David Melvill on the hidden investment gem – Krugerrands

Independent financial advisor David Mevill, a long-time gold bull, shared his insights regarding the benefits of holding Krugerrands as an alternative investment. Amazingly, David says gold has been the best performing asset class over the past 50 years. Gold is known as a safe haven asset that performs well during economic turmoil and during inflationary periods, where it is seen as a store of value against eroding purchasing power. – Justin Rowe-Roberts

David Melvill on the hidden investment gem that is the Kruger Rands: 

The economist Mike Schussler did a summary around eighteen months ago looking at the different asset classes over 50 years and would you believe it, gold comes out tops, it beats the South African equity index, offshore equity, cash in the bank and bonds. It was quite amazing that he could pick this up and bring it to the fore.

On the complexities in the Kruger Rand price: 

People typically look at the spot price of gold. If gold is quoted as 1895 dollars an ounce, you multiply that by the USD/ZAR exchange rate (R13.54 to the dollar) which equals R25,658. But that’s just the spot price of gold – that’s having a lump of raw gold in your hand and nothing has been done with it. That’s where the rand refinery comes in which is in fact the oldest refinery in the world and the biggest – its been going since 1921 and owned by the original gold miners. The refinery then melts it and forms it into gold coins, which are Kruger Rands. The refinery process adds around 4.5% to the price of a Krugerrand to bring it to the finished product.

On the diversification benefits of holding Kruger Rands: 

I see it as an alternative currency and protecting yourself against the debasing of currencies. For anyone that needs to travel in a hurry, it couldn’t be a better idea to take a few gold coins with you. As insurance but also as a very liquid currency, that’s the beauty of Krugerrands.

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