The U.S. Mint still produces gold coins, like last year’s Saint-Gaudens and Buffalo coins or the First Spouses coins, but since the elimination of the gold standard there haven’t been any truly legal tender gold coins in the United States. For example, the First Spouses coins all have a face value of $10, but weigh in at a ½oz of gold worth over $500. Even though these coins are called “legal tender”, there’s no actual intent to use them at the grocery store – they’re value is in their gold content, and their appeal to collectors and investors alike is measured in the weight of their gold. While the gold standard was dying in the late 1960s, however, one country was bouying its currency with cold, hard precious metal.
Along the edge of a prehistoric lake near what is now Johannesburg, South Africa, the water and silt left a long curving deposit of gold called the “Golden Arc”. In 1886, gold was discovered in an area called the Witwatersrand basin, making South Africa one of the largest gold producers in the world. Gold remained a major part of South Africa’s economy and coinage throughout colonialism and wars, and at the time the Republic of South Africa was established the new form of currency was called the Rand, a shortening of the name of the gold-rich Witwatersrand.
As world dependence on gold as a form of currency was waning, South Africa was determined to continue to use their locally-produced gold as money. In 1967, they took a unique approach: international currencies were being devalued or were fluctuating, so the new gold coins would not include a face value at all. The Krugerrand, a combination of the name of President Paul Kruger on its obverse and the name of the currency at the time, displayed only its weight in gold rather than a monetary value, and were distributed as a true circulating coin, full legal tender for any transaction. The coin wasn’t intended entirely for internal purposes, though: although other nations had laws against private individuals owning gold bullion, citizens could legally purchase and own foreign gold coins. The Krugerrand was a circulating gold coin, despite its bullion face value, so it was the perfect way for private investors to convert their fluctuating dollars, pounds, and francs for gold. Foreign investors and collectors purchased thousands of Krugerrands as an investment, and along with locals using it as currency the mint was producing hundreds of thousands of Krugerrands from South African gold a year.
The growing international opposition to apartheid, however, began to sour the Krugerrand as an investment. In particular, the United States cut off the purchase of Krugerrands in 1986, and the presence of U.S.-made gold coins for investment – partly to compete with the Krugerrand – reduced the number of the South African gold coins in America. This blackout continued until 1994, with the end of apartheid and the release of sanctions against the country.
The one-ounce Krugerrand is the most recognizable of the South African gold coins, with millions having been produced since 1967 in their circulating form, and their value remains close to the spec value of gold. Far less common are the rare Krugerrand proof coins, bearing the uncirculated mirror-like finish common to proof coins. Only a few thousand proof Krugerrands have been produced each year, and they bear a higher collectible value than their gold content. The proof coins are also identifiable by their reeded edge: the proofs have 220 serrations, while the circulating coins only have 180. Beginning in 1980, fractional Krugerrands were minted in values of 1/2oz, 1/4oz, and 1/10oz for smaller transactions, and were also minted in both circulating bullion and proof condition. Forgery is rampant in all sizes of the Krugerand, and lower-priced silver replicas are advertised as true Krugerrands when they are not, so great diligence is necessary to ensure a purchased Kruggerand is real.
In 1986, the centennial of the gold rush, South Africa began producing a new gold coin series. The Protea, named for the flower on its obverse, is a commemorative gold coin honoring various important events in South African history on its reverse. Like US bullion coins, the Protea have a face value much lower than the gold value, R25 for the 1oz coin and R5 on the 1/10oz coin, and they are available in both a standard finish and proof finish. In 2005, the Natura series of gold coins were added, depicting the various fauna indigenous to South Africa. The Natura coins, too, are available as both regular and proof, and have small face values: R100 for 1oz, R50 for 1/2oz, R20 for 1/4oz, and R10 for 1/10oz. The Protea and Natura coins are more directly aimed at collectors, rather than gold investors, and their presentation is far more eye-catching than the Krugerrand. As with other newer gold coins, the Protea and Natura are still valued close to the spec gold price, while the older Krugerrands – in particular the mirror-finish proofs – are beginning to grow in value as a collectible.