A Comprehensive Guide to the Krugerrand. Table of Contents

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2 Table of Contents Introduction... 2 Dimensions and Physical Specifications... 3 Description... 3 Refining and Minting... 5 Manufacturing... 5 History... 6 Worldwide Markets and Dealers... 8 Krugerrand Prices... 9 Why Invest in Krugerrands... 9 Contact GoldCore GoldCore 1

3 Introduction T he Krugerrand is a South African gold coin containing exactly 1 troy ounce of fine gold, and is the world s most widely held gold coin, with over 47 million 1oz coins sold globally since production began in The coin is named after Paul Kruger, a former President of the South African Republic in the late 1800s, and the South African currency, the Rand, whose name in turn is derived from Witwatersrand, the famous South African gold reef. Krugerrands are sometimes known by their shortened name, Krugers, especially in South Africa. Over 47 million 1oz Krugerrands sold globally since production began in GoldCore 2

4 Dimensions and Physical Specifications T he Krugerrand is a 22 karat gold coin, with a fineness of or 11/12 gold. It is made of 11 parts gold to 1 part copper, creating an alloy known as crown coin. The copper adds durability and strength to the coin and contributes the reddish tint to the colour of the metal. Since the Krugerrand contains exactly 1 troy ounce of fine gold, or grams, the gross weight of the coin is ozs or grams. The coin has a maximum diameter of 32.77mm and a thickness of 2.84mm. There are 180 serrations on the coin s rim. Description The front (obverse) of the Krugerrand bears the profile of Paul Kruger. This profile was designed by Otto Schultz of the Imperial Mint in Berlin and first appeared on the South African Republic s coins in It was again chosen in the 1960s when the design of the Krugerrand was being devised. Inscribed around Kruger s profile are the words SUID-AFRIKA, in Afrikaans and SOUTH AFRICA in English GoldCore 3

5 On the reverse of the Krugerrand is an image of South Africa s national animal, the Springbok. The design, created by Coert Steynberg, a famous South African sculptor, captures the typical pronking or strutting movement of the Springbok. This design was also used previously on various older South African coins. In a semi-circle above the Springbok is inscribed the word KRUGERRAND and in the lower semi-circle the coin s weight 1 OZ. Then, to the left the word FYNGOUD" in Afrikaans, and to the right FINE GOLD in English. The coin s mintage year is specified horizontally in two parts each side of the Springbok, for example, 2012 being 20 and 12. Although the Krugerrand has legal tender status in South Africa and has a face value of 10 Rand, there is no monetary value specified on the coin. Krugerrands were never intended to be used as legal tender since, in a free floating gold price environment, the gold content would always be As legal tender Krugerrands can be imported free of import duties. of higher value than any legal tender value ascribed to them. This is known as noncirculating legal tender. The legal tender status allows Krugerrands to be imported into various countries free of import duties, and for this reason the South African government has never looked to remove the legal tender status GoldCore 4

6 Refining and Minting Krugerrands are produced in a joint undertaking between Rand Refinery Ltd and the South African Mint Company (Pty) Ltd, and ultimately regulated by South Africa s central bank, the South African Reserve Bank (SARB) under the direction of the South African Treasury. Rand Refinery is a private company owned by four leading South African gold mining companies, namely, Goldfields, AngloGold Ashanti, Harmony and DRDGOLD. The refinery, located in Germiston, east of Johannesburg, is the largest single gold refining and smelting site in the world and has refined more than 25% of the world s gold mining output. The SARB authorises Rand Refinery to refine and sell Krugerrands through a network of primary distributors both in South Africa and internationally. The South African Mint Company, located in Centurion, between Pretoria and Johannesburg, is a wholly owned subsidiary of the SARB. Manufacturing The manufacturing process of a Krugerrand is twofold. Rand Refinery first manufactures the coin blanks. These are then supplied to the Mint. The Mint strikes the coin blanks to create Krugerrands. Although the vast majority of Krugerrands created by the Mint are bullion coins, limited edition proof Krugerrands are also made. Bullion coins are stamped once by the coin stamping process. Only Rand Refinery is authorised to sell these bullion Krugerrands, and then, only to primary distributors in South Africa and abroad GoldCore 5

7 Proof coins are stamped twice using a sand-blasted die to create a frosted image and then polished to a high quality finish. Proof Krugerrands are sold directly by the Mint in sealed capsules with a certificate of authenticity. History T he South African Chamber of Mines devised the Krugerrand in the mid-1960s as a new way of marketing South African gold internationally. The logic of the coin was that the simple design, low cost of manufacture and exact 1 troy ounce size would allow a low premium over the gold spot price, and give investors an affordable way to track the gold price through coin ownership. The first Krugerrands were minted in 1967 but initially only in small batches of proof coins. In 1970 Krugerrands began to be mass produced and international demand grew quickly. Britain lifted gold buying restrictions for individuals in 1971 followed by the US at the end of Demand increased as the international gold price rose, but was also helped by successful Krugerrand marketing in the From 1975 until the 1985 import ban, approximately 22 million Krugerrands had been imported into the US. US and West Germany. Annual sales of new production peaked in 1978 at over 6 million 1oz coins, but remained in an annual 2-3 million coin range until In September 1985 the US Government announced a ban on the importation of Krugerrands as part of sanctions against South Africa. In 1986, the European Community introduced its own package of sanctions, also banning the importation of the coin. The US was always the Krugerrand s largest market. From 1975 until the 1985 import ban, approximately 22 million Krugerrands had been imported into the US GoldCore 6

8 Trading of previously imported Krugerrands was still allowed but discouraged due to various anti-apartheid campaigns. Annual sales of new coins dwindled from 1985 to 1990 and although sanctions were subsequently lifted, new coin sales remained low for the rest of the 1990s due to a languishing gold price, but also because the existing holdings of Krugerrands were so large. It wasn t until the early 2000s that new Krugerrand sales again strengthened as the gold price rose GoldCore 7

9 Worldwide Markets and Dealers K rugerrands have a sophisticated primary distribution network and secondary trading network. The Johannesburg Stock Exchange (JSE) facilitates a primary market where new Krugerrands are issued, and a secondary market where they trade, just like an equity market. In the primary market, the South African Reserve Bank sells Krugerrands via tender but only banks are allowed to bid on these tenders. The JSE claim to be the largest and best regulated secondary market for trading the coins in South Africa. On the JSE, stockbrokers trade Krugerrands just like stocks, based on their gold bullion value. The coins even have their own trading symbol KR as well as a futures contract KGRD, and the rules and directives of the exchange govern Krugerrand trading, just like stock trading. The Rand Refinery is the sole distributor of Krugerrands internationally via authorised distributors. These include a number of major UK and European based bullion banks and refineries, and appointed distributors in the US. Local banks and dealers (depending on country) can then purchase through the authorised distributors as well as on the secondary market. South African stockbrokers are not allowed to deal in Krugerrands on behalf of non-residents of South Africa. A non-resident could buy Krugerrands through a South African bank, take delivery to a South African address, and then export them in person but exchange control regulations limit the export of Krugerrands by an individual to 15 ounce coins per transaction, and a Customs Declaration is required, along with proof that the coins were acquired using foreign currency GoldCore 8

10 Krugerrand Prices New Krugerrands are sold to authorised distributors based on the gold content and a small mark-up to cover manufacturing and transport costs. The buying price internationally for buyers will be based on the spot gold price, the Mint and dealer s mark-up, and a premium reflecting demand. Buyer s premiums will be lower for larger orders. Rand prices quoted in South Africa will be based on the international price and the Rand / US Dollar exchange rate. Why Invest in Krugerrands The market for Krugerrands is highly liquid due to the large number of coins produced historically, and the extensive trading network. This ensures competitive pricing and ease of selling internationally. The Krugerrand has a relatively low premium over the spot price of gold because the South African Mint is able to sell to dealers at a low mark-up. As a form of physical gold ownership, Krugerrand s allow investors to gain exposure to the gold price. Krugerrands provide a cost-effective way to diversify an investment portfolio. The exact 1oz weight and lack of import duties and VAT makes the Krugerrand easy to value and price. The compact size, durability and portability of the coins allows for easy storage options GoldCore 9

11 WRITTEN BY GoldCore ABOUT GOLDCORE GoldCore are respected international bullion dealers who are experts in the execution and logistics of the highly specialised precious metals market. GoldCore have been providing precious metal investment solutions for an International client base since Today, our team of experts service all investor classes from private individuals to companies and institutional investors. Whether you are a small or large investor looking to take delivery or arrange for secure, trusted insured storage, GoldCore has a solution to suit your needs. CONTACT GOLDCORE Ireland GoldCore Ltd 14 Fitzwilliam Square Dublin 2 Ireland Low Call Ireland GOLD IE Ireland Phone England No. 1 Cornhill London EC3V 3ND England UK Phone +44 (0) UK Fax +44 (0) USA USA Phone Disclaimer: The information in this document has been obtained from sources which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. GoldCore Limited ( trading as GoldCore is regulated by the Financial Regulator of Ireland GoldCore. All rights reserved GoldCore 10