There is no denying that modern gold investing and collecting owes a debt to South Africa. The debut of the iconic Krugerrand undeniably changed the world by making private gold ownership much more accessible to the common man.

This article will cover the history of this most important bullion coin. We’ll also talk about the different sizes available to you and what you need to know before you buy.

The Krugerrand remains an important coin today. Even for brand new gold buyers, it can be an excellent option to consider. So, let’s get into it.

What Is a Krugerrand?

Let’s talk about the basics first. The Krugerrand is the flagship gold bullion coin produced by the South African Mint. It contains one troy ounce of pure gold, but it is minted to be 22-karat, or 91.67% pure, to make it more durable. Copper represents the remaining 8.33% of the alloy.

The mint first produced the Krugerrand in July 1967. Its name is a portmanteau of “Kruger” – a reference to an influential former president, Paul Kruger – and “rand” – the currency of the Republic of South Africa.

Appropriately, an image of Paul Kruger, who is sometimes known as “Oom Paul” or “Uncle Paul,” appears on the obverse of the coin. On its reverse, there is an image of a Springbok antelope, one of South Africa’s most recognizable fauna.

Perhaps the most notable aspect of a Krugerrand is its distinctive hue. Instead of tending towards the light colors you’d expect from a gold coin, the Krugerrand has a reddish tone that reflects the copper in its composition.

Why the Krugerrand Was the First — and Why It Mattered

Until the 1960s, gold ownership was mostly the province of the wealthy and the institutional. American investors weren’t permitted to own bullion until 1974, and even those outside of the US found their options for profit hampered by the London Gold Pool – an international pooling of gold reserves designed to hold gold’s value at $35/oz.

However, South Africa had long been one of the world’s top producers of gold in the 20th century. In fact, it would claim the mantle of the top country for gold ore in 1970.

So, the South African Mint found itself with a tremendous amount of gold to unload. Thus, it devised the Krugerrand as the world’s first bullion coin to be accessible to the masses. The first gold Krugerrands hit the market on July 3, 1967.

One of the most groundbreaking elements of its design was the fact that South Africa minted it with a full troy ounce of gold. In other words, it was one of the few times where the pricing of the coin relied upon the gold content, rather than the gold content reflecting the face value of the coin. Actually, the Krugerrands do not have a face value on them, though they are legal tender in the Republic of South Africa.

Now, while the Krugerrand certainly put the idea about bullion coins in the minds of other countries, it was a different creation of South Africa that finally spurred them to create rival coins to the Krugerrand. In the 1970s and 1980s, many countries grew increasingly dismayed at South Africa’s racist government policy known as apartheid.

In fact, their distaste for apartheid led many of them, including the US, to ban the import of the Krugerrand altogether. In the vacuum left by the ban, coins such as the Canadian Gold Maple Leaf and the American Gold Eagle found a space to rise as alternatives.

Now, apartheid finally ended in South Africa in the 1990s, and the sanctions on the Krugerrand soon followed. So, the Krugerrand is now restored as one of the premier gold coins on the international market. However, it now has much more competition than it did in the 1970s and early 80s.

Sizes Available

When the Krugerrand debuted in 1967, it was available in a single size – the iconic 1 oz coin. This size was the only option for the rest of the 1960s and the entirety of the 1970s.

However, in 1980, the South African Mint expanded its offering to allow for purchasers with more limited budgets to buy. It unveiled three smaller options – the 1/2 oz, the 1/4 oz, and 1/10 oz Krugerrands.

A few things to note:

• No matter the size, all Krugerrands feature the same composition and design. So, even the 1/10 oz coins are 22-karat gold and feature Paul Kruger and the springbok antelope.
• The 1 oz Krugerrand remains the most popular among investors. Therefore, it is the most liquid and is the easiest of the four sizes to resell.
• As you decrease in size, the premium attached to the coin increases. In absolute terms, the smaller coins are still cheaper. However, in terms of unit cost or percentages, the 1 oz coin is the most cost-effective of the group.
• Within the different sizes, there are also further options to purchase proof versions and bullion versions.

What to Know Before You Buy

We mentioned that smaller Krugerrands have a higher premium than the full-size (1 oz) variety. If you’re new to coin collecting, that may not mean anything to you.

However, the premium is the amount that a dealer charges over the spot price for the amount of gold inside a coin or bar. In general, most dealers charge a modest premium for Krugerrands – where they may charge more for coins such as American Gold Eagles or Canadian Gold Maple Leafs.

When you decide to buy, be sure to purchase from reputable dealers. Be sure to check with the Better Business Bureau before you do business with them, and look at the negative reviews on Google to investigate the whys behind the complaints.

As long as there aren’t issues with how they do business, they’re probably alright. Listen to your gut, though – the good news is that Krugerrands are so common and well-known that you don’t have to search far and wide for them. They are easy both to buy and to resell.

Now, the condition of your Krugerrand is important to its value. Generally speaking, it’s best if you never put your bare finger on the coin. However, if you are buying proofs, it is doubly important, as part of the essential value of proof coins is their pristine quality and appearance.

Be sure you’ve thought about the way you plan to store your Krugerrands. Home safes are the cheapest, to be sure, but they are far less secure than a safe deposit box or, better yet, a secure storage vault. You might also want to consider insuring your Krugerrands against theft and other mishaps.

Who Should Buy a Krugerrand?

Krugerrands definitely appeal to particular sets of investors.

First-time gold buyers who want to start with a known quantity are well-served to think about the Krugerrand. Its value is the most time-tested of them all, and it is always going to be one of the most recognizable and liquid bullion coins in the world.

For that matter, any investor who doesn’t want to gamble on an illiquid coin could justifiably stick to the Krugerrand. The lower premiums compared to some of the other marquee coins can help keep costs down and options open.

There’s also something to be said for the collector interested in historical relevance and significance with their coin collections or investments. Buying the “OG” bullion coin would certainly tick those boxes for some people.

You might think twice about the Krugerrand, however, if you want to maximize the purity of your gold stack. There are several higher-purity options that can make for a more “pristine” collection if you want an efficient (in terms of purity) selection of coinage in your vault.

Conclusion

The Krugerrand is the one that started it all. The notion of the ordinary man owning gold began with the Krugerrand’s release in 1967.

Several years of international sanctions made the Krugerrand’s journey rockier than that of other bullion coins. It took an entire regime change and global redemptive arc to return it to its position of glory.

Nevertheless, the Krugerrand remains one of the most popular and important bullion coins in the world today. If you want to get started, we have them – but be sure to do your price research and shopping before you make a final decision.