Jump to: What is a Krugerrand? | Design | African Gold | South African Mint | Krugerrands and the Gold Market | Apartheid and International Sanctions | FAQs
, The South African Krugerrand Coins are renowned as the longest-running gold bullion coins in the world. They have a rich history, turbulent at times, which has piqued the interest of both investors and collectors alike.
In fact, for some time during the late 70s and 80s, it was illegal to import Krugerrand coins. But that begs the question “Why were Krugerrands illegal?”
In this article, we will delve into the intricate political and economic sanctions imposed against South Africa during a tough time in the country’s history.
What is a Krugerrand?
Krugerrand coins are South African gold coins minted by the South African Mint through the Rand Refinery. It was introduced in 1967 to help popularize gold as a private investment in the country.
Read further about what is a Krugerrand?
The name comes from the combination of the words "Kruger" and "Rand.”
They respectively refer to Paul Kruger, a former president and prominent figure in South African politics, and to the South African Rand, which has been the official South African currency since 1961.
Its rich history and alluring designs ensure its popularity until this day.
Krugerrand Design Details
With a peculiar red-like color due to an alloy of 91.67% gold and 8.33% copper, the Krugerrand holds a special place in collectors' and gold investors' hearts.
The design by Coert Steynberg on the reverse side shows a pronking Springbok, the country’s national animal. Above it, there is the name of the coin, KRUGERRAND. And surrounding the bottom, there are the inscriptions FYNGOUD 1 OZ FINE GOLD.
The Obverse depicts Paul Kruger, the 15th president of South Africa, surrounded by the words SUD-AFRIKA SOUTH AFRICA.
Kruger was an important political and military figure in South Africa during the turn of the 20th century and was also a State President of the South African Republic from 1883 until 1900.
Notice that Gold Krugerrand coins have no face value. However, they are considered legal tender within South Africa by the South African Reserve Bank Act (SARBA) of 1989 based on the gold spot price.
Due to the massive success of the gold coin program, the South African Mint released silver and platinum versions of the coin in 2017. Contrary to the gold counterpart, the Silver Krugerrand and the Platinum Krugerrand have a face value of, respectively, 1 and 10 Rands.
The African Gold and Creation of a Gold Coin
Without South Africa's gold mines, we might have never met the Krugerrands. After the discovery of gold in South Africa in the late 1800s, the country became one of the greatest producers of this precious metal in the world.
In the 1960s, as a way of seizing the momentum of the gold rush in the country, the government introduced the first gold bullion coin of the modern era to the world.
The South African Mint and The Rand Refinery
The Krugerrands are co-produced by the South African Mint and the Rand Refinery. The South African Mint has more than 100 years of experience. The Rand Refinery is the world's largest fully integrated single-site precious metals refining and melting complex.
Importance of the Krugerrand Gold Bullion Coin in the Global Gold Coin Market
In the 1960s, private investors had limited choices. To capitalize on the increasing popularity of gold, the South African government introduced the Krugerrands in 1967, making them the world's first modern bullion coins.
It didn’t take long for the Krugerrand coins to become a worldwide success, with mintage figures reaching triple digits in the early 70s.
Apartheid Policies: Economic Sanctions on the South African Government
In 1963, the United Nations General Assembly created a special committee to deliberate and condemn South Africa's apartheid policies. In the same year, the Assembly requested a political split between member nations and South Africa.
Further sanctions were imposed in cultural and sports areas by 1968.
For many years, numerous countries complied with these requests. For instance, Japan prohibited South Africa from participating in the Tokyo Olympics in 1964. However, some, including the U.S., raised moral concerns about these sanctions.
As awareness of South Africa's Apartheid policies increased, numerous Western nations imposed import bans on South African Krugerrands during the late '70s and early '80s.
However, it was only in 1985, after much debate, that the United States (which had been the largest market for the coin up to that point) joined in with the economic sanctions, including the prohibition of Gold Krugerrands imports.
As the Krugerrands was produced during the apartheid government, it was a tangible reminder of the racial segregation going on. The association was, indeed, too strong to be ignored.
As a result of the coins becoming an illegal import in many countries, the premiums on Krugerrands fell below those of other competitor bullion coins.
However, in the 80s, despite all the controversy, the Krugerrand gold coins still were a success among investors worldwide. So much so that it represented 90% of the international gold coin market at the time.
One of the most impactful measures occurred when the United States denied investment funds and boycotted South African investments, limiting available capital for South African businesses.
These actions aimed to encourage UN member nations to impose embargoes on South Africa, using non-violent means to pressure the racist regime to regress.
This political isolation forced South Africa to yield. The sanctions heavily burdened the country's economy, compelling then-President Frederik Willem de Klerk to release imprisoned activist Nelson Mandela, who would lead the country to a democratic election victory in 1994.
In 1990, as confirmed by Mandela, the economic pressures played a crucial role in ending the segregation regime.
In 1991, the embargo was withdrawn, making South African Gold Krugerrand coins legal to import once more all over the world, including the ones minted while the international sanctions were still in place.
Final Thoughts
In this article, we discussed the milestones of the Krugerrand history and clarified the lingering question, "Why are Krugerrands illegal?".
We learned that during the 1970s and 1980s, several Western countries forbade import of the Krugerrands. This action was taken amidst the ongoing apartheid regime in South Africa, and the coins were directly associated with it due to their origin. And thus, many people still wonder if Krugerrands are legal or not.
Despite all the confusion, the Krugerrand is indeed legalized nowadays and is one of the most popular gold bullion coins in the market. Understanding its background gives us a glimpse of the past, the struggle, and the apartheid's global impact on the bullion market.
FAQs
Are Krugerrands illegal to own in the US?
No, Krugerrands are not illegal to own in the US. Actually, the private ownership of the coins was never vetted. What happened was that their importation was banned in the US in 1985 and in other Western countries through economic sanctions as a form of protest, because they were a product of the apartheid regime. These sanctions were removed in 1991, with the regression of the apartheid policies.
Are Krugerrands still a good investment?
It depends on your investment goals. The Gold Krugerrand coin is composed of 91.67% fine gold content and 8.33% copper. Krugerrands can be a valid choice for gold investors since they have gold in their composition, and gold as a tangible asset is widely used by gold investors worldwide as a form of investment. Besides that, it tends to perform well in times of crisis and works as a hedge against inflation.
Why is a Krugerrand worth so much?
The price of a Krugerrand depends ultimately on its precious metal content. The coin is composed of 91.67% gold and 8.33% copper. There are also aspects like rarity, market trends, and the premium charged. As of December of 2023, the price of a Krugerrand gold coin fluctuates around $2,000.
Can anyone buy Krugerrands?
Everyone can buy a Krugerrand coin, but one should purchase it from an authorized dealer, since neither the Rand Refinery nor the South African Mint sell Krugerrands directly to the public.
How many Krugerrands can I travel with?
Foreigners in South Africa can export up to 15 Krugerrands or its equivalent in factional coins, backed by the SARS customs declaration, once it's proven that the Krugerrands were purchased with foreign currency brought with them into South African borders.
What year Krugerrand is worth the most?
The 1967 1 oz Gold Krugerrand might be the most valuable coin of the series because of its year of mintage and rarity. It was the first one-troy-ounce gold bullion coin available in the market for private gold investment, and it was a mintage of only 40,000 coins. During the apartheid policy, Western countries prohibited Gold Krugerrands imports, making these initial strikes a highly collectible item.
What is so special about Krugerrand?
The Krugerrand gold coin was the first legal tender gold bullion coin to gain international popularity in the modern era, and it is the first ounce-denominated gold coin in the world. Its singular reddish color comes from a unique alloy composed of 91.67% pure gold and 8.33% copper, which makes the coin more resistant.
Why don't some people like Krugerands?
Krugerrands were associated with the apartheid regime at some point in history. Imports to the United States were banned in 1985 until 1991. It could be a reason some collectors might be bothered by its past association with the problematic regime.
