How to Invest Today

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.

In 1967, the South African Mint began producing their gold bullion coins. By doing so, South Africa became the first country to offer a gold coin that contained exactly one troy ounce of gold. In actuality, you should be aware that the total weight of a Krugerrand is 1.0909 troy ounces, but exactly one troy ounce of that is pure gold. The remainder is made of a copper alloy, which makes the coin more durable and scratch-resistant, and this also gives it a darker, reddish hue.

These coins became very well liked throughout the world. In fact, their popularity spurred other countries to follow suit and issue their own one-ounce gold bullion coins. In 1979, Canada also got into the game, and in 1981 Austria also joined in. The US government did not get into the one ounce gold coin market 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. 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 price difference mentioned previously. Gold bullion coins like these two are often sold at a premium to the normal spot price of gold. For the most part, this premium reflects the production costs that went into producing the coin, including costs like mining and distribution.

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.

These days, they have rebounded with respect to market price, but not as far as their pre-ban level. Krugerrands now offer a premium over the spot gold price, but the premium for Gold Eagles remains at a higher level.

So to wrap things up, the two gold coins discussed here are quite similar in many ways, including the simple fact that each contains exactly one troy ounce of pure gold. However, due to marketplace factors, the Gold Eagle is now bought and sold at a small premium to the Krugerrand.

Gold coins are becoming more and more popular, and two of the most popular coins are Krugerrands and Gold Eagles. Learn how to protect your portfolio with gold coins.. Free reprint available from: American Gold Eagles versus Krugerrand gold coins.