The gold Krugerrand was the first mass-produced gold coin intended to facilitate the private ownership of gold. Unlike investment grade coins, the Krugerrand was differentiated by containing exactly 1 troy ounce of gold and selling for a very slight premium over the spot price of gold.
While original plans were to have the coin circulate as South African currency, it soon found its real value as a popular way to purchase and save gold as part of an investment portfolio. The coin was attractive to investors in part because of its design and in part because it contains precisely 1 ounce of gold.
As the Kruggerand was originally intended to be a regularly circulated coin, it was minted with a more durable gold alloy that would hold up better over time. It also was an easy way to keep track of a gold bullion investment. If you bought 10 Kruggerands, you owned 10 ounces of pure gold. This standard would later be copied by many other countries including the United State with its American Gold Eagle coin and Canada with its Gold Maple leaf coin.
In 1964, the Kruggerand was a marketing concept of the South African Government to sell South African gold. In 1967, the first Kruggerands were minted and made available for private ownership. The name comes from a combination of the first South African Boer President, Paul Kruger and the basic South African unit of currency, the rand.
South Africa’s Apartheid policy had an influence on worldwide distribution of the coin. When the Kruggerand was first minted, many Western countries were not willing to deal with such an oppressive government. Most of the kruggerands that exist today were minted in the 1970s and 1980s to meet the high demand created by individuals wanting to own gold. In the United States a decade’s long policy started under Franklin Roosevelt’s administration only allowed Americans to invest in numismatic gold coins. When the ban was lifted on December 31, 1974, Americans flocked to the Kruggerand as a means of owning gold in bulk.
As Apartheid continued, the US Congress passed a 1985 law prohibiting any further importation of Kruggerands. However, an estimated 22 million such gold coins had already found their way in to the country. By 1994, Apartheid was ending and Congress removed the ban on Kruggerands.
Kruggerands, while still a very popular coin have been supplanted by the American Gold Eagle. In an attempt to compete, Kruggerands sell at a lower markup than American Eagles and therefore are attractive to buyers looking for the best price on bullion gold coins.