South Africa's Precious Metal Coins

The South African Krugerrand was first mass-produced in 1970. Since then more than 46,3 million ounces (1440 tons) or 54,5 million coins of all four sizes have been sold world-wide, making it the most successful in the history of gold bullion coins. In 1978 sales reached a peak of more than 6 million ounces. Each Krugerrand contains an exact amount of pure gold, added to which is a small amount of copper to provide durability. Thus the coins are made of 22 carat alloy and their mass is a little more than that of the fine gold contained as indicated on the reverse.

The obverse depicts Paul Kruger, President of the original South African Republic from 1883 to 1902, and the reverse shows the springbok, the national animal of South Africa. The Krugerrand is now well established as the only South African world brand. Behind this remarkable achievement is an innovative concept allied to effective marketing.

The Chamber of Mines of South Africa, a voluntary association of private sector South African mining companies, evolved the concept in the 1960's - the striking of a gold coin containing exactly one ounce of gold without a face value, the price of which would move in accord with the daily gold price on world markets.

For this concept to realize its potential, it was essential that the coin be accorded legal tender status. After negotiation, the government amended the South African Mint and Coinage Act in October 1966, to include a one ounce gold coin - the Krugerrand - in the official coinage of South Africa. The coin was first struck by the South African Mint in July 1967, in small numbers as a proof coin of interest primarily to collectors.

However, the gold mining industry's objective was to place gold into as many private hands as possible by making it available in a convenient and easily negotiable form at a relatively low premium over the international price of bullion.

Accordingly, arrangements were made for the South African Mint, while continuing the production of proof coins in limited numbers, to mass-produce the coin in uncirculated quality for sale at a low premium above its gold content.

Availability of the coin in large numbers from 1970 onwards was followed by an explosion of demand for a tangible asset on a scale that could not have been foreseen, as a hedge against the erosion of assets through rampant inflation arising from political and economic uncertainty.

The rapid increase in the gold price in the late 1970's created a situation in which many people could no longer afford to buy the one ounce Krugerrand. But it was the man-on-the-street who was most vulnerable to inflation and who needed to find a counter to the erosion of his savings. Action was once again taken to place gold ownership within the reach of those for whom the price of the one ounce coin had risen too high. Agreement was obtained from the South African authorities to strike in addition to the one ounce coin, a half ounce Krugerrand, a quarter ounce Krugerrand and a one tenth ounce Krugerrand which were also accorded the status of legal tender of the world's largest gold producing country.

To maintain the high recognition value created on world gold markets by the original one ounce coin the smaller units were struck with the same design as their "parents". In addition to the huge potential of the consumer savings market for bullion coins at popular prices, it was envisaged that the popularity of the coins would extend into jewelry or as gifts for special occasions. The new coins were launched internationally on September 23rd, 1980. Thus a "family" of Krugerrands had been created covering all facets of consumer demand.

The Chamber of Mines continues today with these same objectives. The Krugerrand gives the man-on-the-street convenient access to gold, illustrates that gold is an economic asset, a store of value and a form of money all combined together in one coin, and adds value locally to South African gold.

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