Krugerrand's rise mirrors uncertainty
MOUNTING political jitters among white South Africans have pushed the price of Krugerrands to a record 21.3 percent above the value of its gold content.Skip to next paragraph
Subscribe Today to the Monitor
The Kruggerrand, a 1 ounce gold coin which normally trades at a premium ranging between 6 percent and 12 percent above the gold price, has been on an upward trajectory since negotiations with right-wing parties began foundering in early January.
Since the Feb. 9 deadlock in talks with the Freedom Alliance, a coalition of white right-wing and conservative black groups, the coin has gained 14.1 percent (about $55).
``The present premium is a direct reflection of the nervousness about political and economic developments,'' a dealer says.
The latest rise followed the news Feb. 14 that the Zulu monarch, King Goodwill Zwelithini, was demanding an independent Zulu state. Equity markets, which have risen around 20 percent since December on the strength of foreign interest and a rising gold price, dropped in sluggish trading after the announcement.
``The price has gone up because farmers - fearful of a wealth tax being introduced by a black government - are mortgaging their farms and putting the proceeds into hard assets like Krugerrands,'' one investment broker said. ``Some are even putting them in metal trunks and burying them.''