If you're thinking of buying gold, it's very possible that your first thought is to buy Krugerrands, and if you do that you would be okay because only in rare instances are there are better forms of gold for investing purposes. Of the best known gold bullion coins, the Krugerrand nearly always carries lowest premium. Additionally, the Krugerrand enjoy a very active market, which in important when it comes time to sell.

Although first minted in South Africa in 1967, the Krugerrand was introduced in the United States in 1975 immediately after the federal government lifted the ban on Americans owning gold bullion. The Krugerrand was an immediate hit as investors sought to protect themselves from the price inflation caused by the "bread and butter" economic policies stemming from the Vietnam War.

The Krugerrand remained the dominate gold bullion coin until 1985 when Congress banned its importation because of South Africa's apartheid, a political system that enabled the whites to rule the country. From 1974 through 1985, South Africa sold some 42 million Krugerrands worldwide and possibly 25 million in the United States.

With the ban, the importation of Krugerrands ceased, but an active secondary market for the coins continued through out the ban and continues to this day. Krugerrands are bought and sold daily, in small quantities at coin shops and in huge quantities among gold bullion coin dealers.

When the ban was lifted in 1995, after the election of Nelson Mandela as South Africa's first black president, the South Africans made an attempt to again market the Krugerrand in the United States. However, by that time the American Gold Eagle coin, which the U.S. Mint introduced in 1986, had become the popular gold bullion coin, and the South African effort was futile. Americans could buy the Gold Eagles at the same price as Krugerrands, and Gold Eagles became their bullion coins of preference.

During the height Financial Crisis of 2008, demand for all forms of gold was so great that Krugerrands were again imported into the United States, and today new, 2009-dated Krugerrands sometimes are available. However, most trading in Krugerrands is in the secondary market for coins dated 1974-1984.

Although the Krugerrand comes in four sizes, 1-oz, ½-oz, ¼-oz and 1/10-oz, the 1-oz coin is the more popular. The 1-oz coin contains exactly 1-oz of gold but weighs slightly more than one ounce because it is 22-karat (91.67%) gold. Precisely, the Krugerrand is an alloy of 31.1 grams of gold and 2.83 grams of copper. Rarely are fractional-ounce Krugerrands available.

© Bill Haynes 2009