Investing in the Krugerrand: Is it worth it?

The Krugerrand, the iconic South African gold coin, is celebrating its 50th anniversary this year. Originally introduced in 1967, the Krugerrand has stood the test of time, becoming the most widely held and actively traded bullion coin in the world. Richard Collocott, the Executive Head of Marketing at Rand Refinery, shared insights into the history and future of this legendary coin during a recent interview on CNBC Africa. Collocott explained that the value growth of the Krugerrand has closely mirrored the price of gold over the past half-century. With the gold price increasing from $35 an ounce to $1,200 an ounce today, the annualized growth rate of around 13% highlights the consistent performance of this precious metal. The Krugerrand serves as a means for individuals to have private ownership of gold, allowing them to diversify their investment portfolios and hedge against market volatility. While the rise of cryptocurrencies and sophisticated trading platforms may pose challenges to traditional bullion coins, Collocott emphasized the resilience of the gold coin market. Annually representing about five to six million ounces of gold with a market value of $6 billion, the gold coin sector has shown steady growth, especially since the financial crisis. This steady rise in demand underscores the continued appeal of physical assets like the Krugerrand. High net worth individuals have traditionally been the primary holders of Krugerrand, with strong demand from countries like Germany and within Africa. The coin's durability, trustworthiness, and government guarantee make it a popular choice for investors looking to safeguard their wealth outside of traditional banking systems. Collocott highlighted the importance of diversification and the role of gold as a hard currency asset in a well-rounded investment strategy. In terms of market trends, the Krugerrand regained its position as the world's most popular gold coin in 2016, facing stiff competition from coins like the US Eagle and Canadian Maple Leaf. The coin's hardness, trustworthiness, and government backing contribute to its enduring popularity and tradeability. With 53 million ounces of gold produced in the form of Krugerrands since 1967, the coin's long-standing presence in the market attests to its reliability and durability. Looking ahead, Collocott discussed the potential launch of a silver coin in 2018 as part of efforts to expand beneficiation in South Africa. While there are considerations around the viability of a platinum coin due to the metal's liquidity challenges, ongoing discussions and assessments are underway to determine the feasibility of introducing new metal variants. The collaboration between Rand Refinery and the South African Mint signifies a commitment to responsible and sustainable initiatives in the precious metals market. As the Krugerrand celebrates five decades of excellence, the future looks promising with potential expansions and innovations on the horizon. Investors worldwide continue to turn to this iconic gold coin for stability, reliability, and long-term value appreciation.