American Krugerrands

Despite Congress's decision six years ago to permit U.S. citizens to hold gold for the first time since 1933, few Americans were able to buy domestic gold. The smallest quantity offered by the Treasury Department in its monthly auctions before they were canceled last October was a 300-oz. bar that sold for as much as $118,000. A Midas with a smaller touch usually turned to the popular 1-oz. South African Krugerrand, which sells for about $25 more than the spot price for gold (last week's closing: $510). Throughout the years the South Africans had a virtual corner on the small-investor gold market, selling an estimated 1 million Krugerrands in the U.S. annually. But competition has been getting stronger. Last year the Canadian government began selling its 1-oz. Gold Maple Leaf, and this spring the Mexicans started promoting the Centenario. Beginning this month Americans will also be able to buy 1-oz. and 1/2oz. medallions made from Fort Knox gold. These will be medallions--and not gold coins--and thus cannot be used at the corner drugstore. They will be sold through post offices, with the cost being set at the daily gold price plus a handling charge of about $15. The 1/2oz. version will bear a portrait of Singer Marian Anderson, and Painter Grant Wood appears on the 1-oz. piece. Over the next five years a total of ten medallions will be issued, honoring American artists ranging from Mark Twain to Louis Armstrong. Since less than 4% of the population currently hold gold, precious-metals dealers foresee a continued bull market in bullion.

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