Krugerrands: low premium gold bullion coins

Krugerrands are the world’s best known gold bullion coins. Although Krugerrands come in four sizes, the 1-oz coins are the most popular. In excess of fifty million 1-oz Krugerrands have been minted, more than all the other modern 1-oz gold bullion coins combined.

Most of the Krugerrands available in the United States are secondary market coins, which were sold into the United States in the 1970s and early 1980s. And, until the financial meltdown of 2008 there were enough secondary market Krugerrands to meet demand.

However, with the 2008 financial crisis, Krugerrands were again imported into the US to meet the demand for gold in any retail form. Today, Krugerrands and American Eagle Gold Bullion Coins are the most popular gold bullion coins in the US.

Krugerrands: 22-karat gold bullion coins

Because Krugerrands are 22-karat (91.67% pure) gold bullion coins, they are durable and highly resistant to damage and scratching. Pure gold bullion coins, such as the 24-karat Canadian Gold Maple Leafs, are easily damaged if dropped or if not handled properly.

Gold Eagles also are 22-karat, which is another reason they enjoy great popularity in the gold bullion coin market.

Krugerrands background

Krugerrands are South African gold bullion coins. They gained instant popularity in the United States after Americans regained the right to own gold bullion on December 31, 1974. Before then, Americans could not legally own gold bullion coins, a prohibition that came about in 1933 when President Franklin Roosevelt, by Executive Order, ordered Americans to turn in all gold bullion coins and gold bullion. The Treasury also ceased redeeming gold certificates in either gold coins or gold bullion.

With the removal of the prohibition on gold bullion ownership and with Americans seeking protection against the rapidly rising inflation of the 1970s, Krugerrands were well received in the US. However, in 1985 Congress banned the importation of Krugerrands because of South Africa’s apartheid, a form of legal racial segregation that essentially guaranteed that the minority whites ruled the country.

By the 1990s, the ruling whites saw the handwriting on the wall and began discussions to end apartheid. In 1995, Nelson Mandela was elected South Africa’s first black president. With Mandela’s election, the ban on the importation of Krugerrands into the United States was lifted.

Following the lifting of the importation ban, the South Africans made an attempted to again market Krugerrands to Americans. However, Krugerrands failed to gain another foothold in the US for two reasons. One, the US Mint had introduced American Gold Eagles in 1986, and by 1995 they had become as popular in the US as the Krugerrands had been in the 1970s and early 1980s.

Further, Gold Eagles are essentially the same coins as Krugerrands, the only difference being that Gold Eagles are minted by the US Mint while Krugerrands are produced by the South African Mint. Otherwise, they are the same: same 22-karat, same four sizes, and exactly the same dimensions. Consequently, when the South Africans tried to re-introduce Krugerrands after the ban was lift, Gold Eagle provided stiff competition that had not existed in the 1970s.

The second reason the Krugerrands could not again be marketed successfully in the US was because there were an estimated 25 million of them already in the US, with thousands of them trading daily in the secondary market at lower premiums than at which new Krugerrands were being offered. In short, the huge quantities of Krugerrands sold into the US in the 1970s and early 1980s provided tough competition, along with Gold Eagles.

When Krugerrands and Gold Eagles sell at about the same prices, go with the Gold Eagles, which hold their premiums better. At times, Krugerrands can sell as much as $20/oz cheaper than Gold Eagles.

When Krugerrands can be bought substantially cheaper than Gold Eagles, buy the Krugerrands because there are times when all gold liquidates at the same price. For a further discussion of this topic, read Gold Krugerrands vs. Gold Eagles, a post on Bill’s Blog, which is dedicated to the precious metals markets and to matters that affect precious metals prices.

Krugerrands come in four sizes

As do Gold Eagles, Krugerrands come in four sizes: 1-ounce, 1/2-ounce, 1/4-ounce, and 1/10-ounce. All four gold coins carry the same design. 1-oz Krugerrands are far the most popular and generally can be found in large quantities. The fractional-ounce Krugerrands are not always available, but when fractional-ounce Krugerrands are available they often carry significantly lower premiums than fractional-ounce Gold Eagles.

Almost always, the smaller the coin size the greater the premium, and this applies to Gold Eagles as well as Krugerrands. It means you pay more per ounce for your gold when you buy the smaller size of the coins. There trade off is, of course, that you get more pieces of gold when you buy the smaller coins. The primary reason for buying the fractional-ounce gold bullion coins is for “survival purposes.”

Buying Krugerrands

If you would like to discuss buying Krugerrands, or would like to discuss any aspect of the gold and silver markets, please call. We take calls 7:00 a.m. to 5:00 p.m. MST, Mondays through Fridays. Call toll free 1-800-528-1380.

Minimum Krugerrand Orders

The minimum order for gold is ten ounces, and the minimum order for silver bullion is five hundred ounces. However, the minimum order for junk silver coin) is a half-bag ($500 face value), which contains approximately 357 ounces of silver.

Additionally, quantities of gold coins less than ten ounces sometimes can be found on our Gold Specials Page, and small quantities of silver bullion can be found on our Silver Specials Page.