International bullion history: Precious metals basics

The South African Krugerrand was the first king of bullion coins
By , Coin World
Published : 05/13/15
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The Republic of South Africa in 1967 struck 50,065 pieces of a coin called the “Krugerrand,” which features the likeness of Paulus Kruger, a South African statesman. The .917 fine gold Kruger­rand has a gross weight of 33.9 grams, having other metals alloyed with the gold. The Krugerrand contains a full ounce of gold.

Through 1969, South Africa struck fewer than 50,000 pieces annually. In 1970, the mintage jumped to 242,000, including for the first time 10,000 Proof versions. From 1971 to 1973, Krugerrand mintages hovered around half a million pieces, with fewer than 10,000 Proofs produced annually.

In 1974, the mintage for the bullion coin jumped to 3,180,075 pieces. This jump, which was to be sustained for the next decade, is attributable in large part to a single act—the Aug. 14, 1974, signing by President Gerald Ford of legislation lifting a 40-year ban on the ownership of gold by United States citizens, effective Dec. 31.

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During the 1980s, the world economy and political conditions influenced the demand for gold bullion coins. 

Intergold, as the International Gold Corp. was known in the marketplace until its reorganization in 1986 into the Gold Information Center, was the marketing arm of the South African Chamber of Mines, the semi-official consortium responsible for distribution of the Krugerrand.

Intergold established offices worldwide with the goal of educating the investing public about gold in general, bullion coins especially and Krugerrands specifically. The measure of Intergold’s success can be seen in that during the early 1980s, the Krugerrand commanded as much as 80 percent of the world’s gold bullion coin market.

But two factors in 1984 and 1985, beyond Intergold’s influence, combined to bring down the Krugerrand as the undisputed king of bullion coins. First, the price of gold stayed relatively flat and many investors shied away from tangibles. Second, and perhaps most devastatingly, the Krugerrand became identified as a symbol of South Africa’s apartheid policy of racial discrimination.

It was perhaps inevitable that, when no fewer than 10 pieces of legislation introduced in the U.S. Congress in 1985 called for some restriction on the importation of Krugerrands into the United States, Pres­ident Reagan signed an executive order banning the import of Krugerrands effective Oct. 11, 1985. No restrictions were placed on Krugerrands already trading within the United States.

However, the death knell had sounded. By late 1985 and early 1986, nearly every major market for the Krugerrand had been affected by government bans or banking agreements. Krugerrands were still traded by bullion coin investors, but the net effect of the prolonged debate about the morality of South Africa’s policies and the destabilizing effect of months of doubt severely dulled the coin’s sheen. The Royal Canadian Mint, which had introduced its Maple Leaf .9999 fine gold bullion coin in 1979, was ready to grab the throne. 

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