Gold Bullion Coin- question re: Eagle vs. Krugerrand

Gold Bullion Coin- question re: Eagle vs. Krugerrand

Post by Patrick Dule » Mon, 15 Jul 2002 07:42:21



Reading about gold coins and wondering why a 1 oz. Krugerrand sells for
~$10.00 less than an Eagle.  Why the difference?

Only the Krugerrand shows this large spread (based on Kitco pricing).
Reasoning?

Thanks for the informed opinion.

Patrick

 
 
 

Gold Bullion Coin- question re: Eagle vs. Krugerrand

Post by John L » Mon, 15 Jul 2002 09:11:24


Quote:
> Reading about gold coins and wondering why a 1 oz. Krugerrand sells for
> ~$10.00 less than an Eagle.  Why the difference?

This is based on what buyers are willing to pay, just like everything else.
In this case the buyers that drive the price are the collectors. The
Krugerrand is available with the least premium over spot that I've seen.
However, the Krugerrand, Maple, Eagle, and Panda all have the same amount of
gold - 1 troy ounce. It's been mentioned on this board that some US
collectors prefer the Panda while some investors like "American" gold and go
for the Eagle, and others avoid the Eagle (see what FDR did to gold in 1933)
and go for foreign gold - like the Maple, Krugerrand, etc. instead.

Quote:
> Only the Krugerrand shows this large spread (based on Kitco pricing).
> Reasoning?

Actually, the Panda has the highest premium I've seen. However Kitco for
some reason doesn't list the Panda. Where the Maple was available for around
$330 last week, and the Eagle for $335 or so, the Panda was still over $350
and in some cases closer to $360.

Check out www.goldmastersonline.com for some additional pricing info. Don't
get me wrong, I watch Kitco for pricing all day!

 
 
 

Gold Bullion Coin- question re: Eagle vs. Krugerrand

Post by Fred A. Murph » Mon, 15 Jul 2002 12:30:14



Quote:
> Reading about gold coins and wondering why a 1 oz. Krugerrand sells for
> ~$10.00 less than an Eagle.  Why the difference?

> Only the Krugerrand shows this large spread (based on Kitco pricing).
> Reasoning?

> Thanks for the informed opinion.

Up until 1986, the Krand was the world's most popular bullion gold coin,
hands down.  When the US government wanted to introduce the gold eagle, it
felt it couldn't handle the competition, so it did what any good businessman
would do and made it illegal to bring Krands into the country.  "Apartheid"
was what they used as the excuse for the ban.

This meant that the importer no longer spent tons of money every month
advertising and promoting them, and thus they fell out of the public's eye.

There are four main reasons why the Krand now carries the lowest premium:
1) They are quite plentiful, even though recent mintages have been
miniscule.
2) Americans naturally would prefer a homegrown product.
3) The people handling them are promoting the US Eagle.
4) Many people think it's illegal to import or even own Krands, even though
the import ban has been lifted.

--

Outgoing mail is certified bollocks

 
 
 

Gold Bullion Coin- question re: Eagle vs. Krugerrand

Post by Demokritos from Brookl » Tue, 16 Jul 2002 01:14:01



Quote:
>made it illegal to bring Krands into the country.  "Apartheid"
>2) Americans naturally would prefer a homegrown product.

BiggFredd, I agree with the gist of your post and I concur with your
identifications of the factors involved.  In particular, for whatever reasons,
the large sellers push Eagles.  In reflection, however, they will tell you that
they do this because these are the coins people want.  

As for the two points above, please accept what follows not as contradiction
but as amplification.

The ban on Krugerrands came from the US and Europe.  Apartheit was indeed the
target.  There were a wide range of embargos against RSA.  

It is also true that Austria, the UK, Canada, Australia, and the USA all wanted
to jump on the lucrative gold band wagon. Having destroyed their paper
currencies, they could in fact sell off the gold they had in store for the
market price.  Gold production is a business.  It costs less than the per ounce
price of a coin to mine the gold and mint the coin.  This is obvious, perhaps,
but never addressed. As  a consequence, GB, USA, etc., could buy gold once they
ran out of stocks, strike gold, and sell gold for a profit.

Most people in most times and places prefer local money.  As it so happens,
some peoples today in many places in the world prefer dollars and many people
in Europe living in non-EU nations prefer euros.  Nonetheless, as you say,
Americans prefer American images on the coins they buy from their government's
Mint.

Personally, myself, it is my tendency to be as they say "socially liberal and
fiscally conservative."  I was disappointed to see Oom Paul back on the South
African coins when the KR came back on the market.

The reason for this is that the KR does not come from the goverment of South
Africa.  PROOF krugerrands do.  Circs do not.  

Circs are the product of a private mint that strikes coins for the mines with
which it has contracts. The mines are privately owned.  Basically, the KR is
perhaps the last vestige of apartheit.

 
 
 

Gold Bullion Coin- question re: Eagle vs. Krugerrand

Post by Phil DeMa » Tue, 16 Jul 2002 04:10:08


Quote:

>>> Up until 1986, the Krand was the world's most popular bullion gold coin,

hands down.....<<<

Wasn't it the world's "only" 1 troy ounce gold bullion coin? There were
restrikes of the Mexican 50 Peso and the Austrian 100 Coronas that were popular
prior to the introduction of the Krugerrand but neither contained exactly 1
troy ounce of gold.

Quote:
>>>.....When the US government wanted to introduce the gold eagle, it felt it

couldn't handle the competition, so it did what any good businessman would do
and made it illegal to bring Krands into the country.  "Apartheid" was what
they used as the excuse for the ban. <<<

Ah, ever the cynic Fred.

Did the US "want" to strike a one ounce gold bullion coin prior to Reagan's
9-9-85 Executive Order in which, among other Apartheid related actions, he
called for the banning of Krugerrands and gave the Secretary of the Treasury 60
days to come up with a feasability study for an American alternative?

++++++++++
Phil DeMayo
When bidding online always sit on your helmet
Just say NO to counterfeits

 
 
 

Gold Bullion Coin- question re: Eagle vs. Krugerrand

Post by David Gier » Tue, 16 Jul 2002 09:10:28


I seem to recall the official line was (paraphrased) "We are making it
illegal to import the Krands due to the apartheid issue, but to keep the
American gold investors happy, we'll make gold US Eagles in the same
weights."  You can interpret either way.

Dave  

Quote:

> Did the US "want" to strike a one ounce gold bullion coin prior to Reagan's
> 9-9-85 Executive Order in which, among other Apartheid related actions, he
> called for the banning of Krugerrands and gave the Secretary of the Treasury 60
> days to come up with a feasability study for an American alternative?

> ++++++++++
> Phil DeMayo
> When bidding online always sit on your helmet
> Just say NO to counterfeits

 
 
 

Gold Bullion Coin- question re: Eagle vs. Krugerrand

Post by Fred A. Murph » Tue, 16 Jul 2002 07:12:10



Quote:
> The ban on Krugerrands came from the US and Europe.  Apartheit was indeed
> the target.  There were a wide range of embargos against RSA.

It is significant to understand, however, that the ban of Krands was
motivated not by apartheid, but by the desire to come out with a similar
coin.  If Apartheid was the reason, they would have banned the importation
of RSA gold.  Instead, you were allowed to bring in all you wanted, as long
as it was not in the form of Krands.

When we issued the gold eagles, they were not in the pure gold form that
others like Canada uses, nor in the .900 fine format that would have been
logical to match all other US gold coins for most of our history.  Instead,
they were 22K, a bastard purity only commonly used within the Commonwealth.
Further, they were made exactly the same size, denominations, and thickness
as the Krands.  They were obviously designed, not to compete with the Krands
on their own merit, but to substitute for them.

I have written in a bit more length about this before, and don't intend to
repeat that effort.  However, I think it is important that people recognize
that this is the type of thing that their government does, and the kind of
smokescreen they hide it behind.

I say this not as some wild-eyed *** theorist, but simply as a
presentation of provable facts.  There is no doubt in my mind that the US
Gold Eagle would never have gotten off to the start that it did if it
weren't for the fact that all the jewelers already had bezels and rings that
would exactly fit the coins without requiring a whole new line of designs.
Just take the corresponding Krand bezel and slap an Eagle into it.

There is an interesting corollary today.  The largest part of the reason why
the dollar coin will not work is because people will continue to use the
familiar dollar note.  By removing the familiar Krand, it left the market
wide open for the Eagle, which conveniently, required no special treatment
for its use.

--

Outgoing mail is certified bollocks

 
 
 

Gold Bullion Coin- question re: Eagle vs. Krugerrand

Post by Fred A. Murph » Tue, 16 Jul 2002 07:21:50



Quote:
> >>> Up until 1986, the Krand was the world's most popular bullion gold
> >>> coin, hands down.....<<<

> Wasn't it the world's "only" 1 troy ounce gold bullion coin? There were
> restrikes of the Mexican 50 Peso and the Austrian 100 Coronas that were
> popular prior to the introduction of the Krugerrand but neither contained
> exactly
> 1 troy ounce of gold.

Yes, or at least the only one designed as bullion as opposed to a collector
piece.  This was a large part of its appeal.  You knew exactly how much gold
you had, not 1.2056 ounces for a 50p, or .2354 ounces for a sovereign, or
around .2 ounces for a 10 franc, etc.

Quote:
> Ah, ever the cynic Fred.

> Did the US "want" to strike a one ounce gold bullion coin prior to
> Reagan's 9-9-85 Executive Order

Yes!  The US government tried issuing a bullion piece for five years before
coming out with the eagles, and they failed miserably.  Issued without
denomination (just like the Krand), they contained .5 and 1 ounces of gold,
and were part of the American arts medals series.  Not only did they never
take off to start with, but by the time the program was over, their mintages
were downright pathetic.

Quote:
> in which, among other Apartheid related actions, he
> called for the banning of Krugerrands and gave the Secretary of the
> Treasury 60 days to come up with a feasability study for an American
> alternative?

Nothing at all cynical.  They never banned the importation of gold, just the
importation of Krands.  It makes no difference to the mines whether you buy
their 3 million ounces a year as bars or coins, so apartheid was not the
reason.

--

Outgoing mail is certified bollocks