GERMISTON, South Africa - Fears that the U.S. economy is souring and heading toward a recession might cause most business owners to groan but here at the world's largest gold refinery, just south of Johannesburg, those are signs, perhaps, of better times to come.
Like snow-blower salesmen before a blizzard, managers of Rand Refinery Limited are hoping that economic uncertainty ushers in the comeback of their once best-selling, later banned, and now largely forgotten gold coin: the Krugerrand.
If you're not a coin collector or a gold investor, the word Krugerrand might not mean very much. But in the 1970s and early 1980s, when inflation soared and the price of gold reached $850 an ounce - more than triple the price today - the South African-produced gold coin was in huge demand as a hedge against uncertain economic times.
"You just couldn't get them fast enough," recalls Gerhard Stadler, owner of Water Tower Precious Metals in Chicago. "We sold hundreds a day."
The key to the Krugerrand's success was that it allowed anyone from small investors to millionaires to buy gold in a convenient form. As the first mass-marketed gold coin, the Krugerrand caught the imagination of investors in the United States, where more than 15 million of the coins were sold. Worldwide, the Rand Refinery has sold about 46 million ounces of Krugerrands since 1970, making it the most commonly held gold coin.
"It was ahead of its time. It was a masterstroke of an idea," says Paul Streng, managing director of the Rand Refinery, a sprawling factory that produces and markets the coin from this industrial suburb. "No one thought of producing a coin anyone could buy."
The first Krugerrand was minted in 1967. These were gold-proof coins sold to coin collectors only. But in 1970, the coins began to be mass-produced with low markups above the price of gold. The Rand Refinery produced the gold blanks that are then stamped by the South African mint to make them legal tender.
For years "Krugerrand" was the most recognized brand name from South Africa, the world's largest gold producer. And "Krugerrand" became synonymous with wealth and fortune: It was a coveted piece of gold that could be passed on to children and grandchildren.
But just as foreign interest in the coin peaked, so did the world's disdain for the South Africa government and its repressive apartheid system. Anti-apartheid protesters singled out the coin as a symbol of the apartheid regime and called for economic sanctions.
In 1985, President Reagan banned the importation of the Krugerrand. Other countries followed and, almost overnight, the gold coin that had been cherished became a pariah.
Some Krugerrand owners feared at the time that the coin would be illegal and sold off theirs at a loss. Other Krugerrands were melted down for other uses.
In the popular mind, the coin earned a bad-boy image. Consider the 1989 action film "Lethal Weapon 2" starring Mel Gibson and Danny Glover as two policemen. The bad guys: South African consulate members dealing drugs for Krugerrands.
The ban lasted until 1991, when the United States lifted economic sanctions against South Africa. But the damage was done. The stigma of apartheid remained inseparable from the coin.
"The sanctions were very effective - so effective that many Americans still think that it is illegal to own a Krugerrand," says Streng. In fact, it never was illegal to own the coins, only illegal to import them.
This month, the refinery launched the 2001 Krugerrand. Like its predecessors, the coin sports on one face the image of a prancing springbok, a gazelle that is a popular symbol of South Africa. On the other face is the profile of Paul Kruger, president of the old South African Republic in the 1880s and 1890s, for whom the Krugerrand is named.
Marketers of the coin are predicting a boost in Krugerrand sales, given fears of an economic slowdown in the United States. But no one is expecting to match the Krugerrand's heyday. In 1978, more than 6 million were sold.
"What we sold then in one day we sell now in six months," says Streng. "At the height, over 20,000 Krugerrands were being sold per day."
In 1978, about 200 tons of gold, or nearly 28 percent of South Africa's total gold output, went into Krugerrands. Last year, about 2 tons, or less than 1 percent, of South Africa's gold output became Krugerrands.
When the apartheid regime ended and Nelson Mandela was elected president, in 1994, the South African Chamber of Mines launched an ad campaign to promote the Krugerrand to American buyers, but the effort never took hold.
South Africa's tarnished image did not help Krugerrand sales, but something else happened, too: the price of gold plummeted. From a high of $850 an ounce in 1980 to about $269 an ounce today, gold lost much of its glitter. In the 1990s investors poured their money into the high returns of mutual funds and stocks on Wall Street.