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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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