But gold investment coins continue to shine after a shaky start.
Gold’s bull run may flounder on the sharp point of a Covid-19 vaccine needle, economists speculated this week.
That would add another twist to the history of the precious metal, history in which South Africa’s legacy as the dominant player of the world’s gold production looms large.
Today, South Africa’s gold heritage rests on the thin edge of the Krugerrand, a gold coin introduced in 1967 as an investment vehicle for the private ownership of gold.
Within about a dozen years of its launch sales of the Krugerrand accounted for 90% of the global gold coin market, sparing South Africa blushes as gold production fell away for a variety of reasons.
The success of the investment coin led to other countries mimicking the concept. Gold investment coins were minted by Canada, the United States, Britain, France, Australia and various other countries. But the Krugerrand remains one of the most frequently traded gold coins in the world.
The blip in the history of the gold coin bearing Kruger’s bearded image came about when sales of the coin were banned in the United States, Britain and various other countries until the government of national unity came to power in 1994.
Few investors who add Krugerrands to their portfolios at around R29 130 ($1900) per coin are aware of the chequered past of Paul Kruger, long-serving president of the Transvaal Republic (also known as the Zuid-Afrikaansche Republiek or ZAR).
When he sailed into exile from Lourenco Marques (now Maputo) in 1900 he left behind a legacy that has since become one of the world’s most enduring missing treasure mysteries.
Over the last 100 years scores of treasure seekers have scoured the Transvaal looking for the gold treasure reputedly buried on or near Kruger’s route to the coast. The value of the missing treasure is said to be worth billions in virtually any currency your care to name.
What’s ironic about the fact that the Krugerrand has become an iconic investment vehicle is that Kruger developed an unsavoury reputation during his lengthy reign. He and a coterie of privileged individuals stood accused of building personal fortunes at the expense of ‘embattled’ burghers. Their independent country fell into British hands in June 1900. Vastly outnumbered and out-gunned Boer commandos kept a guerrilla war going until 1902 when peace was finally declared.
Here’s where the sense of irony becomes all-pervasive. Kruger was not the first president of the Transvaal to have his profile stamped onto a gold coin. That honour belongs to Thomas Francois Burgers, the upstanding fourth president of the Transvaal Republic (1872 to 1877).
A Dutch-trained churchman and a progressive thinker, Burgers was persuaded by former Swiss gold assayer Jules Perrin that the bankrupt republic could realise a significant income stream by minting its own gold coins. Gold had been discovered near Sabie in 1873 and later that year Pilgrim’s Rest was declared a goldfield.
Burgers recognised the validity of Perrin’s argument. But rather than set up a mint in the Transvaal, he had gold coins struck in England. These coins are the extremely rare Staatpond.
The proud Burgers shared the largesse of his vision with members of the Transvaal Republic’s Staatsraad (people’s council). He was astonished by the adverse reaction.
He was roundly criticised for proceeding without the Raad’s permission. And he committed a sin by having a ‘craven image’ of his profile minted on the coin.
The gold coin that would have saved the republic from penury was relegated to the scrap heap, so to speak.
A disillusioned Burgers left the Transvaal after the bankrupt republic was annexed by Britain in 1877. He returned to the Cape where he died penniless at the age of 47.
Sixteen years later the canny Kruger allowed himself to be persuaded to establish a mint by the self-same Perrins. Coins are king, Perrins insisted. The Transvaal’s first mint began operating in Pretoria in 1892 and as a result enjoyed the largesse that flowed into State coffers. Kruger’s infamous ‘concessions’ policy empowered the favoured few to enjoy monopolies over a wide range of essential products such as dynamite for the burgeoning gold mining industry.
The new gold sovereigns bore Kruger’s image on one side, testament to the president’s total domination of the Staatsraad during his reign (1883 – 1900). The issue of ‘craven’ images had simply withered away under Kruger’s glowering gaze. Kruger sovereigns were minted in the period from 1892 to 1898.
What of the Staatpond today? The coin rejected by the burghers so long ago is worth, according to Randburg Coin, $32 500 (R500 000) for each of the 695 ‘fine beard’ coins and $114 000 (R1 750 000) for the later ‘coarse beard’ coins. Only 50 of the latter coins were minted. The rare coins are likely to achieve higher prices on auction. Some ‘fine beard’ coins have changed hands at auction for R2.2 million ($143 390).
Hindsight, as members of the 1874 Staatsraad would agree, is the most exact science in the world.