South Africans are turning to gold

 ·16 Jun 2024

There is increased demand for Krugerrands amongst South African consumers amid the high price of gold.

FNB said that it has helped deliver over 2,200 Krugerrands on its trading platforms as consumers embrace alternative asset classes to diversify their portfolios.

The bank holds over R1 billion work of coins in its portfolio on behalf of its clients.

Sebastian Pillay, Head of Share Investing at FNB Wealth and Investments, said customers diversify their portfolios to hedge against unfavourable market conditions.

“Krugerrands are linked to the international value of gold, which means that the investment is protected from local currency volatility and devaluation. Therefore, this makes it a global asset class that you can rely on in a good market environment as well as in times of uncertainty,” said Pillay.

“Moreover, the recent surge in the gold price has led to a significant increase in demand for Krugerrands.”

Gold R/kg

During global market uncertainty and slow economic growth, gold has maintained a reputation as a haven asset.

Some investors buy gold as a sentimental investment, while others are extra cautious about financial market movements and buy Krugerrands as a sense of comfort.

Thus, Krugerrands are a prominent safe-haven asset for many investors when considering their exposure to gold and are often used as a hedge against inflation and currency fluctuations.

“Krugerrands are highly liquid in the South African market, making them a preferred choice among seasoned investors and collectors alike, and are considered a legal tender in South Africa, but their real value lies in their gold content,” said Pollay.

“Whether acquired for portfolio diversification, wealth preservation, or numismatic appreciation, Krugerrands continue to perform in the realm of precious metals and serves as a cornerstone investment in precious metals.”

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