KRUGERRAND

12 May 2016 By PDSNET

A gold coin containing exactly one ounce of gold in the form of "royal gold" which is 8.3% copper. The copper is added to make the coin harder so that it cannot easily be "sweated" or "clipped". The krugerrand is the most widely-produced and best-known gold coin in the world with more than 50 million in circulation since they were first minted in 1968. It is an excellent store of value, but obviously pays no return beyond its natural capital gain. It has no collectors or numismatic value since it is neither rare nor old. This applies even to the so-called proof krugerrands. But it is an excellent hedge against inflation or the weakness of paper currencies. These days, however most investors prefer to buy a gold ETF since it is far more tradable and does not have any security or storage problems. The following is a logarithmic chart of the krugerrand price in rands over the past 37 years since 1988:

Semi-Log Chart of Krugerrands in Rands from February 1985 to April 2022

As you can see from the chart, krugerrands spiked up during times of crisis. In February 1988, one-ounce krugerrands were trading for R595 each.  On 16th March 2022 they were trading for R31400 each. The problem with krugerrands as an investment is that they offer no annual return. So they do not pay dividends, rent or interest and they do not add 10% to their weight every year. They are the most secure asset and so they have a zero return.



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