South African Krugerrand: specs, history and why it can’t go in an IRA

At a glance

Made by	South African Mint, with Rand Refinery
First minted	1967
Alloy	91.67% gold, 8.33% copper (22 carat)
1 oz coin	33.93 g in total, 32.77 mm, one troy ounce of gold
Sizes	1 oz, 1/2 oz, 1/4 oz and 1/10 oz
Face value	None; legal tender in South Africa
Allowed in an IRA	No

A short history

South Africa’s Chamber of Mines came up with the Krugerrand in 1967 as a way to market South African gold, and the first coins were struck that July. The name joins Paul Kruger, president of the old South African Republic, whose portrait is on the front, with the rand, South Africa’s currency.

By 1980 the Krugerrand made up more than 90% of the world’s gold coin market. Other mints launched competing coins, including Canada’s Maple Leaf in 1979 and the American Gold Eagle in 1986. In the 1980s several countries restricted Krugerrand imports as a sanction against apartheid. The U.S. banned imports in 1985, and most sanctions were lifted in 1991.

South Africa added 1/2 oz, 1/4 oz and 1/10 oz coins in 1980. Rand Refinery, which makes the gold blanks, says more than 60 million ounces of gold have been sold as Krugerrands.

Specifications

The 1 oz Krugerrand weighs 33.93 grams, measures 32.77 mm across and is 2.84 mm thick. It’s 22 carat: 91.67% gold and 8.33% copper. The copper makes the coin harder, so it resists scratches better than pure gold coins, and gives it a warmer, slightly orange color.

The coin contains exactly one troy ounce of gold, and dealers price it on that. It has no face value in rand. It’s legal tender in South Africa, and it’s denominated by its gold content instead.

The design

The front shows Paul Kruger, from a portrait by Otto Schultz first used on coins in 1892. The back shows a springbok, South Africa’s national animal, from a 1947 design by Coert Steynberg. Apart from the date, the design has barely changed since 1967.

Why Krugerrands can’t go in an IRA

U.S. law treats coins as collectibles that an IRA can’t hold, with exceptions. Certain U.S. coins, including the American Gold Eagle, are named in the law. Other gold qualifies only as bullion that meets the purity required for delivery on a regulated futures contract, which is 99.5% for gold.

The Krugerrand is 91.67% gold, so it fails the purity test, and as a South African coin it doesn’t get the exception the Eagle has. A custodian won’t accept it. If an IRA bought Krugerrands anyway, the IRS would treat the money spent as distributed to you, which means income tax and possibly a 10% early-withdrawal penalty.

Outside retirement accounts, none of this matters. For an IRA, the Gold Eagle or a 99.99% coin such as the Maple Leaf is the usual choice, and the gold IRA guide explains the rules.

Price and resale

Krugerrands usually carry low premiums compared with other 1 oz gold coins, and U.S. dealers buy them readily. Many Krugerrands in circulation are decades old. Coins with light wear still contain their full ounce of gold and trade on that, though badly damaged coins may fetch less.

When you sell 25 or more 1 oz Krugerrands to a dealer within 24 hours, dealers commonly file Form 1099-B, under an IRS rule tied to what can be delivered on regulated futures contracts. Report or no report, gains are taxable as gains on a collectible, at up to 28% for coins held more than a year.

See what gold really costs for how to check a premium against the spot price, and the gold coins buyer’s guide for how the Krugerrand compares with other coins.

Frequently asked questions