Are Silver Krugerrands A Good Investment?

For eons, humans have placed financial value on precious metals. They have played a big part in the history of humanity, and contribute to the global economy in many different ways.

Silver is one of the most popular ones, and a common way of amassing it is to collect coins.

Just like gold, although not as valuable, silver coins appreciate over time. And with enough patience, the avid collector can build a small fortune.

But time is not the only factor which adds value to the famously 999-stamped metal coins, but so do their history and significance.

Silver Krugerrands, the silver coin of South Africa have become an investor commodity since first appearing.

And in this article, we are going to look at whether these coins are still worth your money, or if you are better off investing it elsewhere.

What are silver Krugerrands?

To understand the silver Krugerrand, we must first have a quick look at the gold Krugerrand. This little history lesson is also important, as it will help you to understand why these coins are valuable aside from being precious metals.

First minted in 1967 in the Republic of South Africa, gold Krugerrands are gold coins which were produced by the South African Government.

At the time there were expanding global gold markets, and the nation’s government wanted in!

By producing these coins, the government wanted to increase awareness of South African gold in these markets, and to also make private gold ownership possible.

fast forward 50 years to 2017, and the South African mint commemorated the gold Krugerrand’s 50th anniversary with a silver edition.

But the silver Krugerrand was not just a commemoration. The geld Krugerrand always suffered from its association with South Africa’s apartheid system.

After all, the name Krugerrand comes from the famous 19th century nationalist politician Paul Kruger, and the South African currency, the rand.

Therefore, the silver Krugerrand was also released as a symbol of modern South African economic growth. Especially now that the country is a post apartheid, democratic, and more racially fair society.

So it is the combination of being a precious metal, and the intricate historical significance that makes the silver Krugerrand a valuable, sought after metal collectors coin.

How much are silver Krugerrands worth?

Silver hovers around the 22 dollars an ounce mark. This means that the silver Krugerrand

Unlike their more valuable sister gold coin, silver Krugerrands are made from a less precious metal, and also are much younger. They have only been in existence since 2017, which is not exactly a long period of time for something to appreciate in value.

Even so, the current price for a one Troy ounce 2021 silver Krugerrand expects to pay upwards of $30.00.

But an older coin, like the 2019 ones, you will find prices upwards of $90 dollars, and as low as around $75.

However, prices heavily depend on where you buy silver Krugerrand coins from, how many you buy , and of course the year in which the coin was made.

The original 2017 coins, although only being 4 years older than the newest editions, do carry a higher value. And you can find them online for closer to $200.

Do silver Krugerrands keep their value?

It is early days to give a strong forecast of whether silver Krugerrands hold their value. You need to know how well their history will influence prices, and the coin simply is not old enough yet.

But when you look at the difference in prices between first edition 2017 coins and the latest 2022 ones, it is clear to see that with time, the silver Krugerrand has been increasing in price.

This is mainly down to collector interest driving up the price. And like any collector’s novelty, the rarer something becomes, the higher the price tag. So, in a few years, the first edition 2017 Krugerrand will likely surpass the $200 mark, and later models will see a similar trend.

And how will these coins hold their value due to being a precious metal? Well this is a little easier to analyse, as silver markets have been around for years.

Just like with the stock market, nobody can ever say for certain what is going to happen to the value of precious metals. But we can look at trends and data, and use a little intuition to make an accurate estimation.

Silver has a notorious reputation of being volatile. And global silver mine production is estimated to have declined by 2.4% in 2020. This was also the fourth consecutive year of decline.

Depleting reserves are the main cause of this. And being a non-renewable resource means that reserves will never recover.

So as silver resources decline, but demand for silver shows no sign of slowing down, it is likely that its value is only going to increase.

However, current trend analysis estimates that silver production will in fact increase by 3.2% year-on-year for the next 3 years.

If this happens, then the price is likely to stabilise, meaning that the silver Krugerrand’s value may decrease in terms of the value of silver.

But if this forecast is incorrect, and silver production continues to decline, then it is a different story.

This scenario will create a double whammy effect. The silver Krugerrand should increase in price thanks to constant silver demand but depleting resources, as well as being an aging collector’s novelty.

Either way, it looks like the silver Krugerrand will at least maintain its value over the coming years.

Where can I buy silver Krugerrands?

Silver Krugerrands are sold all over the web, and there are countless vendors. This is great as it gives price variety, but also means that you need to put more time into finding the best deal.

Something to be careful of when buying silver Krugerrands are cons. Fakes and con-people are rife within the world of coin collectors, so keep your eyes peeled.

Always try and see the coin in person. And if that is not possible, then make sure that the vendor gives you all of the coins details. Also ask for any documentation, along with high quality, detailed images.

A final point when buying online, is to only buy from reputable sellers. For obvious reasons, vendors with questionable reputations should be ignored. And this definitely should not need explaining!

How to make money with silver Krugerrands

When it comes to a collectors item, age and rarity are what give it value. Silver Krugerrands do not have age on their side, and only some have rarity.

This means that at the moment the best thing a silver Krugerrand investor can do to make money is to buy in. And buying Krugerrands of different editions is a smart choice. By investing in a 1st edition you possess one the most valuable Krugerrands, which as an individual coin, will give you the best returns.

But by also investing in larger quantities of newer editions, you can buy into Krugerrands at a low price. This does two things. It increases the number of valuable collectors coins that you own, and also the amount of silver.

When selling as a collectors item, more than anything, it is a waiting game.

But if you are also considering selling for their rare metal value alone, and not collectors value, then there are strategies you can use.

The value of silver runs in cycles. Big investment firms can cause prices to plummet, despite there being a lower supply than demand. And then all of a sudden, this quickly changes, and prices go up.

This is what makes silver volatile, even more volatile than gold. Its prices go up and down faster than gold’s, and having an understanding of its volatility and cycles can be rewarding.

It will give you insight into when the right time to sell comes, allowing you to offload your commodity at the best price.

You just need to be careful not to over expose yourself, and hang on too long, in the hopes that prices are going to further increase.

Are silver Krugerrands a good investment?

Despite being a young collectors coin, silver Krugerrands are a good investment. They may not be highly valuable at the moment, but with time that is likely to change.

As with other precious metals and natural resources, silver is a commodity which can be publicly traded. And as with all tangible assets, when the stock markets declines, their value does the opposite, and increases.

Tangible assets also have intrinsic value. This is calculated by using an objective financial model instead of the commodity’s current trading price. Over the long-run, silver has a good reputation of maintaining its intrinsic value, especially when interest rates are low.

And finally, investing in tangible commodities like silver, whether it is in the form of a Krugerrand, or not, diversifies your portfolio.

The right amount of diversity strengthens any portfolio, and minimises the chances of it losing money.

Matt Roberts
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