Gold News

Gold Krugerrands: Buying gold coins

Looking to buy gold coins like Maple Leafs, Nuggets or Krugerrands...?

WHAT'S THE CHEAPEST and easiest way to buy gold? For many years, gold coins – most especially the South African Krugerrand gold coin – have offered a simple, and cost-effective, route to investing in gold.

The Krugerrand gold coin remains the cheapest and most common way to buy gold coins today. But as with all gold coin investing, there are costs involved in buying, storing and then selling Krugerrands that can eat up far more of your gold investment money than you really need to lose.

We'll see why – and look at how to cut your gold dealing costs dramatically – in a moment. First, a little history.

Gold coins: The 1-oz Krugerrand

The Krugerrand gold coin was introduced by the South African government in 1967, back when South Africa was not only the largest gold producer in the world (which it still is today) but when it was also producing a massive 1,000 tonnes of gold per year.

Now producing just one-quarter as much gold each year, South Africa still leads the world in gold mining output – and it still mints gold Krugerrand coins, guaranteeing their weight and purity in a certificate issued with each gold coin.

The most common Krugerrand, the one-ounce gold coin, actually weighs 1.0909 troy ounces. Its purity of 91.67% gold – which is better known in the jewelry business as 22 carat – means that each gold coin contains exactly one troy ounce of gold (the rest is copper). The gold Krugerrand was the first gold bullion coin in the world minted at this one-ounce weight. So-called "fractional" Krugerrands weighing half, one quarter and one-tenth of an ounce were added in 1980.

Gold coins: The '70s bull market in gold

During the great bull market in gold of the 1970s, the gold Krugerrand quickly became the No.1 choice for investors worldwide wanting to buy gold. Between 1974 and 1985, it's estimated that 22 million gold Krugerrand coins were imported into the United States alone!

This huge success encouraged other gold-producing countries to issue gold bullion coins of their own, including the Canadian Maple Leaf and Australian Nugget. But the Kruggerand has remained the most popular gold coin for cost-conscious investors. Why?

  • Minted in such huge numbers, the Krugerrand will never win any prizes for scarcity. Over the last forty years, the Rand Refinery has manufactured and marketed more than 54 million gold Krugerrand coins!
  • Nor is the Krugerrand much famed for its design among gold coin collectors – unlike the American Eagle or intricate Saint Gaudens, for example. You might think it pretty enough; one side features a springbok antelope, the other side shows Paul Kruger, an early 20th century president of South Africa. But Krugerrands simply don't command the specialist demand enjoyed by the rarer US gold coins.

Because there's such little rarity value in the Krugerrand, each one ounce gold coin is as near to a plain chunk of gold bullion as a gold-coin buyer can get.

But if that's the appeal for cost-conscious investors, why stop there?

Gold coins: Cut your dealing costs by two-thirds or more

Professional-market gold bullion bars – the very gold whose price you see quoted on the internet and in your newspaper – used to be out-of-reach for all but the very wealthiest private investors.

But buying and selling the gold in these 400-ounce bars, however, would mean that no rarity value or collector's premium whatsoever gets between you and the "spot" price of gold.

Nor would any coin manufacture or minting costs eat into your gold investment either. That would be a real cost-saving advantage, even compared with the simplest gold coins such as the Krugerrand.

Choose to hold your professional-grade gold bullion in a secure market-approved vault, and you would also save money in delivery and insurance costs. That, in turn, would save you time and effort.

Interested? Thanks to the extra cost-savings enabled by the internet, you can now buy and sell as little as one gram of professional-grade gold online from anywhere in the world, dealing as near to the "spot" price as it's possible for private investors to get.

Cutting out the middle man – and side-stepping all coin-dealing premiums – BullionVault is the most cost-effective way for private individuals anywhere in the world to access the gold market direct. It lets you buy between one gram and 10 kilos or more of professional-grade gold, stored in a secure vault located in your choice of New York, London, or Zurich in Switzerland.

No, you won't get to hold your gold in your hand; it must stay within that secure bullion vault to retain its full integrity and potential re-sale value. But with BullionVault, you won't have to worry about insuring or protecting your gold at home. Nor will you have to pay gold-dealing charges of two...three...or even four per cent when you buy, and then again when you sell.

Dealing fees at BullionVault never exceed 0.8%, and the live gold-dealing prices enjoyed by our customers are rarely more than 0.4% above the "spot" prices quoted by the world's largest bullion banks and investment houses. Compared with the standard fees charged by the leading US and European coin-dealing services, that could mean a reduction of two-thirds or more in your gold-investment costs. (See the complete tariff, with no charges hidden, by clicking here...)

In short, gold coins are no longer the cheapest or most straightforward route into making an investment in gold. If you want to Buy Gold Today with the minimum of fuss – and at minimal cost – then click here and learn more about BullionVault now.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver, platinum and palladium market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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