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Advantages of Investing in Krugerrands

Updated on November 2, 2013

Some gold investors are content to access the metal through certificates or by participation in an exchange traded fund. These paper investments offer convenience and an easy way to sell the investment when required. Other investors may favor the purchase of shares in a gold mining company, whose valuation will also generally reflect the fortunes of the gold price. For some people, however, nothing beats an investment in the physical metal and in this case they should consider buying gold coins.

Many people are attracted to physical gold in the form of jewelry or other ornaments owing to its attractive appearance combined with its value as an investment. The demand for gold in this form is increasing, especially in the emerging economies. In some parts of the world the purchase of gold in a physical form is associated with traditional festivals or family occasions. The demand for the precious metal in this form is likely to continue rising in the future.

The purchase of physical gold in the form of coins or bullion may also reflect a general lack of faith in the financial system and a desire for an investment that does not depend on the general confidence in that system. An investor may also buy physical gold as an insurance against a future downturn or collapse in the fortune of paper currencies. In this case the investor will look at the possibility of holding gold coins or gold bullion.

Krugerrands are Ideal for Small Investors

For the small investor gold coins hold an advantage owing to the convenience of storage and the possibility of selling them in small amounts. For this type of investor Krugerrands may be the best type of gold investment. These gold bullion coins are available in weights of one ounce, and there are also coins of half or a quarter of an ounce of gold. It is even possible to buy Krugerrands that contain a tenth of an ounce of gold. The gold in Krugerrands is alloyed for greater durability and contains 22 carat gold.

Many gold coins, owing to their appearance, associations or other interest, can attract a premium over the actual value of the gold in the coin. This is especially the case with coins that may also have historical interest. In the case of the Krugerrand this premium is lower than with many other gold coins. This makes them an ideal investment for the investor looking to own physical gold.

It should also be noted that in many cases buying Krugerrands in bulk rather than one at a time can be cheaper owing the reduced costs of the supplier. Storage and security are far less of a problem than is the case with gold bars. When storing the coins the collector should however keep them away from humidity or from extreme temperatures.

South Africa began to mint Krugerrands in 1967 and the convenient size and elegant appearance of the coins has made them a very popular investment for those interested in buying gold. The success of the Krugerrand has led many other countries to issue their own gold coins. The Krugerrand has however retained its popularity and accounts for a large part of sales of gold coins.

Anyone considering the purchase of Krugerrands should be very careful to independently check the price of gold at the time of purchase, and compare this to the amount being asked for the Krugerrands. As with any other purchase the buyer should make sure that the item being sold is the genuine article and that the dealer is reputable. The weight of the coin being sold and the gold content should be clearly notified by the dealer. Where delivery of the coins is not immediate the buyer should be very clear about the terms and timing of delivery.

The owner of gold coins should always remember that gold is a soft metal and even in the form of an alloy it should be treated carefully. The purchaser of Krugerrands should therefore be cautious in holding a gold coin and should ensure that it does not come into contact with any corrosive substance such as vinegar. Those inspired by the sight of Olympic champions biting their gold medals should not try to imitate them when holding gold coins.


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      clintobrien 2 years ago