As a business owner, you know that managing cash flow is a fine balancing act. On the one hand, you want to invest your money in a way that shows returns, but on the other hand, you need liquid capital to pay salaries and settle your rent on a monthly basis.
According to a study done by CB Insights, running out of cash is the second most common reason for new businesses failing. No matter what stage of maturity your business is in, be it a start-up or the business your grandfather started, cash flow is a common concern.
In your business, you experience cash flow highs, along with cash flow lows – but how do you manage to build an investment portfolio which can grow in value, but can also be turned to capital on a dime? The answer is by investing in Krugerrands.
Krugerrands can offer a business owner the benefits of an appreciating asset over time, with the near liquidity of cash in the bank, making this investment option very attractive to a business owner who needs to navigate his options on a daily basis.
Here are five reasons why the Krugerrand is the perfect investment for a business owner:
1. Krugerrands are an easy way of trading in Gold
Krugerrands were originally minted to make investing in Gold a reality for the man in the street. The purpose of the coin is to be traded without hassle by any level of investor, from the first time through to the experienced buyer and seller.
Trading in Krugerrands is a simple way of kick starting or growing, your investment portfolio. Where many investment options require a great deal of knowledge, skill and time – the lack of which could run inexperienced investors into trouble – buying Krugerrands is a very easy and cost-effective way to invest in Gold.
2. Gold can be an ideal Rand hedge
A Krugerrand is simply Gold bullion minted in the form of a one-ounce coin (or smaller denominations thereof). When you are trading in Krugerrands you are trading in Gold, which historically has been one of the best-performing and most stable precious metals in the world – and in South Africa’s current economic climate, stability is key.
Krugerrands can be an ideal hedge in a portfolio, because while the Rand depreciates, a pattern we’ve seen over years, Gold remains an internationally traded commodity which is quoted in US Dollars and as such is not affected by the instability of the Rand.
Krugerrands, therefore, ring-fence the value of the portfolio and reduce the risk of adverse price movements due to the Rand depreciating.
The impact of this relationship between the Gold price and the depreciation of the Rand can be clearly seen in the graphs below which display the price of Gold in US Dollars next to the price of Gold in SA Rands over the last 5 years. Looking at the devaluation of the Rand we see how Krugerrands have been a solid investment over the last 5 years.
3. You can trade in increments
The Krugerrand can be bought and sold in increments of an ounce, including one-half, one-quarter and one-tenth of an ounce.
This makes investing in Gold more affordable for a business owner whose investment capital value is fluid from one day to the next. The price of the trade is calculated according to the price of Gold on that specific day. For daily updates on Krugerrand pricing, please visit Mr. Kruger’s pricing page.
4. Krugerrands can be quickly and easily converted into cash
Krugerrands are the easiest way of dealing in Gold bullion. The coins can be traded in at any registered numismatic dealer. Make sure that your supplier is approved by the South African Mint or is a member of the South African Association of Numismatic Dealers.
When shopping for a reputable gold bullion specialist, consider a business that both buys and sells Krugerrands, and offers safe storage all at a fair price.
Related: Managing Personal Finances
5. Krugerrands are internationally the most recognisable and widely traded Gold coins in the World.
Krugerrands are one of the oldest Gold bullion coins in the world; a feather in the cap of South Africa’s Gold industry and the South African Mint. The first Krugerrand was minted in 1967 as a vehicle for the private ownership of Gold.
By 1980 the Krugerrand made up 90% of the global coin market and, in that same year, smaller denominational coins were introduced making the purchase of gold ever more accessible to the man on the street.
According to Wikipedia, the coin has the status of legal tender and may be offered in payment to creditors. In the eyes of the South African Reserve Bank the Krugerrand counts as a bank note or coin, not as an asset or product, therefore the coin is not subject to VAT – a bonus for local investors.
The iconic design of the coin in conjunction with its value make the Krugerrand a highly sought-after investment globally.