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Investors Warm Up For Reserve Bank Of Zimbabwe's Gold Coins

Investors Warm Up For Reserve Bank Of Zimbabwe's Gold Coins

Investors seem to be warming up for the gold coins that were announced by Zimbabwe’s Reserve Bank chief John Mangudya as a strategy to enable investors to store value within the country as inflation spirals out of control.

The move comes as the local currency continues to rapidly devalue against major currencies worsening inflation which increased by 30.7% on a month-on-month basis for June 2022.

In a statement on Monday, Mangudya said:

The Reserve Bank of Zimbabwe’s Monetary Policy Committee (MPC) resolved to introduce gold coins into the market as an instrument that will enable investors to store value. The gold coins will be minted by Fidelity Gold Refineries (Private) Limited and will be sold to the public through normal banking channels.

Fidelity Gold Refineries (Private) Limited is the sole gold buying entity and refining entity in the country and is owned by the central bank.

Harare-based independent economist Victor Bhoroma commended the central bank’s interventions, saying positive interest rates would reduce both “speculative borrowing in the economy and money supply growth”. Bhoroma told Al Jazeera:

Gold coins are a good idea in terms of storing value. It can be a way to reduce pressure on the US dollar if sold in Zim dollar thus stabilising inflation,” But they will likely be indexed in US dollar which means it’s a fundraising scheme to get USD from the market by the central bank. The success will thus depend on confidence in the central bank as the seller of the coins and guarantees that back them.

Batanai Matsika, the head of research for stockbroking firm, Morgan & Co, said the gold coin was a welcome development in a market starved of investment options and will help investors hedge against inflation. Matsika told Al Jazeera via telephone:

For a long time, the market did not have many investment options and this is a new asset class. The thinking was inspired by the need to come up with an instrument that addresses the inflation problems in the economy where purchasing power has been eroded. From what we are gathering, this is going to be a store value.

The idea is being emulated from the Kruger rands. It’s also a way of opening the gold market to ordinary investors. From an investment advisory point of view, it’s an area that is potentially exciting. It could prove to be worthwhile.

Harare-based Akribos Capital economist Tatenda Mabhande expressed optimism about the gold coin’s ability to act as a store of value. Mabhande told Al Jazeera:

Regarding the coin acting as a store value, it’s a good step given that the Zimbabwean dollar’s value was being eroded. People were going after US dollar as a store of value. It is going to ease pressures on the US dollar but demand for the USD will still be there. We don’t see the gold coin addressing exchange rate volatility though.

For as long as Zimbabwe remains a net importer, there will still be demand for dollars. Along the way, bad money will drive good money out of the market. We are likely to see the coins disappearing as well.

Mabhande added that in order for the gold coins to be effective, those seeking to acquire them should be able to pay with Zimbabwe dollars and not US dollars, to mop up excess local currency in circulation.

Mabhande added that the central bank needs to ensure that the face value of the gold coin “is always greater than its intrinsic value” for them to be treated as money and for investors to use it as an alternative to the US unit.

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20 Comments

ccc 1 month ago

hoo


Bit 1 month ago

It will not work.These so called analysts do not know what they are talking about.


zimdollar 1 month ago

Quote "For as long as Zimbabwe remains a net importer, there will still be demand for dollars." Unquote. Zvimwe mugazvinetse henyu.


Asalif 1 month ago

even the governor seems not to know how the coins work , they are good as bullion or a treasure it's just a way of keeping your wealth without loosing value not a form of currency you can pay the bearer on demand kkkkkkkk like Kanye West does he owns pure gold and diamond inscribed wrist watches if you look closer to some of his images you can see both hands have watches even our own Robert Mugabe did that and the French president does it look closely at most celebrities photos you will notice what I'm saying


£$¢¥€ 1 month ago

FunFact
The Mandela gold coins introduced in South Africa during the 2010 world cup resulted in losses for investors, small losses but nonetheless losses.


🙆🙆🙆🙆 1 month ago

are these G/C Robbery Prooof🤷


AfricanMogul🇿🇼 1 month ago

We are warming up,, it's time to rise trading Gold against the USD and the Zimbabwean dollar


Da Truth 1 month ago

Anongozo kumbiwa Nana Scott, Tagwirei,Mai vene venyika

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TheGullable 1 month ago

Looking forward to investing in these new coins.


Horomba 1 month ago

Which investors are warming up to the gold coins?. Dont be too optimistic and spread falsehood s


Mmmm 1 month ago

The Zim dollar @1:1 was a store of value now a store of failure.
****'s gold will not be a store of value.
The only store of value is the USD.


Mwana waMambo 1 month ago

Vane hope avo. Ngavadzoke kovata varote zvimwehe. Year after year, kungoronga nekuronga. Hapana chobatika chatakamboona. These guys! We are in a mess


Nimrod 1 month ago

chenjerai ku tengeswera fake gold coins muchini ma gold coins chaiwo. Be alert!


🙄 1 month ago

Hazvishande. It will only help those vagara vari kuita plunder economy to get more us dollars from the streets and naive businessman.
Another version of moneychangers...l see people counting losses.


cde chipopi 1 month ago

Time will tell let us wait and see. Zvakuitirwa ma elections ka izvi


Gogo Kaguvi 1 month ago

Kusvika mati mhaaaaaaaa



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