What’s a Krugerrand? It’s a South African gold coin bearing an image of President Kruger, first minted in 1967. So what’s special about that? Well, what’s special about gold? It’s gold! Few coins actually have gold in them at all, and the Krugerrand is choc-full of the stuff because it’s made specifically for private investment.
The Kruger was intended to provide a way for South Africa to market the relatively large amounts of gold it was mining. The coin became very popular very quickly because, although it was legal tender as we know it, it did not have a fixed face-value but a fixed weight of gold. Gold of course varies in value, and the coin therefore became a very conveniently tradable item for individuals.
The Krugerrand has one ounce of gold in it, plus a bit of copper to increase the coin’s resistance to wear. This results in a 22 carat gold coin, or if you prefer, a 91.67% pure gold nugget. From 1980 it was joined by the half-Krugerrand, quarter-Krugerrand and tenth-Krugerrand coins—all named according to their respective weights of gold in ounces, and all 22 carat.
So why is the Krugerrand a good investment? Well, for one thing it’s affordable to the smaller investor, and for another, although gold prices fluctuate, there are always periods of general economic difficulty when the price takes a hike, because it suddenly becomes the only dependable investment, and everyone needs something to depend on. Despite recessions in the economy, squeezes on your spending and crunches on your assets, gold stays in shape and just keeps climbing.
Gold has increased by 500% over the last eleven years, and to date (30 November 2010) it’s hovering around $1,360 an ounce. That’s a very good return rate. So now is actually a good time to sell your gold if you need to; if not, wait for the global economy to pick up and the price to come down then buy some more gold!
Just a couple of things to bear in mind. Krugerrands are for long-term investment, so you are not likely to make much money if you sell after only a few weeks, or even months. Furthermore, as with all gold coins, you will buy them at a small premium over the going value of gold, and sell at a price slightly below. However, prices will vary again according to the collector value, which is based on rarity and condition.
The one-Kruger coin is still more widely traded than the fractional Krugers because, for example, there is less premium imposed on the one-ounce coin than on two half-ounce coins together.