If you are new to the world of gold investing, you may wonder what the difference is between the South African Krugerrand and the American Gold Eagle gold coins. The coins have many similarities between them, but there are a few differences between the two that affect how they are valued in the gold market. In particular, you may have noticed already that these two gold coins are often offered at slightly different prices. The reason for this price difference will be covered in a minute, but before we get there, let’s have a look at some of the attributes of these coins.
The South African Mint began producing their gold coin in 1967. In doing so, South Africa became the first country to offer a gold coin that contained exactly one troy ounce of gold. Now, you should know that the physical weight of a Krugerrand is 1.0909 troy ounces total, of which one troy ounce is pure gold. The remainder is a copper alloy that makes the coin more durable, and this also gives it its reddish hue.
These coins became popular across the globe. Not surprisingly, other countries saw the coins’s popularity and rushed to follow suit by issuing their own one-ounce gold coins. Canada jumped into the game in 1979, and Austria soon followed in 1981. The United States didn’t join the party until 1986.
The American coin adopted many of the same aspects as the South African coin, with nearly identical physical properties such as thickness and diameter. boca raton web design . Also, the American coin also weighs in at 1.0909 troy ounces in total, of which exactly one troy ounce is pure gold. The one primary difference is that the Gold Eagle uses a silver and copper alloy to make it more durable, which makes it seem shinier than the red-hued South African coin.
Now, about that difference in price. Many gold coins, including these two, often trade at a premium (higher price) to the regular spot price of gold. Generally, this premium is due to the production costs that went into creating the coin, such as distribution, fabrication, and mining costs.
Following its 1967 introduction, Krugerrands often carried a premium over the spot gold price because of its popularity. But things quickly changed in 1985, when the United States and a number of other countries banned their importation in protest to the South African government and its apartheid policy. This prompted the coin’s popularity, and therefore its demand in the market, to fall off a cliff, so to speak. Reversing its previous trend, they actually traded for less than the spot gold price for a while.
Nowadays, they have recovered substantially in terms of market strength, but not to the extent before the import ban. So Krugerrands now carry a premium over the spot price of gold, but the premium carried by the Gold Eagle is still at a higher level.
So to conclude, the Krugerrand and the American Gold Eagle share a number of similarities, like the fact that each coin contains precisely one troy ounce of pure gold. Even so, as a result of market-related factors, the American coin now trades at a slight premium to the South African coin.
Gold coins are once again gaining in popularity, and two of the most popular coins are American Gold Eagles and Krugerrands. Learn how to protect your portfolio with gold coins.. Free reprint available from: What are the differences between the Krugerrand and American Gold Eagle?.