Established in 1920, Rand Refinery has grown to become the largest integrated single site precious metals refining and smelting complex in the world. Over almost 100 years, Rand Refinery has refined almost 100% of South African gold.
Such is the refinery’s pervasive influence on the sector that it is the only London Bullion Market Association (LBMA) referee in the Southern Hemisphere and one of only five LBMA referees worldwide.
Rand Refinery play a leading role in assisting the LBMA in developing the Responsible Gold Guidance. Rand Refinery’s gold bars have been accepted for good delivery in the London market since 1923.
The refinery produces a range of gold products like the kilo bars, gold minted bars in various sizes and designs and the Krugerrands. Rand Refinery also produce gold granules to service the manufacturing jewellers in South Africa.
One of the refinery’s prolific products has been the globally revered Krugerrand. Fifty years since it was first introduced in 1967, the Krugerrand has built an indisputable legacy as one of the leaders in the global gold bullion investment industry. Since its launch, more than 53 million ounces of gold (over 60 million pieces) have been sold in the form of Krugerrands, as much as the Canadian Maple Leaf and the US Eagle put together.
The global appetite for the yellow metal supported sales of 1.1 million ounces of gold bullion Krugerrands in 2016, making it the world’s most traded coin of that year. In 2016 the Krugerrand held a 26% market share of the global gold bullion coin market.
Gold, a safe haven investment, has become more attractive to investors in recent times due to low interest rates and global volatility amongst other geopolitical consequences stemming from events like Brexit. A good hedge against inflation, a gold bullion Krugerrand bought in 1967 for USD35 could return well over USD1200 today, explains Richard Collocott, Executive Head of Marketing, Rand Refinery.
The Krugerrand’s face value is denominated in ounces of pure gold while other gold bullion coins have a face value significantly below the value of gold. This means that with a Krugerrand, the South African Reserve Bank (SARB) guarantees the purchase of any Krugerrand tendered for the ruling gold price on the day, whereas with other coins the issuing government only guarantees the face value.
The Krugerrand is issued under the authority of the SARB and jointly produced by the South African Mint, a subsidiary of the SARB, and Rand Refinery.
“For South Africans, the Krugerrand presents a unique opportunity to acquire gold without any hindrance and exchange control approvals. Moreover the Krugerrand does not attract Value Added Tax (VAT).
The Krugerrand is available in 1 Oz, ½ Oz, ¼ Oz and 1/10 Oz sizes, affording opportunities for people to effectively and efficiently invest in gold at different price points,” adds Collocott.
With the contentious debate surrounding South Africa’s beneficiation strategy becoming vocal during this decade, Collocott adds, “The main purpose of launching the Krugerrand way back in the 1960s was to add value to South African gold.”
“In 1978, more than 6 million Krugerrands were sold, representing approximately 50% of gold produced in South Africa. Even today, over 20% of the gold is beneficiated in the form of Krugerrands. The success of the Krugerrand shows it is possible to add significant value to our precious metals if we develop local capabilities and channel resources towards achieving those goals.”