What Is a Gold Krugerrand?
The gold krugerrand is one of the world's most instantly recognizable coins. It is both investment-grade gold bullion and legal tender. At one time the most popular way to own physical gold in the United States, krugerrands are still sought by collectors and investors, and are accepted around the world.
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Identification
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The South African krugerrand gets its name from the portrait of Paul Kruger, last president of the South African Republic, on its obverse. On the reverse is the image of a springbok antelope, a national symbol of South Africa. The krugerrand has the gold content and the name "South Africa" written in both English and Afrikaans. "Krugerrand" the word is itself a registered trademark of Rand Refinery Limited, of South Africa.
History
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The krugerrand was the first 1-ounce gold bullion coin ever widely minted and circulated as legal tender. Since it was first produced in 1967, it has become practically synonymous with gold bullion. At the time, it was illegal for U.S. citizens to own gold bullion except for legal tender coins. The krugerrand was thus legal for Americans to own, which explains its popularity. In 1980, it's estimated that krugerrands made up 90 percent of the gold bullion market, but the coin has been a victim of its own popularity since other nations (notably Canada, the U.S. and Australia) have minted their legal tender bullion coins.
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Types
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Originally, the krugerrand came only in 1-ounce gold size. In 1980, smaller sizes came into production. One-half, 1/4 and 1/10 ounce coins are now available, all with the same purity as the original 1-ounce product, which is informally called the full kruger. The 1-ounce Krugerrand typically sells at 4 to 10 percent over the current gold spot price. The fractional ounce rounds have a lower price point, but represent a far higher premium over spot, and therefore less value for the buyer. The South African mint also produces proof coins and collectible medallions resembling the krugerrand style.
Features
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All krugerrands contain 91.7 percent gold. This alloy is more durable than finer gold bullion, which makes the coins resistant to scratches and wear. Because the 1-ounce coin contains 1 ounce of gold, the full coin actually weighs 1.0909 troy ounces, or 33.9305 grams. Its diameter is 32.77mm and thickness is 2.84mm. Like the full kruger, the smaller coins contain the amount of gold represented by their name, and therefore weigh slightly more than a 1/2, 1/4 and 1/10 ounce, respectively.
Function
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Physical gold contains a considerable amount of wealth in a small space. Because gold doesn't tarnish, it is also a good long-term store of value. Unlike bank deposits, which could be unavailable during a run or bank holiday, or gold investment accounts and mutual funds, which can be unreachable for similar reasons, gold bullion is held close by many investors as an emergency currency or item of barter. Krugerrands, being widely recognizable, and of reliable content, are sure to retain their value in the event of financial catastrophe. Even if that catastrophe never happens, gold bullion is widely lauded as a hedge against inflation.
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