Kruger Rands

Just what is a Kruger Rand?

A Krugerrand as it is sometimes referred to is a gold coin minted by the South African Mint from 22 carat (fine) gold. Actually there are four different size coins that are minted with the only difference being the weight of the coin.

It is the only legal way the South African government will allow its citizens (the same ones that mine and produce the stuff in the first place) to hold gold without a special jeweller's license.

Krugerrands are minted in one ounce, one half ounce, one quarter ounce and one tenth ounce 'sizes'.

Best of all the price of this gold coin is determined by the price of gold on the day. You pay a slight premium for the privilege to holding the precious metal and this premium covers your traders costs of handling the coins. It is a very small percentage. And it makes Kruger Rands about the cheapest gold coin available...

For instance: Right now assume gold is USD 640. A Kruger rand will cost around USD 660 to USD 680. Sometimes the price varies a bit but you should never pay more for your Kruger Rand than the prevailing gold price, plus two or three percent. Compare that to your credit card transaction costs (yours AND the merchants!).

So, for all intents and purposes, a one ounce gold Krugerrand will cost you about the same price as the trading price of one ounce of pure gold. You get the stamping of the coin absolutely free!

Something that often causes confusion amongst investors in gold, especially new investors buying gold for the first time is the purity of gold.

The difference between 22 carat (fine) and pure gold:

The price per ounce of gold as quoted on stock exchanges is the price of one ounce of fine gold.

This is in fact, 22 carat gold is gold that is mixed with copper. In this case the purity of the gold is reduced to 91.667%. The copper strengthens the gold making it less prone to scratching and deformity. Kruger Rands are minted from the same fine gold, and thus have the same purity.

This is the same purity as that of gold quoted on all stock exchanges around the world. So, when buying one ounce of a Krugerrand you are buying one ounce of fine gold as quoted on the New York or any other stock exchange for that matter.

In other words don't worry. In each one ounce Kruger Rand coin you are getting one ounce of pure gold plus some free copper...

Proof Kruger Rands on the other hand are a little different. These are limited editions of the same Kruger Rand bullion coins. They are hand made at the South African Mint and they are fashioned from the same fine gold. There are only about a thousand or so produced every year and they are distinguished by having a certificate of authenticity and a special presentation case.

These coins carry a substantial premium over bullion Krugerrands. From a collector's point of view they might be worth the value but from a pure investment into gold, krugerrand bullion coins are a better option as you are buying the intrinsic value of the gold and not the collectable value of the coin.

That said, our friends at SA Coin have some amazing information on the value of collectable gold and other precious coins. These coins as an investment have made remarkable returns and with the focus shifting onto gold in the next few years, are set to continue to deliver outstanding investment value.

South African gold coins, collectable gold coins at that are a largely untapped easy to access entry into owning fine gold. Krugerrands incidentally are about as liquid an asset investment as you can make - even if you don't like the coins you can go to the extremes of melting them down and selling them as one ounce lumps of gold... which is illegal in South Africa by the way. Also, a lump of gold is less easy to liquidate than a Kruger Rand...!