The Krugerrand has always aroused a great deal of interest. This is not surprising if one considers to what extent gold has captivated mankind. Furthermore, to many enthusiasts, gold coins still reflect wealth and prestige. The name of this prestigious coin kindles memories of a bygone era and symbolises the romance and allure attached to it. The discovery of the main gold reef on the Witwatersrand changed the history of South Africa
Overnight a hub of commerce was established as thousands flocked to the country. This led to an era of unprecedented expansion, a golden era with many wonderful opportunities. At this stage President Paul Kruger recognised the need for a South African coinage system. Thus the gold Kruger pounds were introduced in 1892 and became the symbol of South Africa as a country of opportunity.
The striking of the first Krugerrand at the South African Mint on 3 July 1967 took place with very little ceremony and barely any media coverage. In 1964 South Africa’s Minister of Finance announced the introduction of a 1 oz gold coin in Parliament. The South African Coinage Act was passed. The recommended name for this coin, “the Trojan” was changed to the Krugerrand in 1966. The Krugerrand was a brand new concept, which was copied by many other countries.
The name of the Krugerrand was derived from “Kruger” (President Paul Kruger) and “Rand”, the monetary unit of South Africa. The “Rand” is associated with the area called the Witwatersrand, “the ridge of white water”, an important gold producing area. The obverse design of the Krugerrand bears the effigy of President Paul Kruger, struck from the original die used in 1892 for the historical Kruger Half Crown. The reverse was original designed and engraved by Coert Steynberg, a famous South African sculptor, and depicts a prancing Springbok, the South African national animal.
Since its inception in 1967, more than 50million Krugerrands have been minted. Today the Krugerrand is one of the best established South African brand names. The golden dream has become a South African symbol of wealth and is recognised internationally. There is confidence that the Krugerrand will remain an exciting symbol of South Africa as one of golden opportunity.
South Africa's Enduring Success Story
The Krugerrand entered a new era with the launch of the Krugerrand 2000 Programme at the South African Mint and subsequently in New York, in October 1999. The move responded to a resurgence in demand for gold bullion coins, especially in the United States on the eve of the new millennium. The issue of newly minted gold bullion coins, of all kinds, worldwide had grown from 1,3 million ounces in 1996 to 2,1 million ounces in 1997 and 3,2 million ounces in 1998. It exceeded 4 million ounces in 1999, almost four times the level in 1996. Speaking at the launch of the Krugerrand in 2000, Rand Refinery Managing Director, Paul Streng said that this renewed interest in gold provided an important opportunity to draw prominent attention to the international status of the Krugerrand, support the millions of Krugerrands traded on the secondary market and sell newly minted Krugerrands.
As Paul Streng commented, “The Krugerrand 2000 is the best and most appropriate way to won gold as we enter the new millennium.” The programme was enthusiastically supported by distributors with newly minted Krugerrands being exported to the US for the first time in 15 years.
The World's Best way to own Gold
Launched in 1970, it is now generally accepted and known that the Krugerrand remains the world’s most widely held gold bullion coin, accounting for more than 54% of the market.
Despite the international sanctions imposed from 1985 to the early 1990’s, some 46 million ounces have issued in total. This is more than all the other gold bullion coins combined. Thus, while a vast number of newly-minted Krugerrands have been issued on the international market in recent years, the availability of millions on the secondary market has ensure that the Krugerrand continues to be the most actively traded and best known gold bullion in the world.
Indeed, more Krugerrands (15million ounces) are held in the US, the world’s largest bullion coin market, than the entire worldwide mintage of the Gold American Eagle (10 million ounces).
The Birth of the Krugerrand
During the late 1960’s and the early 1970’s, when South Africa’s annual gold mine output averaged 75% of total output in the Western world, the promotion of gold was considered vital, not at least as an investment following the final collapse of the Gold Standard in 1971.
The chosen vehicle to drive demand was the Krugerrand, which was developed in the 1960’s by the Chamber of Mines of South Africa, working closely with t6he South African Reserve Bank and the South African Mint.
The Krugerrand was the world’s first ounce-denominated gold Coin. They were mass produced to enable the “man in the street” to purchase gold easily and with confidence at a low premium above the prevailing gold price. Although they are legal tender, they have never recorder a face value on the obverse or reverse sides. This was done to emphasise that the value of each coin is directly related to the prevailing value of their gold content. Rand Refinery Limited, the world’s largest gold refiner, manufactures the gold blanks for minting into Krugerrands by the South African Mint. Rand Refinery is also responsible for the sale and delivery of the Krugerands to primary distributors worldwide. The first Krugerrands, containing exactly one ounce of fine gold, were sold in July 1967. These were, however, experimental proofs and proof-like coins that were sold mainly to coin collectors. For investors, they were mass-produced as the world’s first gold bullion coin in April 1970. The three smaller mass-produced Krugerrands (1/2oz, 1/4oz and 1/10oz) were launched ten years later in 1980.
Marketing the Krugerrand Worldwide
The Chamber of Mines of South Africa established its marketing arm, International Gold Corporation (Intergold) in 1971 to promote the Krugerrand. The perspective of Intergold was wholly different from that adopted by the marketing departments of other national mints. Its mission was to act in the long-term interests of the gold industry. It viewed the Krugerrand, not as an end in itself, but as a key promotional tool to stimulate investment in gold, in whatever form, whether as Krugerrands, gold bars or other coins.
Thus, advertising promotional and publicity programs, which were funded by the South African gold mining industry, focused as much n the advantages of gold investment as on the Krugerrand.
They were widely recognised as providing the generic umbrella under which all gold investment products were more easily marketed. In fact, Intergold welcomed the launch of the new gold investment product and passed on its practical experience to relevant entities. By the early 1980’s Intergold had appointed marketing managers, with national and regional responsibilities in eight countries, the US, Switzerland, Belgium, Germany, Spain, United Kingdom, Hong Kong and Japan. Supported by market research, advertising and PR agencies, the focus was solely on the promotion of gold demand and the Krugerrands.
Substantial funding enabled Intergold to investigate international markets thoroughly, to identify, improve and support the distribution network, to monitor attitudes to gold investment and to implement extensive advertising and publicity campaigns.
Over the period 1970 to 1984, the Krugerrand became the international symbol of gold investment and, arguable, its major achievement at the time was its impact on market sentiment and the gold price, albeit unquantifiable, rather than its own substantial sales. The success of the Krugerrand blazed the trail for other gold producing countries with the launch of three more gold bullion coins: Gold Maple Leaf (Canada 1979), the Gold Libertad (Mexico, 1981), and the Gold Panda (China 1982). A number of other countries were to follow suit, with the launch in 1986 of the US’s Gold American Eagle, in 1987 Australia’s Kangaroo Nugget and the UK’s Gold Britannia, and in 1989, Austria’s Vienna Philharmoniker.
However, the Krugerrand – known to millions around the world, remains the world’s most widely held and most actively-traded gold bullion gold coin.
Rand Refinery Limited
Rand Refinery Limited, the world’s largest gold refiner, has supplied blanks for the minting of Krugerrands since 1970. Since that time it has also administered the sale and distribution of Krugerrand to primary distributors worldwide.
In April 1998, Rand Refinery assumed direct responsibility for the global marketing of the Krugerrand, as a consequence of acquiring the equity of Intergold, which previously promoted the Krugerrand internationally. Rand Refinery is owned by South Africa’s leading gold mining companies. It is the leading supplier of London Good Delivery Bars, Kilo Bars, and Tola Bars for the international markets and is currently expanding its range of value-added products for the jewellery industry.
Krugerrands coins are legal tender coins designed for gold investors. They typically contain one ounce of fine gold, or fractions of an ounce. They are mass produced in large quantities in response to demand. They are still without doubt the best way to invest in gold, as they do not attract VAT (Value Added Tax.)