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‘Gold coins an investment’

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‘Gold coins an investment’

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GOLD coins to be released onto the market on July 25 provide an investment option and will also help in stabilising the local currency, whose value against the United States dollar has declined in the last few weeks due to speculative tendencies, as some of those driving up the black market switch to gold instead.

Information, Publicity and Broadcasting Services Minister Monica Mutsvangwa, who is also the Leader of Government Business in the Senate, said this during yesterday’s question time.

The gold coin will be called the Mosi-oa-Tunya.

“The gold coins were introduced to act as a store of value and to address the volatility of the local currency, which has resulted in a rise in prices of commodities causing the suffering of ordinary people,” Senator Mutsvangwa said.

The gold coins, she said, will also help curb speculative tendencies driven by the black market for foreign currency that have eroded the value of the local currency.

The coins are part of measures meant to reduce demand for foreign currency on the black market and increase supply of foreign currency in the official market.

On the inflow of cash into the black market, the Reserve Bank of Zimbabwe recently said speculative borrowing by some unscrupulous people and companies resulted in the Zimbabwe dollar losing value against the US dollar.

Consequently, the RBZ reviewed the country’s interest rate from 80 percent to 200 percent beginning this month, to dry up this private creation of money.

The gold coins are designed to divert some of the remaining local money being pumped into the black market by those seeking a store of value, by offering a better way of doing that, legally.

The increase in official sources of currency comes from a move that net exporters have to sell off a quarter of their retained export earnings unspent after 120 days, increasing inflows into the interbank and auction markets.

RBZ Governor Dr John Mangudya said the Monetary Policy Committee was deeply concerned about the surge in inflation, after month-on-month rose 30,7 percent for June 2022, while year-on-year inflation for the same month stood at 191,6 percent. The MPC said it “noted that the increase in inflation was undermining consumer demand and confidence”.

The gold coin will contain an ounce of pure gold and will be traded in both local and foreign currency.

Analysts believe the gold coins present an opportunity for the RBZ to make the local currency attractive to investors if the coins were issued mainly in local currency, which will result in the US dollar chasing the local unit as people would need it to make the investment.

Fidelity Gold Refineries, which is Zimbabwe’s sole authorised gold buyer, will mint the gold coins.

The RBZ said the coins would be sold to the public through normal banking channels and redeemed though the same channels.

The coins may also be sold to RBZ-owned companies namely Fidelity Printers and Refiners and Aurex Private Limited.

However, Minister Mutsvangwa said despite the inflation setback, the economy remained on a strong footing as seen in the number of infrastructure projects being implemented across the country.

Some of the infrastructure projects that are underway include dam construction, efforts to boost electricity generation, and road construction.

Further, new mines and industries are opening up while old ones are expanding their operations. Herald

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