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The Krugerrand and its History with Apartheid

September 15, 2010236 view(s)

While most people have at least heard of the Krugerrand, very few actually understand the history of this gold coin and its significance in the world economy. This coin was first minted in 1967 and was intended to be used specifically as a way for the general public around the world to have ownership of gold. At this time it was illegal in many countries to own gold in bullion or bar form and the intent was to circumvent this and to find a much larger market for South African gold. However, since the Krugerrand was minted as legal tender is was made of an alloy that included approximately 91.7 percent pure gold and 8.3 percent copper to make the coin durable enough to last. Even though the coin is made from an alloy, there is one full Troy ounce of gold in each coin. The first coin was minted on June 3rd, 1967.  In that first year, 40,000 of the standard Krugerrands were stamped. There was an additional 10,000 proof Krugerrands were stamped out specifically for collectors.

The history of this remarkable coin goes back to the gold rush of 1884 to 1886, when gold was first discovered in the Witwatersrand, a range of hills in South Africa that have since been found to have the richest gold deposits found anywhere in the world. This led to a war to control the gold as a rush of foreigners came to try and claim their share. The President of South Africa at the time was Paul Kruger and at the end of the Second Boer War the British Empire was left in full control of the country. Thus the name of the Krugerrand is a combination of the name Kruger and of Witwatersrand in order to honor Paul Kruger and his part in the war. In 1917 the U.S. had banned the ownership of gold bullion; however the public was still allowed to own foreign coins.

This led to the development of the Krugerrand as legal tender so that it could be purchased by anyone. The biggest issue with this was that with South Africa's commitment to apartheid. The U.S. and many other countries in the world banned the import of these coins. Those who held ownership in Krugerrands were forced to keep them stored out of the country until the end of apartheid during the 1990s. This brought an end to the sanctions against South Africa and finally made it possible not only to own these coins, but to store them on U.S. soil. Today it is one of the most popular ways for private citizens to own gold as an investment tool.

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