Pindula
Register Login

Gold Coins Redeemable For Cash After 180 Days - RBZ

Gold Coins Redeemable For Cash After 180 Days - RBZ

Reserve Bank of Zimbabwe governor John Mangudya said the gold coins set to be released on 25 July will likely reduce demand for the US dollar as a store of value and stop the depreciation of the local currency.

Speaking in an interview with State media, Mangudya said the gold coins, which are known as Mosi-oa-Tunya, can only be redeemed for cash after 180 days. He said:

Because of hyperinflation and past experiences, people in Zimbabwe have increased the demand for foreign currency as a store of value.

So, in order to provide an alternative product for those who want to store value, including those with excess balances and those who have foreign currency under their pillows, we have introduced the gold coin.

Its first positive impact is that it provides a safe and secure investment for those living in perpetual fear of hyperinflation and losing value.

Mangudya however, refused to reveal the number of gold coins that are going to be released in the first batch. He added:

However, they are sufficient. We will only be able to give you information after the beginning of the first week.

The Mosi-oa-Tunya coins will be sold at a price based on the prevailing international price of gold plus a five per cent mark-up to cover production and distribution costs.

The coins will also be traded through commercial banks, Fidelity Gold Refinery and RBZ-accredited agents.

The central bank said on redemption, buyers will have an option of receiving cash in either Zimbabwe dollars or US dollars.

More: The Sunday News

Share Article

Sponsored

19 Comments

Economist 3 weeks ago

Ummm!!!


ZIMBA🇿🇼OG 3 weeks ago

including those who have foreign currency under their pillows.
meaning you want to fish out what ppl has been gathering all these struggling years , and finally baited by a gold coin


CDE 3 weeks ago

A foolish strategy, now are awake. Zvakadiyaneyi nekubhodhesa dried vegs (mufushwa)

kkkkkk


legislator 3 weeks ago

hameno hake anoendesa chiri mumaoko nekuda kukumba zvimagold coin izvo


Machiavelli 3 weeks ago

5% surcharge for production and transportation is too high. Working on the current gold price US$1,600 it works out to US$85 per coin, which any right thinking economist/investor is likely to question.

The next question is locking an investment of US$1,700 without a guarantee of increased return. Assuming that I have that kind of money, the lowest return is on LIBOR @ 6.25%. Is there any guarantee that gold is likely to increase in value by 7% within the next 6 months? I doubt.

By the way I haven't factored in 'spinning' options which Zimbabweans are very good at, which would increase the return phenomenally.

In short I doubt if the Gold Coin will get many takers, unless banks are brought into the fray.


DaCool 3 weeks ago

Guys does the statement above mean the liquidity of gold coins is 180 days??


Machiavelli 3 weeks ago

According to information at hand once you purchase the Gold Coin you cannot offer it back to banks or the other distributors (I.e. redeem it for cash) before 180 days have expired. However what isn't clear is whether s black market for coins will not develop.

For instance if I have deposited 20 Gold Coins in CBZ, is there anything that stops me from using that as collateral for US$15,000 loan. Or for tha matter can I not offer the Gold Coins in exchange for my friend's Toyota GD6.

Fisherman 3 weeks ago

Hook has been baited, waiting for bites.


Sponsored

CreedX 3 weeks ago

Rather invest that money in buying gold from korokozas and selling it at local black markets which will earn me considerable returns than throwing it into Mangunda's poophole


MU SU RI WA TU NYA COINS 3 weeks ago

🪙


Gafa 3 weeks ago

This will fail like bond note.Kutora mari pasi pepillow kupa Panonetsa for the next 180days uchida kuzowanei isu totenderedza USD mustreet kwete kurisker uchiriisa mubank pedzozve wonzi 1:1 nebond wanyurazve wopiwa riri bond USA voti ikozvino hatina kkkkkkk


ex 3 weeks ago

if you have a problem which needs money and you have coins ane 10 days you will suffer nenhamo mari iroiko kkkk


the Zebra 3 weeks ago

The next you are told the USD is no longer a legal tender and you are given the Zimi dollar kkkkkk


Nyoka Longo 3 weeks ago

This is a s**t investment initiative from Mangudya and his fellow hare brained Mthuli Ncube. No sane or right thinking person will purchase coins which have a 180 day none tradable tenure. What guarantees are there that after 180 days there will be upward fluctuations on international gold market which can benefit an investor? Rather there should have been flexibility of allowing free tradability of these coins where an investor can redeem after noticing upward positive trends on the gold market. The MAIN reason why there is that 180 days lock in for this gold coin is that all the money mopped from gold coin purchase is to be used by government. Government conceived through Mangudya a clever way to raise capital after realising that there were no avenues available for them to raise capital anymore.


the Zebra 3 weeks ago

the problem is overnight policy change , you may work up and be told gold coins can only be redeemed with local currency


ex 3 weeks ago

mangudya ka kkkkk usadaro ndokutamba nenyika kauku


vanotenga zvigumwe vauya 3 weeks ago

buy gold coins using rtgs. its s better of preserving value. never use usd to purchase cold coins... unonyura


ahoyi 3 weeks ago

*Fresh warning over gold coins*

https://chat.whatsapp.com/E7zwz61vyLoBjTF0oFm6Mw

LOCAL financial services firm, IH Securities has raised concerns that the “Mosi-Ao-Tunya gold coins” set to be released tomorrow will lead to increased arbitrage opportunities.

On July 4, the Reserve Bank of Zimbabwe announced the introduction of gold coins as an alternative store of value to the United States dollar as the bank scrambled to find solutions for the collapsing local currency.

The idea behind these coins was to reduce the demand for the greenback while also wiping out the nearly $1 trillion local currency that is fuelling the annual inflation rate pegged at 191,6% as of June.

Zimbabwe’s annual inflation rate is being driven by the local currency continually losing value, falling from $108,66 to a current $413,43 against the US dollar.

The fall is steeper on the parallel market as the greenback trades for $850, down from $200 at the beginning of the year.

That disparity between the official and parallel forex rates is what IH Securities warned would give the biggest arbitrage opportunity on the gold coins.

This publication updated the figures from the IH Security report analysing the gold coins using current market prices following movements on the exchange rate.

“Start by exchanging US$1 711 (price of gold per ounce as of writing this) on the parallel market to receive ZWL$1 454 350 at a rate of US$1:ZWL$850. If gold is going for US$1 711/oz the equivalent ZWL$ price for 1 oz, a gold coin is ZWL$707 378,73 at an interbank rate of US$1:ZWL$413,43,” IH Securities said.

“With the ZWL$1 454 350 and a top up of (nearly) ZWL$32k you can purchase 2 gold coins. If the 2 gold coins are sold in foreign currency you will receive US$3 422 or equivalent.”

IH Securities continued: “Given the real effective value of the gold coin in US$ versus the implied price in RTGS there is a clear opportunity for arbitrage. Of concern is how the gap between the implied RTGS price and the effective US$ price will be funded.”

The gold coin will weigh one ounce (28,34 grams), but be weighted at 33,93 grams, with a gold purity of 91,67% as anything above 90% is considered pure and has 22 carats of the yellow mineral.

At current international spot prices, the coin is worth US$1 711 but is expected to have a cost of nearly US$1 796,55 as the central bank will add a 5% charge on top of the coin, hence, the extra
$32 000 for two coins mentioned by IH Securities.

The 5% charge will be to cover the cost of production and distribution of the coin on a payment versus delivery basis.

Upon purchasing the gold coin, the central bank is on record stating that the buyer will be able to take physical possession of the coin along with a bearer certificate acknowledging ownership.

“The gold coins will be available for sale in both local currency (ZW$) and United States Dollars (US$) at a price based on the prevailing international price of gold and the cost of production,” IH Securities said.

“The interbank rate has been set as the sole commercial exchange rate to be used in formal transactions and against that background, there is a potential US$ gain on the arbitrage created for those with access to the coins.”

Further, whilst the coin can only be sold to approved agents of the central bank after 180 days, the RBZ governor John Mangudya says that the coin can be sold to international players and locals willing to buy the coin.

“If you want to sell your gold coin to your friend you sell it and also give your friend the bearer certificate,” Mangudya told the paper in WhatsApp messages.

He said after seeing how successful the gold coins would be in the market, they wouldn’t rule out developing Visa cards for the yellow mineral.

“It’s a development that will be feasible after the launch of the gold coins,” Mangudya said.

Based on current monthly salaries from both the public and private sectors, the majority of workers earn between ZWL35 000 and ZWL120 000, on average, meaning purchasing the gold coins will only be for high income earners.

This is because the average salaries are lower than the cost of living which was $110 550 for a family of six as of June, according to the Zimbabwe National Statistics Agency.

The figure, however, is lower than independent estimates that place the cost of living at well over $150 000 currently.

Resultantly, only high-income earners, corrupt officials, business executives, companies, and firms will afford the gold coins, amid a depreciating Zimbabwe dollar that continues to force consumers to reorganise their monthly priorities.

These high income earners are the ones expected to make serious gains on the arbitrage opportunity.


OnceBittenTwiceShy 3 weeks ago

RBZ cannot be trusted.
History has taught us that.



Leave a comment


Recent News


News Categories



Feedback