Krugerrand: Why This Gold Coin Is So Popular

The Krugerrand is probably the most popular gold coin in the world. It is in very high demand especially in Germany and even demonstrates its advantages during times of crisis. However, even in such times there are factors that influence the ultimate price of gold. But why is the Krugerrand in particular so popular?

 

The popularity of the Krugerrand

The Krugerrand originates from South Africa and could be listed with a new export record. Within a single year, approximately 700,000 troy ounces were exported, and an impressive 80 percent of those went to Germany. There has not been such demand in 30 years, which is likely due to people looking for an alternative investment during the pandemic and as a result of inflation. In the preceding years, an average of only 450,000 troy ounces were exported, each weighing exactly 31.1 grams. Gold coins from South Africa are therefore becoming increasingly popular.

 

What is the price doing?

In 2020, you could almost watch the price of gold rise daily. The peak was reached in August 2021. Currently, one troy ounce of gold is worth around 1,792 US dollars, even though it was stuck at 1,700 US dollars for a longer period in April. The Krugerrand currently has a mintage of around 60 million coins, making it the most traded coin in the world. Gold has proven to be a very safe investment over the years, one that can even withstand inflation. In the first half of 2021, a total of 90 tonnes in bars and coins were traded in Germany alone, representing the highest value in the last 12 years. Only in China was demand even higher during the same period.

 

Tax-free sale after one year

Perhaps the greatest advantage of gold is that no value-added tax needs to be paid when purchasing it for investment purposes. Furthermore, the holding period is only one year. After that, the profits made from selling bars or coins are also tax-free, which is not the case with many other investment methods. Nevertheless, the banking association regularly warns that even with gold, it cannot be said with certainty that there will be a stable price development. Among other things, the exchange rate between the euro and the dollar is always considered, and factors such as the oil price or the general political situation also play a decisive role in the assessment.

How quickly things can change was demonstrated by the year 2013, when the gold price fell by 30 percent in a very short period of time, representing the greatest loss in 30 years. At the time, it was the slowly easing financial crisis that had the decisive influence, while previously many people had relied on the safety of gold. One must therefore be aware that there is no guarantee of a safe investment even with gold. A certain risk is associated with it, even if in these times there are considerably more uncertain ways of growing one's money or protecting it from inflation through investment. Anyone who wants to invest in gold should make sure to buy larger quantities rather than very small coins, which make reselling more difficult.  

 

Do you have experience buying gold? We look forward to your feedback — feel free to leave a comment.

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