2017 saw the introduction of a familiar piece of bullion into the metals market. The South African Mint presented the first ever 1 oz. Silver Krugerrand to the world.
It comes 50 years after the first Gold Krugerrand was introduced in 1967, indicating how economic conditions in the country are strengthening.
It also shows the governments ambition to promote nationalistic projects, 25 years since the end of the racially-segregationist Apartheid regime.
The Rise of Gold Krugerrand Coins
When introduced in 1967, the gold Krugerrand took the republic metals market by storm. Private investors from around the world flocked to the minted copper-gold alloy. These little gold coins from South Africa quickly became one of the most sought after investments in the world.
As it turns out, the South African Mint could not have picked a better time to begin producing Krugerrands. During the 60s and 70s it became clear that the USD 35$ fixed gold price exchange rate was ineffective.
Investors were aware of this macro-economic issue and began investing in precious metals, in preparation for the switch to a floating exchange rate (based on the value of the USD). Termination of the gold standard occurred under President Richard Nixon in 1971, and the price of gold rose.
Krugerrands were flying off the shelves
It was during these years of economic instability that Krugerrands were flying off the shelves. According to the South African Mint, from 1974 to 1984 the annual production rate was in the millions.
The peak annual rate was over 6 million in 1978, and during the 1980s South African gold accounted for as much as 90% of gold traded coins. The success of the Krugerrand brought financial stability to a South African government that operated under a system of racialized segregation.
Krugerrand and Apartheid
The link between Krugerrands and the apartheid regime were clear from the start. The name Krugerrand comes from Paul Kruger, a nationalist hero who was president of a short-lived Boer Republic in South Africa (from 1883 to 1900). Clearly the coins come from a colonial past – but does that mean they should be devalued today?
The Apartheid regime – a political system based on segregation of whites from coloured peoples – was in effect from 1948 to 1991. Its codified system of segregation was criticized by Western powers, and a number of economic sanctions were levied on the country throughout the 1970s and 80s.
This included a band on the importation of Krugerrands into most European countries (including the United States). Thus it’s value began to slide.
During these years of economic sanction, many countries saw an opportunity to replace the Krugerrand with their own gold coins.
The Canadian Silver Maple (1979) the Australian Nugget (1981), the Chinese Panda (1982), the American Eagle (1986), and the Britannia (1987) all swamped the market looking for the kind of profits enjoyed by the Krugerrand.
So the Krugerrand itself was not universally citizen – it’s value was merely harmed because its profits went to support a repressive political regime.
New Era, New Opportunity
It was not long after economic sanctions that the Apartheid regime was dismantled. By 1994 the country was operating under fair and democratic elections, and things, for the most part, were stable. But what about the Krugerrand? Nelson Mandela, the first president of the new South Africa, stated that the most popular gold coins in the world should be cherished. In the eyes of Mandela, both whites and coloured peoples of South Africa could agree on one thing: the Krugerrand is a national treasure.
While Mandela’s support was not enough to spring the Krugerrand back to its pre-sanction days, it was a clear vote of confidence for the republic metal.
Silver Krugerrands Have Set a New Standard
The silver Krugerrand has set a new standard as it represents a new chapter in South African history, defined by civil liberties and democratic rule. Though it carries with it the dark history of Apartheid, the Krugerrand has more value as a national treasure of resilience.
Much like the silver coins from the Canadian Mint, which commemorate a Canadian history of colonial projects, silver Krugerrands are sought after precisely because of their complex historical significance.
These are the questions you need to ask your bullion dealer to make an informed purchase and make sure that precious metals are working for you.