Frequently Asked Questions ‐ Krugerrands 1. Account opening What account do I need to hold to buy Krugerrands? You need to hold either a Share Builder or Share Investor account to buy Krugerrands. Remember that holding a Share Builder or a Share Investor account gives you the choice to either invest in Krugerrands, shares or both. It’s always great to have choices! What type of Krugerrands can I buy? You can invest in the full range of Krugerrands through FNB Share Investing. The full range includes: ⅟10, ⅟4, ½ and 1 oz generic Krugerrands (KR). Must I own shares to buy Krugerrands? No, you don’t need to. You just need to have access to a Share Builder or Share Investor account, and you may by Krugerrands through this account without buying any shares. Can I invest in Krugerrands if I do not live in South Africa? Yes you can. Clients living outside SA need to establish a relationship with the FNB Non‐Resident Centre. Thereafter, you can open a Non‐Resident or Emigrant Share Investing account, which will allow you to transact and trade in Krugerrands online or via the call centre. For queries to the FNB Non‐Resident Centre please call 011 352 5025. For help with trades on Krugerrands please call FNB Share Investing on 0860 SHARES (742 737). 2. Charges and safe custody of coins How much does each Krugerrand cost? The price of each Krugerrand depends the size that you purchase (1 oz, ½ oz, ¼ oz, ⅟10 oz). Each coin is quoted at a price provided by RMB and is influenced by the R/$ exchange rate and the gold price at that moment in the market. What are my account fees? •
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Account fees: o
If you hold a Share Builder account – the account fee: R17pm o
If you hold a Share Investor account – the account fee : R45pm Price of Krugerrands: this depends on the size of coin you purchase (1 oz, ½ oz, ¼ oz, ⅟10 oz). Each coin is quoted at a price provided by RMB and is influenced by the R/$ exchange rate and the gold price at that moment in the market. 1 •
No trading fees apply •
Custody fee: 0.85% per annum for safe custody at Rand Refinery. This is based on the value of your coin holdings and is calculated on a daily basis, and charged monthly. Where is my Krugerrand kept after I buy it, and is it safe? Your Krugerrands safety is our utmost importance. FNB Share Investing have a contract with RMB and Rand Refinery to keep safe custody of your coin until you wish to sell it or take physical possession of it. How much does it cost to keep my Krugerrand at Rand Refinery? A custody fee of 0.85% per annum is charged to keep your Krugerrand safely in the hands of Rand Refinery. This 0.85% is based on the value of your coin holdings and is calculated on a daily basis and charged monthly. What is Rand Refinery? Krugerrands are minted by the South African Mint from gold coin blanks supplied by Rand Refinery Limited. The South African Reserve Bank has authorised Rand Refinery Limited, the world’s largest single‐site gold refining and smelting complex, as the sole entity to sell Krugerrands from source to primary distributors worldwide. Rand Refinery Limited is owned by leading South African gold mining companies. If I already own Krugerrands, can I hand them over to FNB to keep at Rand Refinery? No, unfortunately not. Only Krugerrands that are purchased directly from FNB Share Investing can be kept at Rand Refinery. How do I insure my Krugerrand? FNB Share Investing gives you piece of mind by insuring your coin at a very competitive custody fee of 0.85% per annum (based on the value of your coin holdings and is calculated on a daily basis and charged monthly).This safe custody fee will be deducted off your Share Builder or Share Investor account balance every month. Can I take physical ownership of my Krugerrands? Yes you can. If you would like to keep your coin in your own possession, FNB Share investing can provide a personalised quote to deliver the coin from Rand Refinery to your residence at a fee. If I decide to take physical ownership of my Krugerrand, what happens to my portfolio? Your Krugerrands holdings will no longer appear in your online portfolio should you decide to take physical ownership. 2 Can I take physical ownership of my coins if I live outside of South Africa? FNB Share Investing does not facilitate the export of Krugerrands due to the South African Reserve Bank Exchange Control legislation governing the export of coins. However, you can take delivery of your coins at any address within South Africa. FNB will deliver coins to a third party, provided the value of the coins does not exceed R50 000. For amounts exceeding R50 000, the account holder must be present to take delivery. Exchange Control legislation also limits the number of coins that a non‐resident client may export. This limit is set to 15 coins per transaction. However, you may approach the South African Reserve Bank to negotiate this restraint and the SARB will deal with requests on a case by case basis. For information relating to the export of Krugerrands, please contact the FNB Non‐Residents Centre on 011 352 5025. If I decide to take physical ownership of my Krugerrand, can I sell them through FNB Share Investing? Unfortunately not. Once the Krugerrands are removed from your online portfolio, FNB Share Investing cannot buy back the coins. What happens to the safe custody fee once if I take physical ownership of my Krugerrands? Should you take physical ownership of your Krugerrands, you would need to apply for additional safe custody or insurance on the coin on your own account. What are the tax implications of investing in Krugerrands? The tax implications are determined with respect to the intention to which the Krugerrand is held. If it is held for investment purposes, the proceeds would be seen as capital but if it is held with an intension to make a profit, the proceeds would be considered to be revenue. It is the responsibility of each investor to ensure that the gains/losses are treated correctly as far as tax is concerned. FNB Share Investing will issue you with a Statement of Gains and Losses in February each year for the period 01 March to 28/29 February. 3. Portfolio queries Do my Krugerrands form part of my portfolio? Yes. Once you have bought your Krugerrand, you will be able to see the growth in value of the coin along with any shares you may hold in your portfolio. This can be viewed by clicking on the Shares/Gold tab in Online Banking. You have the option to sell the coin at any time, as well add to your portfolio by purchasing more. 3 How many Krugerrands can I buy? You can buy as many as you like and hold them for as long as you like. Is there a limit to the amount of Krugerrands I can buy and sell in one day? Yes, currently there is a buy and sell cap that is determined by the bank. You will be notified on your portfolio if this cap is reached. Buy Cap This is a cap that can be set which will limit the maximum number of coins that may be bought per day by a single account. This limit can be changed upon the banks discretion. Sell Cap This is a cap that can be set which will limit the maximum number of coins that may be sold per day by a single account. This limit can be changed upon the banks discretion. When will my Krugerrand settle in my account? Orders placed during business hours will settle immediately. Orders placed during non business hours and on public holidays will settle the next business day at the 08:00 price. FNB will reserve your funds to be able to settle the order. Should the price have increased by the time the order must be settled, and there are insufficient funds in your account to settle, the order will automatically be rejected thus ensuring that you can never become overdrawn. What return will I get? Because Krugerrands are made from 22 carat gold, their intrinsic value is dependent on the gold price as well as the rand/dollar exchange rate. Krugerrands have the ability to breakeven much faster than that of other physical investments (collector’s coins, fine art, antique furniture). 4. General questions on Krugerrands Where can I get more information on Krugerrands? FNB Share Investing has a dedicated section in the Learning Centre on www.fnb.co.za/shareinvesting that covers important investment information and interesting facts on Krugerrands. 4