The modern 1 ounce bullion coin has certainly been successful since South Africa invented the Krugerrand in 1967. It was a simple but brilliant piece of marketing.
There were two main reasons for the success of the Krugerrand. Firstly it was distributed at a very low premium over its intrinsic gold content. Major banks and international bullion dealers can buy Krugerrands from the South African Mint at only 3% of the spot price of gold bullion. Even allowing for shipping costs, insurance and dealers profits, they can be bought at between 4 and 10% over their gold content, making them an excellent and cheap way to buy gold.
Because gold is internationally quoted in troy ounces, the concept of a coin containing exactly one ounce of fine gold was a masterpiece of simplicity and effective marketing. Anybody can look at the gold price, and instantly be able to compare it with the bid and offer prices of a Krugerrand. Because of this, the Kruger has has a number of imitators including the Canadian Maple Leaf, the American Eagle, the Chinese Panda, the Austrian Philharmoniker, the British Britannia, the Australian Nugget, the Manx Gold Crown, Manx Gold Nugget, Gibraltar Gold Royal, and a few others.
To fill demand for smaller sizes of coins, both for jewellery and for investment, all of the countries which issue one ounce bullion coins also produce fractional sizes of half ounce, quarter ounce and tenth ounce. Some also produce fifteenth ounce or twentieth ounce coins, but these are usually too expensive to be considered by any serious investor. The fractional sizes obviously cost almost as much per coin to produce as the larger one ounce coins, and therefore a higher percentage compared with their gold value. They are all issued at increasingly high premiums as their size diminishes, and have not been as popular with investors as their large one ounce counterparts.
Australia issues two ounce, ten ounce and one kilo bullion coins. As these are only marginally less expensive than their one ounce cousins, and are in less convenient sizes, they have not been as popular as the one ounce originals, and are mainly bought by collectors or as gift items. (One kilo gold nugget coins make great paperweights!). For this reason most investors will not buy these larger coins.
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