Employees at the Rand Refinery in Germiston are working tirelessly to meet their targets. Before the end of the day, they must ensure that 9000 blank gold Krugerrands are produced before they are transported to the South African Mint for minting.
“Krugerrands are made on demand, but there is always a high demand for these coins, so we are producing thousands each day,” an employee on the refinery floor remarks.
This week, the employees at Rand Refinery have been especially busy. They have been inundated with orders for Krugerrands as this week marks the 50th anniversary since the launch of the highly sought-after coin. Limited-edition coins are being made available.
“We’re producing around 4500 Krugerrands during each work shift, and this is all based on demand, so we are very pleased,” says the Rand Refinery employee, who could not be named.
Since the launch of the Krugerrand in 1967, more than 53million ounces of gold (over 60million pieces) have been sold in the form of Krugerrands, more than its closest competitors, the Canadian Maple Leaf and the US Eagle.
The Krugerrand, containing one ounce of gold, has become an iconic symbol of South Africa.
Rather more crucially, it has been a pretty sharp investment. In 1967, a Krugerrand would have cost you R32. Today, it costs R17000 - a compound growth rate of just over 14% a year. It seems unimaginable now, but back in 1967 when the Chamber of Mines, the SA Reserve Bank and Rand Refinery joined forces to launch the Krugerrand, nothing like it existed. “The original intent behind the Krugerrand was to create a gold product that the ‘man on the street’ anywhere in the world could legally own,” says Praveen Baijnath, the chief executive of Rand Refinery.
Baijnath says the purpose was to add value to South Africa’s gold production, which averaged 75% of the total global output between the 1960s and the early 1970s.
“It was the earliest form of beneficiation of South African gold.”
The first 22-carat gold Krugerrand was manufactured on July 3, 1967, making this year its 50th birthday.
To commemorate the golden jubilee year, the South African Mint has launched limited-edition collectible Krugerrands, and the flagship offering in the anniversary range is the giant 50-ounce gold coin, 50 times as big as the standard 1-ounce gold Krugerrand. Only 55 coins are available for purchase.
There will also be once-off limited-edition collectable Krugerrands that are being offered in platinum and silver.
“The 50th anniversary is quite significant because it’s the first modern bullion coin to reach that milestone.
“Prior to 1967, there was no gold investment coin and the Krugerrand was the first one in that segment,” says Richard Collocott, executive head of marketing.
This year, adds Collocott, they have seen the biggest increase in demand for Krugerrands since the 1980s.
“This is a somewhat counter-trend compared to the other leading bullion coins. The year hasn’t finished, but sales are already 15 to 20% higher compared to last year.”
Collocott says sales are “doing exceptionally well” in the international market too. “We’ve seen an increase in demand for gold in South Africa, as well as on the international side, taking some market share from our competitors.”
But will Krugerrands ever go out of fashion? Collocott doesn’t seem to think so. “We think about this every day, but so far it hasn’t happened.
“As long as there is a demand for physical gold, the product of the Krugerrand will always do well,” he says.
“Because of its investment value and its tradeability, it remains a significant player in that part of the gold market.”
@SamNaik01