Gold Bullion Spotlight: The South Africa Krugerrand

By Jay Turner for PCGS ……

South Africa 1967 Krugerrand PCGS MS67

The modern bullion coin market wouldn’t exist without the forerunner that, at one point, was the world’s most traded bullion unit: the South African Krugerrand. While bullion gold was quite common prior to the Krugerrand’s introduction in 1967, the coin’s convenient one-ounce form offered an easy way to buy, sell, invest, and trade bullion worldwide. With its success, other countries followed suit with their own bullion coin issues.

South Africa 1960 Chamber Mines 1oz Medal. Image courtesy of Heritage Auctions (www.HA.com)

The concept for the one-ounce bullion coin may originate from multiple sources.

In the South Africa Mint Museum, there is a piece struck prior to 1941, by the Royal Mint in Pretoria, for a 22-karat one-ounce gold coin. This museum-owned piece might just be the inspiration for the Krugerrand coin. The more likely inspiration came from the 1960 Chamber of Mines 24-karat one-ounce gold medallions that feature two springboks. These medals had two versions, one minted with English inscriptions and boasting a mintage of 4,000 and another in Afrikaans with a mintage of 2,000. Unfortunately, most of these medals, often considered patterns for the Krugerrand by South African collectors, seem to have been melted for the bullion and as such are scarce today. Yet, selling a one-ounce bullion issue from the Chamber of Mines likely inspired those who wanted to have an output to market South African gold to create their own units for sale.

In an effort to market and sell the gold of South Africa, the Rand Refinery and the South African Mint collaborated on the production of a one-ounce bullion coin. The design chosen was that of the former Boer leader and president of South Africa, Paul Kruger, based on the designs of Otto Schultz. The obverse would feature the portrait of Kruger and South Africa in two languages, English and Afrikaans. The reverse was that of a single springbok, flanked by the date, with the notation 1 oz. fine gold (again in two languages) with the denomination “Krugerrand” above. The denomination was a portmanteau joining the name of Paul Kruger with that of the South African currency, the rand, to create a Krugerrand.

According to Brian Hern, there is a six-coin pattern set of Krugerrand coin in the vaults of the Rand Refinery, with the six coins struck in various finesse. This approach created a set of six different-colored gold coins, from which the 22-karat piece was chosen for the final accepted issue. This set is considered unique. On July 3, 1967, the first official Krugerrand coins were minted to sell worldwide as an official government bullion coin. While these coins had no official face value, they would be government-backed legal tender, and this became official law with the South African Reserve Bank Act in 1989, years after the coins were first introduced.

South Africa 1968 Krugerrand Proof Double Frosted PCGS PR68DCAM

For the first 12 years, the Krugerrand was issued only in a one-ounce denomination. Both Mint State and Proof issues were struck, with some early Proof pieces featuring one-sided Cameo or Deep Cameo frosted designs and are often marketed at a premium.

In 1980, South Africa embarked on another first with the Krugerrand expanded to include fractional bullion issues of half-, quarter-, and tenth-ounce denominations. While the 1980 mintage is very high for these fraction issues, only 60 pieces of each were struck in Proof, being a set-issue only, technically making them numismatic and not bullion coins, and nevertheless among the scarcest, most desirable issues for the series. With the normal business-strike coins being proof-like, some people are deceived by Uncirculated issues being sold as Proofs for the 1980, so certification is recommended. The Krugerrand series underwent a design change in 1982, with most differences on the reverse.

South Africa 1980 ¼ Krugerrand Proof PCGS PR67DCAM

By 1980, South Africa had produced over 30 million non-Proof one-ounce bullion-issue Krugerrands. Also by 1980, the Krugerrand accounted for 90% of the global gold coin market. Its ease of accounting as a one-ounce unit had manifested it into being the most desired choice for gold investing.

Yet things were changing for South Africa and the Krugerrand. The apartheid government of South Africa started seeing the world come together against its system and the boycott of its products gained traction across the globe. The United States, which had been the largest importer of Krugerrand coins, banned the importation of South African goods–including the Krugerrand–in 1985.

If you follow the mintage of one-ounce Krugerrand coins you can see where the United States and the rest of the world banned their imports. In 1984, 2,685,466 of the one-ounce coins were minted, in 1985 the mintage dropped to 874,995, and in 1986 it plunged to 21,040. In 1986, the half-ounce and quarter-ounce coins are produced only in Proof form. Yet, if you look at the market for gold in 1985, the price was $327, and in 1986 the price was $390–a 19.5% increase for the year. The demand for gold was there, just not for South African Krugerrands. The mintages increased on Krugerrands between 1987 through 1991, with bullion issues in the 100,000 to 600,000 range, but it wouldn’t be in the millions again. Even today, some people refuse to buy or accept Krugerrand coins due to the apartheid history behind the country of issue.

Besides the controversies associated with apartheid, the Krugerrand started to see its monopoly disappear as other countries entered the market. Starting with Canada in 1979 with the Maple Leaf, China in 1982 with the Panda, and the United States in 1986 with the American Eagle, many countries started their own government-backed bullion coin programs. Apartheid ended in 1994, but by then, there were so many choices for bullion it was hard for the Krugerrand to compete. The South African Mint would innovate the Krugerrand, making it more than just a bullion coin, but one with many scarce, low-mintage pieces and offering many variances.

South Africa 1990-GRC (Gold Reef City) ½ Krugerrand PCGS PR68DCAM

From 1987 until 1991, a special-issue Krugerrand was available in Gold Reef City, a casino and theme park in Johannesburg. This attraction included a genuine mine shaft and buildings, along with reproduction antique buildings, which included the Gold Reef City Mint. The Gold Reef City Mint allowed people to personally strike their own Krugerrand coins onsite with a special mintmark of GRC on the reverse. For these five years, these Proof-only coins had the highest mintage of only 1,650 with some issues as low as 318 pieces. The person who chose to pay for this service was permitted to strike their own coin and be given a certificate signed by the Director of the South African Mint and Deputy Master Gold Reef City Mint, with the certificate dated to the date the coin was struck and named to the striker with a unique serial number.

A commemorative photo was taken of the person striking the coin, but due to photos not coming out it was discontinued in 1989. This special mint gave people a direct connection to the manufacturing of coins and likely sparked interest among many future numismatists. The Gold Reef City Mint also made special issues for societies, with some special issues having only an estimated mintage of six pieces. The Gold Reef City Mint ended production in 1991 but was an innovation that many would love to see come back for collectors around the world.

South Africa 1997 Krugerrand 30th Anniversary Privy PCGS PR69DCAM

The Krugerrand marked its 30th anniversary in 1997 with a special privy mark being added to the reverse of the coin. Privy marks were not a new thing, as they can be traced back to the 1600s. But modern mints, such as Australia, introduced them to bullion coins in the mid-1990s as a premium commemorative issue. Other mints, including South Africa, quickly followed suit.

The first privy for the Krugerrand was a “30” on the back for the 30th anniversary, and this set had a mintage of only 330 pieces.

Another special privy of “SS” was added in 1997 for the Sabi Sabi Game Reserve was added to a one-ounce Proof Krugerrand, with that coin having only a mintage of 72 examples.

In 2001, a special privy marked “CW” Krugerrand was minted using the “Oom Paul” press, a coin press that was used to ceremonially strike the first Krugerrand in 1967; the coin press from 1891 was used to strike 395 Krugerrands with the special privy.

Another special privy-marked Krugerrand was issued in 2002 for the Basel Coin Fair, with a mintage of 600 pieces. Since 2001, more than 10 low-mintage issues would carry a special privy mark.

South Africa 2017 1/50 Krugerrand 50th Anniversary PCGS PR69DCAM

South Africa 2017 Silver Krugerrand 50th Anniversary PCGS SP70

In 2017, the Krugerrand turned 50, and as part of the 50th anniversary the South African Mint expanded the series with a 50 oz., 5 oz., 2 oz., 1/20 oz., and 1/50 oz. gold issue. For the first time, the South African Mint struck silver and platinum issues of the Krugerrand to offer along with what was once a purely gold bullion issue. New finishes were produced and offered for the first time besides the business strike and Proof issues. With the issue of the silver Krugerrand, many marketers, especially in the United States, began to promote Krugerrand coinage again, and many collectors added their first Krugerrand coinage to their collections.

The Krugerrand continues to be produced today. The series is very challenging due to many low-mintage pieces and represents a prohibitive bullion cost for most. With just the one-ounce Krugerrand coins alone, there are now 54 different dates, meaning a set would contain 54 ounces of gold for just the business-strike coins. When including Proofs, special issues, and fractional issues, the number of pieces exceeds 350 coins. Yet with patience and perseverance, it could be a great set to collect while allowing one to build a bullion reserve through the assemblage of a single set.

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