[miningmx.com] — DEMAND for Kruger rands has soared to all-time highs over the past few days.
According to Alan Demby, executive chairman of the SA Gold Coin Exchange, the phenomenon was due to a combination of factors, the most telling of which was the record high dollar gold price.
“Sales of the one-ounce gold coin advanced markedly on the day that the bullion pierced the $1 300 an ounce mark.
“And interest has since quickened more or less in tandem with the ongoing price advance.”
Demby said that interestingly, buyers of Kruger rands had not been deterred by the strength of the rand, which had to an extent offset the gains in the yellow metal’s dollar value.
“Investors are clearly looking beyond this near-term offset and in fact the rand strength offers prospective value, since should the local currency slip back to nine to ten to the dollar, an immediate profit would result.”
Demby said investors in Kruger rands were a “unique breed.”
“They are visualising a systemic change in the factors influencing the price of gold and they anticipate a basic shift in the global financial framework.”
Demby said these investors expected the determined stimulation strategies being pursued by the world’s power economies to spill over into severe inflationary pressures and that was why they were buying gold.
Investors were expressing their expectations of the future through the Kruger rand because it was the most convenient and cost effective way of doing so.
“In addition to its ready international marketability, ease of transportation and storage, and homogeneity, the Kruger rand does not attract VAT, nor administration costs, as do other gold-related instruments like exchange traded funds.
“Nor do they carry the risks – strikes, accidents, nationalisation fears – associated with owning gold shares.”
