Gold coins have made great investments since ancient times, and many people even today diversify their portfolios by investing in precious metals. Several decades ago, South Africa introduced the Krugerrand, turning precious metal investments on its head.
So what do you need to know about the Krugerrand gold coin? Is it a good investment? Read on to learn everything you need to know about this gold coin.
What Is a Krugerrand Gold Coin?
In 1967, South Africa decided to create the world’s first gold bullion coin, the Krugerrand. This coin was different than other coins that came before it, because it was created to be a specific weight rather than a particular value. Meaning, instead of being worth a certain dollar amount, it was simply an ounce of gold.
The popularity of the coin took off, especially in the US once the United States allowed ownership of gold bullion once more. The Krugerrand was copied by other nations in the following years, but it continued to remain the most popular gold bullion coin on the market.
Trade of the Krugerrand was banned in the US from 1985-1991 due to South Africa’s policy of apartheid. The coin was freely traded once more when apartheid came to a close.
Krugerrands are a very popular investment coin that can also come in other sizes besides the standard 1 oz. coin. These include the 1/2 oz., 1/4 oz., and 1/10 oz. Krugerrands.
Difference Between Bullion and Numismatic Coins
Some Krugerrands have been made as “proofs” to try to appeal to numismatic collectors. Proofs are specially struck coins that are higher quality and are designed to fetch a premium from collectors.
Other countries’ gold coins are also sometimes made as numismatic coins to try to drive the price up through scarcity. But what is a numismatic coin, and how is it different than a bullion coin? Essentially, a numismatic coin is a coin that has some inherent value because of the design, mintmark, or year.
For example, a coin from the year 1800 would have a large numismatic value because coins from that era are relatively scarce. Even if it was just a copper penny, where the metal in the coin is worth almost nothing, the coin would still be valuable because of its age.
Some investors try to collect numismatic coins in order to speculate on their demand and value. Older American gold coins, for example, are very common for this purpose.
But if you don’t know much about coin collecting or valuable numismatics, it’s probably best to stick with bullion coins. Bullion coins are those that have value because of the metal in them. The design or year often has very little effect on price.
Most Krugerrands are bullion coins, making them great for beginner investors. Although the government minted some proofs over the years, many advisors recommend not paying the extra premium for the proof coins.
The Pros of Investing in Gold Krugerrands
There are several other types of gold bullion coins on the market today, but many people still favor the Krugerrand. It’s a favorite choice because it’s so popular, easy to sell, and well-made. If you buy or sell a Krugerrand, you know exactly what you’re getting.
You’re going to have a much easier time selling a gold Krugerrand if you ever decide you need to change your investments. These coins are easily recognizable and tradeable throughout the world.
You also know exactly how much gold you’re getting, making it easy to calculate the value based on the gold spot price at any given time. If you want to buy or sell a Krugerrand, you can simply look up the spot price per ounce to get your Krugerrand value, and you’re set.
Besides all that, the Krugerrands are very attractive. Their designs feature a springbok on the back, which is a type of African gazelle.
The Cons of Investing in Gold Krugerrands
Unfortunately, as with any type of investment, there are a few downsides to investing in Krugerrands. The biggest issue is that investing in physical gold can be risky.
First, countries like the U.S. have an unfortunate history of banning the ownership of gold. While it hasn’t happened in decades, what happened once may happen again. Many people are wary of gold for this reason, although recent administrations haven’t made any overtures about banning gold again.
Aside from that, it’s just riskier to own physical gold. Fires, thieves, and natural disasters can make your savings vanish without hope of recovery. And to protect against these types of things, you’ll have to invest in a safe or safety deposit box to keep your investments safe.
That’s not to say that owning gold coins is a bad thing. But it does come with its own risks you need to be aware of.
Where Can You Get Krugerrands?
There are plenty of places you can get Krugerrands if you decide to use them as your start for investing in precious metals. With something this pricey, it’s often a good idea to shop around a bit and see where the best deals are.
The first place you should check is with a local coin store. Many of these stores sell bullion gold coins on a regular basis. They can also order coins for you to pick up.
You can also shop online, but you run the risk of getting shadier deals or fake coins if you don’t go with a reputable source. It’s important to carefully check the seller whenever you go to buy gold coins, as you don’t want to get scammed. Quite a few people end up buying gold-plated lead or other fakes without realizing it.
Even if you don’t buy through them, a coin store is still an excellent resource to have. They can point you in the right direction, as well as inspect your coins to see if they’re authentic or not.
Ready to Invest?
Getting a Krugerrand gold coin or two can be a unique investment approach, but gold isn’t the only type of investment you could be making. There are a lot of smart ways to invest and make money.