The Krugerrand is a rare coin minted in South Africa, and is one of the most identifiable symbols of that nation - representing the wealth, resources and solidarity of a nation historically beset on all sides by criticism.
What it is
The Krugerrand is a coin with a unique property in today's world - a coin made containing pure GOLD. This is compared with almost every other currency, which initially started as gold, silver or other precious metal, but due to economy of manufacture and a growth in the requirement of physical units, made alloys more and more important. The gold content in the Krugerrand makes it extremely valuable - simple possession of the coin emphisises the true value of currency.
Gold today is one of the most valuable and stable commodities on the world trading market, holding value due to its unique history, chemical properties and relative scarcity. Thus, when South Africa, already rich in other valuable commodities discovered arguably the largest mineable deposit of gold in 1886, the established government of the time devised ways to exploit this resource and create an institution of wealth and measure of fiscal standing that is still unparalleled around the world. However, their dream was not realised until 1967, when the first Krugerrand was minted.
"The discovery of the main gold reef in 1886 in the Johannesburg area changed the history of South Africa. Few other events have had such an impact on the political and economical history of South Africa. The shimmering beauty of pure gold captivated the people of this country." 1
The name Krugerrand was derived from KRUGER - the Transvaal President of the time of the original deposit discovery, Paul Kruger, and RAND - the monetary unit of South Africa. The origin of the word Rand is associated with the area called Witwatersrand, “the ridge of white water” which was and is an important gold producing area.
On July 3, 1967, the South African Mint introduced the Krugerrand, a weighty coin made of 1 troy ounce of "fine gold" (22 carat) - weighing in at 31.1035 grams. This coin was and is considered legal tender in South Africa, so could theoretically be used as a VERY expensive way of paying for goods and services. However, the high value of the "Kruger" was only ever used for the purchase of luxury items, usually with prior notice of the transaction being conducted in bullion, or for wealth consolidation. The Kruger was extremely popular, and was taken up by most wealthy families as a measure of that wealth.
This popularity made necessary the addition, in 1980, of smaller denominations - "1/2 oz, 1/4 oz and 1/10 oz were added to the 1 oz Krugerrand to assist the smaller buyer to obtain gold at an affordable price." 2 The important thing to note in that statement is that at all times, Krugerrands were never really designed to be used as true currency - it was seen as a way for people to collect GOLD.
The gold chase
The process of citizens of South Africa buying gold from its own government had a number of effects. The resource, gold, was delved quite cheaply by state-funded or state-assisted private mines. This gold was held in a pool, a la Fort Knox, until minted. Then, citizens hand over "normal" currency to the government, increasing the bottom line of their budget, in exchange for a resource that has worldwide appeal, extremely stable trading value, and is relatively easy for the government to obtain - using the citizens' own money! However, once the gold is in the hands of private investors, the value of the South African economy becomes apparent - coins of pure gold (and thus South African value) could be exported - in pockets, suitcases, anywhere that you could fit a coin!
International condemnation was rife over South Africa's human rights abuse - apartheid. The segregation caused worldwide embargos on a whole range of economic factors - including the export of South African monetary value. As a result, it was made, at worst illegal, or at best extremely difficult for a South African or foreign citizen to obtain the Krugerrand outside of South Africa, or take it out of the country. The United Kingdom, for example, placed bans on the coins until 1971, and after that, only licensed three dealers, under strict guidelines and scrutiny, to allow their exchange. This practice of international pressure limited the value of the Kruger to only those countries outside of those participating in the embargoes, making the ultimate aim of the establishment of the coin less effective.
Krugerrands were never intended to be an aesthetically pleasing coin, just a lump of gold with a known weight and value. The coins certainly cannot be called pretty. Their design3, on the obverse, is of Paul Kruger, surrounded by the Afrikaans "Sud-Afrika" on the left and the English "South-Africa" on the right. What is unusual is that there is no date on the obverse "heads" side. On the reverse is the South African national animal, a male springbok, dashing from left to right across a stylised veldt, with the word "KRUGERRAND" above, the century on the left, the year on the right - as in (19 <Springbok> 78), and the words "FYNGOUD <weight> FINE GOLD" on the bottom.
The Krugerrand is still minted today. It has always been minted in two ways: uncirculated - basically bullion, with 180 serrations on the edge of the coin; and "Proof" - the publicly available Krugerrand, with 220 serrations. The Krugerrand is still manufactured with the traditional 22 carat gold.
When Intergold was established as a subsidiary of the Chamber of Mines in South Africa, they took over the distribution of the uncirculated Krugerrand while the proof Krugerrand was sold direct from the South African Mint. The bullion Krugerrand has always been linked to the daily gold price while the proof Krugerrand is available in limited quantities with a fixed price. As a numismatic coin, the proof Krugerrand has been eagerly sought after by coin collectors.
Krugerrand Coin Specifications
| (mm) | (Gram) |
Face Value |Diameter| Mass | Metal Content
1 troy oz | 32.69 | 33.931 | Au 916.67
| | | Cu 83.33
| | |
1/2 troy oz | 27.00 | 16.966 | Au 916.67
| | | Cu 83.33
| | |
1/4 troy oz | 22.00 | 8.483 | Au 916.67
| | | Cu 83.33
| | |
1/10 troy oz | 16.50 | 3.393 | Au 916.67
| | | Cu 83.33
Bibliography and sources
1 - http://www.samint.co.za/entrail/commemorative_coins/products/krugerrand.htm#First
2 - http://www.taxfreegold.co.uk/krugerrandinfo.html
My own experience (first 3 years of life!) of South Africa
My parents stories (usually with longing eyes - they never had one!)