal tender status in South Africa, it was designed to be more durable than the 24-karat gold coins used for decorative medals. The Krugerrand is 22 karats, or 91.67 per cent gold, with an alloy of 8.33 per cent copper.
When Krugerrands were first struck in 1967, the United States prohibited Americans from owning gold bullion, but permitted possession of foreign coins, allowing the Krugerrand to be purchased and sold in the United States. As awareness of South Africa’s apartheid—that country’s system of racial segregation—grew, interest in the Krugerrand waned.
Throughout the 1970s and 1980s, various Western countries imposed economic sanctions on South Africa as a result of apartheid. In 1985, the United States prohibited the importation of Krugerrands. 6 These economic sanctions were lifted in the West in 1994 when South Africa ended apartheid. 7 However, many US investors were unaware that the prohibition had been abolished, resulting in low amounts of Krugerrand imports into the United States.
South Africa was the world’s top gold producer in 1970, accounting for more than 75% of global gold reserves. Throughout the 1970s, Krugerrands quickly became the gold investor’s preferred choice. By 1980, at the top of the gold market, the Krugerrand had surpassed all other gold investments, accounting for 90% of the global gold coin market.
Krugerrand production ceased in 1994, following the end of apartheid. South Africa’s gold production has since recovered, although it has never recovered to the levels seen in the 1970s and 1980s. In 2016, South Africa’s gold production has decreased by 85 per cent since 1980, and the country produced barely 6% of the world’s gold.
Krugerrands continue to suffer today. As illustrated in the graph below, South Africa’s gold production decreased by more than 30% between December 2018 and January 2019, extending the country’s longest contractionary streak since the 2007–08 financial crisis.
Krugerrands continue to be a popular investment for gold investors due to their high value and diminutive size, which facilitates storage. Krugerrands appeal to both professional and private investors seeking to invest directly in gold bullion, hedge against the US dollar, or diversify their portfolios.
Investors continue to purchase gold due to its shown long-term value. Many investors view gold as a secure investment that will preserve its value even in the event of an economic collapse. Possessing a tangible asset appeals to certain investors, who may place a higher premium on physical coins or bars than on paper assets.
If you are considering purchasing Krugerrands, you need to have secure storage space for them. Additionally, you should be suspicious of scammers, seek a reliable gold dealer, and familiarise yourself with your state’s tax rules, which may include a sales tax on gold. The following are some of the advantages of investing in gold that some investors may find appealing:
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This glossary post was last updated: 18th January, 2022 | 0 Views.