The global standard for gold coins
Article courtesy of Farmer’s Weekly People know that the world’s first heart transplant was performed in Cape Town by Dr Chris Barnard, but do they know that other South African inventions include the CAT scan, Q20, Kreepy Krauly, and a unique wealth preservation vehicle, the Krugerrand? The first Krugerrand was minted in South Africa in 1967 and has been making news and breaking records ever since. Rael Demby, CEO of The South African Gold Coin Exchange, The Scoin Shop and SafeGold, explains that the launch of the gold bullion Krugerrand created a new marketplace and made gold ownership more accessible. “The idea behind the coin was to create something that would appeal to collectors and investors, as well as serve as legal tender bullion.” A world first The first batch, issued in 1967, were the first modern coins to consist of one troy ounce of 22-karat gold with a gold purity level of 91,67%. Over 50 million ounces of Krugerrand coins have been sold globally, by far the most of any bullion coin in terms of volume. The Krugerrand set the global standard for collectable and investment gold coins. Since 1967, many other countries have taken their cue from South Africa and have produced their equivalents, including the Canadian Maple Leaf, the American Eagle, the Gold Panda of China and the British Gold Britannia. All of these coins are based on the South African Krugerrand model. The Krugerrand is one of South Africa’s most important assets. It is still the most extensively collected and traded bullion coin in the world. Keeping it safe What gives gold coins and collectables such a sparkling reputation? Gold has been used as a form of currency for more than 2 000 years, showing gold coins and collectables to be historically valued. Gold coins and collectables are categorised as safe-haven assets, which include property, diamonds and fine art. According to Demby, gold coins occupy the top spot in the ranking. “They withstand periods of crisis, fluctuation and inflation. Gold coins are a physical commodity; they’re tangible. You can feel the weight of a coin. That’s very reassuring,” says Demby, and adds that buyers appreciate genuine physical insurance. “Holding a gold coin or collectable is a comforting feeling. You appreciate the weight, enjoy the craftsmanship and are encouraged by your ownership.” But where are your coins when they are out of your hands? Did you know that you can’t insure Krugerrands that you keep in your own home? You can insure other valuables like jewellery and art, but not your Krugerrands. You can insure your car, your pet and your life. But within your own home, it is not possible to insure your Krugerrands! Demby says people instinctively know gold is valuable and understand that it must be stored safely. “You probably also realise that gold coins and bars come with no replacement policy. If you lose them, they’re gone for good.” Hop on the Internet, and you might come across a random post suggesting storing gold and silver in a water-filled fish tank. If that sounds crazy, home storage methods like hiding, burying or using a home safe are even crazier. Demby believes that at-home storage of uninsured valuables is ludicrous. “Our advice is to use a bank’s safe deposit box or a storage facility like SafeGold. Remember, once you lose your gold, you have no recourse should you become a victim. With SafeGold, your Krugerrands, medallions and other numismatic valuables are insured and kept in a state-of-the-art off-site storage facility that specialises in gold storage. When storing your gold, you need to think about security, ownership, accessibility and contamination.” Anonymous and secure SafeGold is a premium safe custody option at a highly competitive price that is fully insured, audited and unlimited. And for one fee, you can put in as much gold as you want. SafeGold offers unrivalled security and total confidentiality and discretion. SafeGold is a trusted, safe custody option that gives you the luxury of remaining anonymous while ensuring your valuable collection is locked up safely and insured for your peace of mind. You don’t want your Krugerrands, collectables and other valuables lumped in together with everyone else’s. So how do you keep possession of your specific gold? Every item is carefully audited and controlled by a team of highly skilled coin connoisseurs. You want to know that you can access or withdraw your gold when needed. SafeGold allows visits to the vaults and delivery services. You can inspect your coins at leisure, and then send them back. Importantly, your precious metals are protected from contamination by layers of physical and technological protection. “We’ve spent decades building an infrastructure of trusted and committed relationships with our vaults and insurers, allowing us to bring our clients the most affordable, secure storage facility,” Demby says.
History of the Krugerrand
The Krugerrand coin was specifically produced to offer an easy means for private investors to access the gold bullion market. For the purpose it was created, the Krugerrand exceeded expectations and was wildly successful. It quickly became the most popular gold bullion coin worldwide, and by the end of the 1970s, the term “Krugerrands” was largely synonymous with “gold coins.” If someone said they invested in Krugerrands, it was taken to mean they collected gold coins. Krugerrands became especially popular with U.S. gold investors, as the commodities markets enjoyed a major bull market during the 1970s. The price of gold soared to over $2,200 an ounce by the end of the decade – a price level it would not approach again until 2011. U.S. investors bought tens of millions of Krugerrands. At that time, no U.S. bullion coins were being minted. The American Eagle gold and silver bullion coins did not arrive on the scene until 1986. The Krugerrand’s success spawned the minting of gold bullion coins in several other countries as well. Canada began minting its gold “Maple Leaf” coins in 1979, and China’s one-ounce gold “Panda” followed in 1982. The demand level for Krugerrands varied widely over the years. It rose steadily throughout the 1970s, declined through the late 1980s and into the 1990s, then began to increase again around 1999. Annual production levels reached as low as 24,000 and as high as six million. By 2018, there were more than 50 million ounces of gold Krugerrands produced. In contrast, while gold American Eagle one-ounce bullion coins also became immensely popular, only about 20 million ounces of them were produced since their original 1986 minting. At one time, the South African Krugerrands made up roughly 90% of all the gold bullion coins in existence worldwide. Originally, there was just the one-ounce gold Krugerrand coin. The mintings now to include the production of 1/2-ounce, 1/4-ounce, and 1/10-ounce coins. In addition to the coins being sold outright, Krugerrands are also traded on the Johannesburg Stock Exchange (JSE). Extract from: CORPORATE FINANCE INSTITUTE
